That was limiting access to unique programming on Ultra Fast Broadband and ultimately would reduce uptake, he said. Programme-makers also are wary of the emerging relationship between Sky and TVNZ and claim there has been a lack of consultation.
Screen Production and Development Association (Spada) executive director Penelope Borland says it's an astonishing situation where the state broadcaster has no obligation to keep the production industry informed.
It wouldn't happen in other countries. Borland said the Government was "turning a blind eye" to business practices at TVNZ such as converting digital rights deals with producers to pay TV rights without negotiation or payment.
Spada had raised its concerns about the dangers of where these policies were leading with officials.
"They were ignored by officials at government departments because they'd been told by the Government its approach was to stay hands-off," she said.
Individual producers offer less dramatic forecasts about the threat facing the industry, but three thought it was at a crossroads and the future for local content was unclear.
One senior broadcasting source said the Government's hands-off approach was valid. But National was "delusional" if it believed its laissez faire policies weren't having a direct influence on the commercial sector.
"Doing nothing still has an effect," said the source.
Michael Stedman is the managing director of Dunedin-based Natural History New Zealand - a former TVNZ division and now a successful Fox TV production company selling programming to public broadcasters around the world.
In his keynote address to the Spada conference last week, he expressed concern about TVNZ's relationship with Sky TV channels because TVNZ should be providing channels on Freeview.
Sky TV had achieved its aims with a long-term vision, Stedman said.
"By contrast, TVNZ's vision changes every or three years and is driven ... by a board with little or no understanding of the industry.
"I've been part of an industry that's been victim of ongoing political manipulation, arrogance and never-ending change," he said.
Unsurprisingly the view from the Beehive is much more upbeat. Broadcasting Minister Jonathan Coleman said the broadcasting industry was "working well and New Zealanders are being well served.
"We're a small country. We have an $81 million content fund [NZ On Air] and an indigenous TV station [Maori TV] and that's pretty good going," he said.
"We've set a clear direction and a clear path for TVNZ and continue our support for public broadcasting through funding agency NZ On Air."
The Government has removed TVNZ's limited social obligations so its only requirement is to make a profit. Coleman praised a turnaround at TVNZ, which recently announced a $2.4 million net profit after a $31 million dividend and $17.7 million writeoff for a failed investment in TiVo. Coleman said he couldn't comment on TVNZ's relationship with Sky, and TVNZ spokeswoman Megan Richards refused to comment.
Coleman stuck by the Government's resistance to regulating pay TV - which commonly occurs in other countries. "Nobody knows how the technology will play out."
The view is backed by Sky TV chief executive John Fellet, who said it was difficult to plan ahead.
At the start of its term, National scrapped a review of broadcasting and this week Coleman rejected any regulation.
"It's not the Government's role to get extremely involved in this and shake up the industry," he said. There was nothing to restrict competitors starting up in competition with Sky.
"If we regulated Sky, would there be a new entrant to the pay TV market? I don't think so.
"People want more choice on screens and they get that. Sky supported rugby and other sports."
Asked if the price for Sky's contributions to sporting codes was a monopoly in pay TV, he said: "I would dispute it is a monopoly. Other channels are free to bid."
