Industry criticism mounts against proposed telco bill

Fibre optic cable. Photo / Richard Robinson

Industry players gave a sharp rebuke to a proposed telecommunications law in their submissions to a select committee this week.

The finance and expenditure select committee heard 24 oral presentations on the Telecommunications (TSO, Broadband, and Other Matters) Amendment Bill on Wednesday and Thursday, complementing the 41 written submissions and supporting documents received since Friday last week.

The law prepares for the Government's ultra-fast broadband scheme (UFB) and rural broadband initiative (RBI), which aim to improve internet speeds for 97 per cent of New Zealand. The UFB scheme hopes to offer speeds of 100 megabits per second by laying fibre internet cables across 75 per cent of the country within 10 years. This is about 20 times faster than the average speeds for households last year, according the Commerce Commission.

The RBI plans to use a mix of fibre and copper lines to offer the majority of rural communities speeds of 5Mb/s within the next six years. The Government is putting in $1.8 billion of investment and is negotiating with potential partners to build them.

Attached to the law is a supplementary order paper (SOP) outlining the process for Telecom to structurally separate from its network arm, Chorus, which it proposed as part of its bid for Government broadband contracts. The split would need approval from Telecom shareholders and also from Parliament because of the rules governing how Telecom operates.

Although submissions on the bill and SOP reflected telcos' and lobby groups' concerns, common criticisms emerged. A number of submitters, with the notable exception of Telecom, took issue with the 10-year forbearance period, or "regulatory holiday", the law introduces.

This would remove the Commerce Commission's ability to regulate any competition issues they saw in the scheme for the first 10 years. internet NZ said the "regulatory holiday" was unnecessary, might breach international obligations and would cause a conflict of interest for the Crown.

TelstraClear said that unless the Government and broadband winner negotiated prices in the open, removing the "holiday" was the "only other way to level the playing field" for internet providers.

The worry is that if the commission cannot intervene in the market, competition could be stifled.

Industry players also believed more clarity was needed around the open-access nature of the fibre infrastructure. An open-access network means all who buy services pay the same price and receive the same level of performance. If a network is open then more providers are likely to offer services to customers, prompting competition and better prices for users.

The Telecommunications Users Association (Tuanz), internet NZ, the Commerce Commission and Vodafone all called for the committee to strengthen the open-access clauses in the law and to define it using the same terms that now apply to the copper network.

Concerns were also raised about proposed changes to copper regulation in the SOP, believing they would harm investment in infrastructure.

The commission said the benefits of the current rules were "beyond dispute" and changes could hinder competition.

Tuanz head Paul Brislen said the law would kill the copper industry and competition to the Government's fibre scheme. TelstraClear echoed this argument.

Telecommunications (TSO, Broadband, and Other Matters) Amendment Bill

December 9: Passed its first reading and went to a select committee for scrutiny.

February 16: Supplementary order paper tacked on to the law, industry says it needs more time to assess it.

March 11: Written submissions from the public due to committee on bill and SOP.

March 16 and 17: Oral submissions to select committee.

May 16: Select committee reports back to the House.

TBC: Second and third reading.