Broadband case flawed, says think-tank

Faster broadband and better uptake will not deliver the economic transformation that many advocates of tougher telecommunications regulations expect, says an academic working for a Telecom-funded think-tank.

Broadband is being touted by the Government as crucial to the country's economic growth and a key argument for the regulation of Telecom - but it is flawed, says Bronwyn Howell, a research associate of the New Zealand Institute for the Study of Competition and Regulation.

In May, the Government said it would force Telecom to open its network because of its concern that Telecom was giving only limited broadband services to competitors on its network, hampering competition.

A report commissioned by New Zealand Trade and Enterprise found last March that New Zealand could add $13 billion in GDP by 2030 if it greatly sped up broadband uptake in the next five years. And a Government stocktake of the telecommunications market in New Zealand found that advanced broadband services, including lower prices and better uptake, were crucial to economic growth.

But Howell has slammed the Government's stocktake as risky, not properly researched and inaccurate.

The Government's finding that lack of competition in the broadband market was stifling economic growth was based on a "flawed assumption", she said in a submission to Parliament's Finance and Expenditure Select Committee which is looking into the Telecommunications Amendment Bill.

Home users - of audio, video streaming and gaming appliances - were the ones failing to take up broadband. "It is not at all clear that the benefits of widespread uptake of these technologies would be easily measured in GDP numbers," she said.

A 50 per cent increase of market share by Telecom's competitors in broadband lines would only raise New Zealand's ranking in broadband uptake from 22nd to 19th in the OECD.

Telecom is a "core" funder of the New Zealand Institute for the Study of Competition and Regulation, but Howell said she produced independent research for the institute, not influenced by Telecom. "I don't produce opinion, I produce research."

But Telecom had commissioned Howell to put together a paper on unbundling in 2003.

Telecommunications Users Association of New Zealand chief executive Ernie Newman said Howell's work was "substantially out of line with both prevailing international opinion and real life experience".

Major funders of the New Zealand Institute for the Study of Competition and Regulation are Telecom, Contact Energy, Fonterra, Meridian Energy, New Zealand Post, Powerco, Vector, and Westpac.