Economic Development Minister Steven Joyce's "arm twisting" of would-be participants in a campaign fighting for lower internet prices is linked to the Government's "shabby deal" over ultra-fast broadband with network company Chorus, Labour Leader David Cunliffe said today.

Mr Joyce has revealed that he spoke to three groups ahead of the launch of the Coalition for Fair Internet Pricing last week, and persuaded them not to take part.

His confirmation follows comments from coalition leader Sue Chetwin of Consumer NZ that leading telecommunications companies and business groups were supportive of the group but "came under considerable political pressure" not to take part.

Ms Chetwin's group claims a recent Government proposal for internet pricing sets the price for copper-based broadband services too high and will result in a windfall profit of $600 million to lines company Chorus, something the group said amounts to an unfair tax.


Prime Minister John Key has criticised the Commerce Commission for suggesting that Chorus' wholesale copper price should be slashed by as much as a quarter, saying the competition regulator was interpreting the law incorrectly. The commission's price proposal was "completely off the wall", could send Chorus broke, and could therefore stall the $1.5 billion Government-funded rollout of ultra-fast broadband, which Chorus is currently leading, Mr Key said.

Mr Cunliffe said Mr Key was grossly overstating the effect of the Commerce Commission's ruling on Chorus.

"The Prime Minister is inappropriately meddling in a regulatory process which ought to be transparent and legally binding, and I note there are issues arising out of that which have yet to play out."

Mr Cunliffe said Mr Joyce's "arm twisting" over the Coalition for Fair Internet Pricing was interesting.

"One wonders why this Government is so intent on doing a deal for one telecommunications company not only at the expense of others but at the significant expense of the New Zealand public."

Mr Cunliffe said the Government's interference with the commission's work was about doing a shabby deal with one company and was "more of the same for the National Government".

Mr Key has defended Mr Joyce's discussions over the coalition, saying it wasn't fair to characterise them as pressure.

"He certainly explained what the Government's process is and what we're going through and what the issues are at stake because he felt they had one side of the debate and it wasn't necessarily characterised correctly or appropriately, and I think he's right to do that."

A spokesman for Mr Joyce said the Economic Development Minister was advised of the coalition's campaign about a week before its launch on Thursday.

"He talked either specifically or as part of other conversations to three groups that he understood had been approached to be part of it because he wanted to be sure they were aware of the reasoning behind the Government's proposal.

"They indicated they would make final decisions whether to participate in due course. He understands that none of the three ended up participating. He takes that to mean the campaign tends to fall apart whenever the other view has a chance to be represented," the spokesman said.

Vodafone said last week it had been working with the coalition, and was closely aligned with its aims, but had chosen not to take part.

It denied any pressure from the Beehive, as did 2Degrees.

Federated Farmers and the School Trustees Association both confirmed they had been in talks with the coalition but also decided against participating. Again, both said there was no political pressure behind their decisions.