WTO requires adjustment to UFB framework

WTO requires adjustment to UFB regulatory framework

Media release – 2 November 2010

(Also available online at: http://tinyurl.com/39nnons)

InternetNZ (Internet New Zealand Inc) today reiterated its strong support for the Government’s Ultra Fast Broadband (UFB) initiative but cautioned against taking unnecessary risks with the regulatory oversight arrangements.

“Getting fibre at affordable prices to the home and office is a critical ingredient for New Zealand’s future”, says InternetNZ Chief Executive Vikram Kumar. “We continue to applaud the Government for getting on with it and investing a significant amount of effort and money into making it happen.”

InternetNZ has however uncovered an obstacle to the Government’s approach to regulating fibre broadband networks being built as part of the UFB. The “regulatory forbearance period”, which would see the Commerce Commission unable to regulate fibre services, seems to be inconsistent with New Zealand’s obligations under World Trade Organisation rules.

Releasing a legal report setting out the issues in-depth, Vikram Kumar says “the Government needs to address this problem. The solution is relatively straightforward and can achieve the Government’s goals without taking unnecessary risks of a framework that may be inconsistent with New Zealand’s international obligations.”

“The legal obstacle to the Government’s proposed approach presented by the WTO issue identified in the report is not one that can be ignored. WTO rules require an independent regulator for telecommunications. The Government’s approach to replace independent regulation with contracts between fibre investors and Crown Fibre Holdings does not pass that test.

“The WTO obligations were specifically set in place, among other reasons, to prevent governments benefiting their own telecommunications investments at the expense of private interests.  With the UFB being a major new investment in telecommunications by government, the arguments that led to the WTO’s strong rules around independent regulation are as important as they have ever been.

“Fortunately this is a narrow issue: who should be the regulator. The solution is reasonably simple.

“The Government should signal that it will not seek to restrict the Commerce Commission’s ability to regulate fibre networks by amending the Telecommunications Act.

“Communications Minister Steven Joyce would continue to retain ultimate decision making authority over any attempts to regulate fibre services under the current law. He can make public statements about how he would deal with any such advice, which would achieve the same practical outcome as a legislated regulatory holiday without the problems created by the current approach.

“The Government can also indicate its strong preference for stability and certainty for fibre investors to the Commerce Commission through a statement of Government policy. Taken together with the Minister’s view about the need for regulation, certainty for investors is the outcome – and the WTO problems identified in this report won’t be an issue,” concludes Vikram Kumar.

ends

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