Clare Curran
Communications and IT spokesperson
13 December 2010 Media Statement
Telecom wins UFB but can New Zealander’s afford it?

Today’s announcement that Telecom will get the bulk of the $1.5 billion ultrafast broadband contract entrenches fears of a commercial monopoly stranglehold on our newest infrastructure network, Labour’s communications and IT spokesperson Clare Curran said today.

“This is perhaps the most important decision in telecommunications policy in a decade, it will have implications for decades to come.

“But it’s been carried out in secret with no ability for expert industry analysis and discussion and costing $1.5 billion of taxpayers money.

“The public won’t know if it has got the best possible deal. It’s taxpayer’s money involved and alongside this the successful bidder will receive a 10 year holiday from price regulation and oversight by the Commerce Commission.

“It is apparent by today’s announcement that Telecom will win the contract to lay fibre in 25 out of 33 regions, including Wellington and Auckland. It is still possible that Telecom could win Christchurch and Dunedin. That leaves Telecom with at least 70% and possibly up to 84% of the UFB network.

“That all adds up to an dominant monopoly in charge of our newest network, with a history of under-investing in its networks, and no great incentive to transfer people from the existing copper network to fibre.

Labour calls on the Government to release the details of its ultrafast broadband contracts as soon as the commercial decisions have been finalised in order to reassure the public that the best deal has been done.

“If this is the right decision then the government is vindicated, but given the crucial nature of the new broadband network for New Zealand’s economic future then the public has a right to know the basis on which it was made.

“It seems like a win win all round for Telecom. The major unknown is what concessions can be extracted from the government in the legislation required for Telecom to structurally separate.

“Will that involve a major tax break for Telecom, which is 85% owned offshore?

“Will the public have adequate time to scrutinise and comment on any proposed legislation for structural separation?

“It may be that the government has upheld the public interest in makings its decisions but the public deserves to know on what basis the decisions have been made.

“It also appears that a curious new criteria of “industry experience” may have been added by Crown Fibre Holdings when making its decision about Telecom being shortlisted to win the bulk of the UFB contracts.

“Is this meant to explain why Vector and the Regional Fibre Group which has ‘industry experience’ in the electricity lines company industry but not so much in telecommunications has not been short-listed?

“Labour has deep concerns that a government Bill introduced to parliament last week will weaken hard fought legislative protections for consumers and exposes the public to an unnecessary risk of future monopolistic practices. The Telecommunications Act already includes protections for investors so the proposed regulatory holiday is unnecessary.

“The government has signalled it will introduce amendments to this Bill to enable the structural separation of Telecom if Telecom is chosen as a preferred supplier under the UFB initiative.

“Labour believes it is essential that the public and the industry are given adequate time to submit or formulate arguments.

ENDS

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