Government should reconsider fibre regulatory holiday

Labour’s announcement today that it would review legislation implementing a regulatory holiday for upcoming investments in ultra-fast broadband should trigger a second look at the issue by the Government, says InternetNZ Chief Executive Vikram Kumar.

“InternetNZ has never supported exempting investments in fibre based networks from the Telecommunications Act,” Vikram Kumar says.

“The Telecommunications Act is a regulatory framework that is designed to act in the long-term benefit of end users. Users benefit from a regime that carefully balances investment incentives with the need for competition, with an independent Commissioner overseeing the relevant markets.

“Under the Act, regulation of new fibre services would not be easy. A thorough investigation would need to show competition problems that justified regulation, and then the Minister of Communications would need to agree to the possibility of regulation before anything could be done.

“This approach brings independent scrutiny of markets, and sets a high bar for any regulatory intervention.

“In its July changes to the UFB framework, the Government made Crown Fibre Holdings – a major investor – the main regulator of fibre networks via contract. This conflict of roles between regulator and investor is simply extraordinary. It creates an unavoidable conflict of interest. As investor, CFH has to maximise buildout. As regulator, CFH has to guarantee competition. The problem is self-evident.

“If the Government is truly seeking to increase investor certainty, it should do so by making sure that the Telecommunications Act applies to fibre investments from the beginning.

“It should not create a legislated exception for fibre which goes against international best practice, creates a conflict of interest for Crown Fibre Holdings, and invites constant campaigns from those who might lose out from a lack of regulation (including users) to end the so-called holiday before ten years are up. “InternetNZ calls on the Government to reconsider its decision,” concludes Vikram Kumar.

ENDS

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