Anti-competitive broadband Bill creates a monopoly to push prices up

Labour has today spelt out its opposition to the government’s new broadband bill as anti-competitive, promoting monopolistic behaviour and likely to result in higher costs to consumers for the new broadband network.

“Labour has also expressed concern about the official advice received on aspects of the bill,” Clare Curran, Labour’s Communications and IT spokesperson, says.

The Finance and Expenditure Committee reported back to Parliament on the Government’s ultra-fast broadband legislation today and Labour’s minority report makes clear that the party opposes the bill because of the anti-competitive effect it will have on the telecommunications industry.

“Kiwis don’t want another monopoly in the Telco industry ripping them off and telling them what’s good for them. They want reasonable prices and good service. I am doubtful that these laws will deliver either,” Clare Curran said.

“We want to ensure that ultra-fast broadband is universally accessible and affordable, meaning that all New Zealanders can benefit from this important new infrastructure. Unfortunately, Steven Joyce’s bill will consign the Commerce Commission to the side-lines for the next decade, stifling competition and making the new fibre network unaffordable for many Kiwis.”

“A coalition of telecommunications industry groups, as well as Consumer New Zealand and the New Zealand Shareholders Association have expressed significant concerns with the regulatory forbearance period.

“Labour joined with these groups to suggest using a Special Access Undertaking (SAU) instead of the regulatory holiday. This was rejected by the Government, with officials saying that an SAU does not provide price certainty to investors.

“Labour rejects the official advice. An SAU has been used successfully in Australia, showing that regulatory certainty could be provided to the service provider by ensuring that an approved undertaking prevails over any subsequent attempt to regulate prices.”

Clare Curran revealed last week that building the UFB network without a regulatory holiday would cost the Crown an extra $400 to $600 million.

“It will be Kiwi consumers picking up this extra cost instead of the Crown or Telecom. This bill will allow Telecom to gouge profit from New Zealanders. Sadly, we have become accustomed to the National Government according special treatment to big corporates.”

The select committee report puts on the record Labour’s commitment to undertake an immediate review of the ultra-fast broadband scheme should it win this year’s election. In addition to this, Labour will repeal key sections of the bill, in particular the regulatory forbearance period.

The Finance and Expenditure Committee’s report, including Labour’s minority report, is now available online: http://www.parliament.nz/en-NZ/PB/SC/Documents/Reports/d/1/a/49DBSCH_SCR5144_1-Telecommunications-TSO-Broadband-and-Other-Matters.htm