NZ govt does u-turn on telco regulation

In surprise move, the New Zealand government has dropped a controversial 10 year "regulatory holiday" for operators of the country's NZ$1.5 billion Ultra Fast Broadband (UFB) initiative.

In surprise move, the New Zealand government has dropped a controversial 10 year "regulatory holiday" for operators of the country's NZ$1.5 billion Ultra Fast Broadband (UFB) initiative.

Instead of giving operators no regulation on wholesale prices for 10 years, the government will instead implement contractual mechanisms where the government will give the supplier more time to pay off any funding that it receives from the government for the build — if the regulator determines prices below those contracted.

The move, which effectively clears the final parliamentary hurdle facing the government's broadband initiatives, follows a concerted campaign by much of the country's IT sector, including Telstra-Clear, the Telecom Users of NZ and Federated Farmers, plus the opposition, Labour, and the Greens.

They feared that the Telecommunications Amendment Bill, as it previously stood, would have given Telecom New Zealand too much monopoly power if, as expected, the telco giant won much of the broadband work.

"While I think their concerns are more theoretical than real, given that pretty much everybody has been happy with the very competitive prices announced by [Crown Fibre Holdings] to date, we have been able to find an alternative solution which will give the infrastructure builders confidence to stay committed to their low capped prices, and customers confidence that they are will continue to get the best prices over that eight-and-a-half-year period," said NZ ICT Minister Steve Joyce.

"In making this change, the government is backing the prices negotiated by CFH; however, if the Commerce Commission believes prices should go lower at some point over the build period, government wears the risk not consumers," he continued.

The "crown fibre bill", as it was widely known, aims to set the regulatory framework for the operation of the NZ government's UFB initiative and associated Rural Broadband Initiative.

It includes provisions to let Telecom New Zealand split into two, which was necessary to allow it to take part in the projects.

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