Preventing a repetition of the vertically integrated monopoly enjoyed by Telecom's copper network was always going to be a cardinal requirement of the Government's $1.5 billion investment in an ultra-fast broadband infrastructure.
A previous National administration failed lamentably to curb the anti-competitive excesses that sprang from blunders during the privatisation of telecommunications. Consumers suffered as Telecom was allowed to run the sector for more than a decade. Now, at last, lessons seem to have been learned.
The structure adopted by Communications and Information Technology Minister Stephen Joyce confirms as much by removing retail services from the orbit of the partnerships that will be charged with delivering broadband to three-quarters of New Zealanders' homes and workplaces within 10 years.
That structure owes much to pragmatism and the work of the New Zealand Institute. It developed large parts of the model under which a new Crown-owned company, the Crown Fibre Investment Co, will work with private-sector partners in regional companies which will provide fibre optic network infrastructure in 25 towns and cities. Central to the technology is the use of "dark fibre", fibre optic cable that is not yet active. Access to this will be bought by internet service providers and telecommunications companies, which will add their own electronics to provide retailing services. Equal access on non-discriminatory terms is guaranteed.
Commendably, Mr Joyce has stuck to his guns despite pressure from the country's three biggest broadband providers - Telecom, Vodafone and TelstraClear. In public, this took the form of a report that questioned the economic benefit of the Government's plan, and suggested their own long-term network improvements would deliver broadband speeds adequate for the needs of everyday internet users.
In private, there must have been sustained lobbying, given the delay in confirming the Government's plan. The minister has demonstrated a resolve that deserted several of his predecessors. In addition, he has signalled a welcome willingness to look at codes of practice, regulation or legislative changes if this is required to ensure good practice.
To some degree, Telecom and its allies may be on solid ground in querying the economic benefit. Productivity is unlikely to be advanced to any large extent by the supply of superior broadband to households. In workplaces, however, it can play an important role in overcoming the tyranny of distance from overseas markets. Additionally, this country's unhappy telecommunications history suggests it would be unwise to leave investment in broadband infrastructure to the private sector. For a variety of factors, including the small size of the market, they have chosen not to pursue a nationwide network at a speed that would place this country in the fast lane.
There may have been a temptation to scale back some of the Government's investment, given the economic climate. Certainly, it has recognised that some of its original plans were overly optimistic. A six-year implementation time-frame is now 10 years. But the essence of the scheme remains. Major considerations will, obviously, be the selection of the successful bidders, and the pricing of the networks. Electricity lines companies, such as Vector, head the list of potential co-investors and should not lack interest or enthusiasm.
The telecommunications companies, for their part, cannot grumble too much. They will have to compete for business, as should be the case. And consumers will be the winners.
See the draft proposal for comment here
