KEY POINTS:
Telecom says New Zealand needs a "massive" $1.5 billion investment, if the Government is to hit its broadband target.
In a formal response to Government regulatory proposals, Telecom said that only a fresh approach to the problem would bridge the "broadband investment gap".
Telecom faces structural separation and the Ministry of Economic Development (MED) has produced a paper outlining how the changes might be achieved.
But Telecom has retorted with a "simpler" solution which could involve selling its fixed line phone network.
Telecom chairman Wayne Boyd warned that under the MED's proposal, only about half of New Zealanders would get fast broadband access in four years time.
The Government wants 90 per cent of New Zealanders to receive 5Mbps broadband by 2010.
But Mr Boyd said under the present proposal, Telecom could only invest one third of the $1.5 billion required.
"This is about return on investment. Investment requires certainty and confidence and no company can invest if the returns are too low and the risks too high."
"Netco," as Telecom calls the proposed spinoff, would operate independently and relieve Telecom of some of its investment obligations to the copper line network.
Mr Boyd said in Britain, where the so-called BT model of regulatory reform has been in place for nearly two years, the same warning bells were ringing.
He said an independent British report released last week said there seemed to be little prospect for the widespread deployment of next generation broadband access networks because large scale investment could not be justified.
Netco would negotiate a regulatory contract with the Government that would identify upfront the services to be provided, the prices that can be charged and the investments to be made.
Netco would treat all customers equally, including Telecom, Mr Boyd said.
- NZPA
