Govt buy-in seen as bad move

A consumer group doesn't think a Government buy-in to Telecom's Chorus division would be a good idea if the telecommunication giant decides to sell part of the company.

Under the rules of the Government's $1.5 billion ultra-fast broadband initiative, a company can't provide retail services while having a controlling interest in fibre infrastructure.

Tuanz chief executive Ernie Newman said the main concern with having Telecom, through Chorus, provide infrastructure and retail services was the effect it could have on competition and the environment it could create for other businesses.

"The issue for the Government is this doesn't sit with international practice. There needs to be a separation between the two for competition, to make sure the consumer gets the best deal.

The end game is we need to reconstruct a form for the market for the fibre era and not reinvest in the problems of the copper era," Newman said.

Newman said one solution, if Chorus is given the contract, is for the Government to buy into the company but many in the industry are not "overly enthusiastic" about this idea.

"The Government does not have a good track record buying back infrastructure at the taxpayers expense, look at KiwiRail."