Govt defends broadband contract process

Telecom CEO Paul Reynolds (left) and Steven Joyce, Minister for Communications and Information Technology. Photo / Natalie Slade

The Government has defended its process for selecting Telecom to set up the majority of the ultra fast broadband (UFB) network, saying Labour's criticism is "boxing at shadows".

Communications and Information Technology Minister Steven Joyce yesterday announced Telecom had won the contract to build nearly three-quarters of the UFB.

As part of the deal, Telecom must split off its network arm Chorus into a separate company -- pending a shareholders' meeting at the end of the year -- so all broadband retailers could compete fairly to on-sell wholesale UFB.

Labour communications and IT spokeswoman Clare Curran criticised the process for awarding the contracts, calling it an "elaborate farce".

"It was always going to be Telecom, but instead of admitting it and dealing with it we've gone through this farce and we've ended up with a programme that still does have a lot of holes in it and does pass a lot of risk over to the taxpayer."

Responding to Curran's comments, Joyce told Radio New Zealand the MP was "completely boxing at shadows".

"Every party involved has said it has been a long and tough negotiating process, and certainly up until the last couple of weeks there's been no confidence as to which way it would go whatsoever."

Had another company put in a better bid then Government would have gone with it, Joyce said.

"It was a competitive bidding process," he said.

"We had an arm's length company called Crown Fibre Holdings to do the bid, and they assessed it and they made a number of recommendations in relation to the four companies to the Crown and the shareholding companies accepted that - you don't get better than that."

Questions have also been raised about the amount of money being spent on the project, which Joyce also defended.

"Look across the Tasman, they're spending about A$30 billion doing exactly the same thing in Australia," he said.

"We're doing it here for $1.3b, which is spread over a number of years, by the time you count what we get back as well the net present value of what the Government is investing is around $600m, which I think is surprisingly good."

Joyce said wholesale household prices would start at $40 or less per month for an entry level product and $60 per month for the 100 Megabit product. There would be no connection charges for households.

The retail prices were not yet known.

- NZPA