Law will kill off rivals - TelstraClear

Allan Freeth, TelstraClear chief executive. Photo / Supplied

Proposed changes to telecommunications law would gag the Commerce Commission and stifle broadband competition, says the head of TelstraClear.

The Telecommunications (TSO, Broadband, and Other Matters) Amendment Bill is before a select committee and aims to prepare for the rollout of the Government's billion-dollar ultra-fast broadband (UFB) plan.

The UFB project will deploy fibre cables across 75 per cent of the country, offering internet speeds of 100 megabits a second to businesses and households.

Negotiations are underway to decide which private company will partner up with the Government to build the fibre network.

Internet, mobile and fixed-line provider TelstraClear is not involved in this process and its chief executive, Allan Freeth, said the law would create a monopoly of fibre and disadvantage telcos with wireless, copper or cable internet networks.

"I call on the Government to be honest, they want to build a monopoly of fibre and protect it at the disadvantage of every other telecommunications infrastructure provider," Freeth said.

The law would place a freeze on the wholesale price of certain copper internet services for three years, allowing fibre prices to undercut copper, he said. The measure would be "death by stealth" to TelstraClear's copper and cable infrastructure and not allow them to compete on an even playing field.

Moreover, he said the legislation would stop the Commerce Commission from intervening if there was a lack of competition in the industry.

"They're removing [commission] oversight, so all the checks and balances about market dominance and anti-competitiveness in the market have effectively been eliminated."

Under the law, the Government's private partner would get a decade-long "regulatory holiday", as the commission would be unable to recommend changes to drive competition.

And if Telecom won the broadband tender, he said, the law would let it buy up parts of the fibre network, even if this was anti-competitive and breached the Commerce Act.

Telecom is in priority negotiations to lay fibre in 25 regions.

Communications Minister Steven Joyce dismissed Freeth's concerns and said industry regulation would be provided by contracts with the Crown.

Joyce said the UFB scheme was designed to ensure long-lasting competition through an open-access fibre network on which any retailer would be able to sell internet services.

A copper network could still compete against this fibre network, he said.

"Prices are frozen for three years at a capped price, but there is nothing in the [law] preventing UBA [unbundled copper] services being offered at price below the cap."