Soft deal on broadband feared

TelstraClear fears Telecom and the Government are hammering out a "soft" agreement on broadband internet regulation "behind closed doors".

It follows a private meeting between the company and Parliament's finance and expenditure select committee last week.

"We're interested in why - and on what basis - they have taken the process behind closed doors," said TelstraClear chief executive Allan Freeth. "Last time this happened we were left with a situation that prevented us from getting into the market."

In 2004 the Government chose a less harsh form of "unbundled bit stream" (UBS) broadband regulation, rather than the "local loop unbundling" adopted by most other developed nations.

"We were burned badly last time over the UBS deal we ended up inheriting as a result of a behind-closed-doors agreement between Telecom and the Government," said Freeth.

The Government has now decided after all to unbundle the local loop and allow rivals direct access to the copper network that connects customers with telephone exchanges. It has also proposed legislation that would force Telecom to produce separate accounts for its various business divisions.

The select committee has just finished hearing submissions on the proposal.

"The Government has talked about this process being open and transparent, instead we're starting to see these meetings again develop and we're concerned it indicates some lack of resolve, maybe in regard to the legislation or in regard to the reforms that the Government's talking about," said Freeth.

The select committee chairman, Labour's Shane Jones, said the committee dealt with the matter privately so it and Telecom "could be more candid". Details of last week's meeting would not be disclosed for the time being, he said.

The committee's deputy chairman, National's Lockwood Smith, said the Government may be reluctant to "knock Telecom around" too much more.

"A hell of a lot of New Zealanders' wealth has been just destroyed so far and you've got be just a wee bit careful."