Telcos team up in fight over fibre

The ultra-fast broadband scheme aims to compete with copper internet lines. Photo / Thinkstock

Battle lines have been drawn over ultra-fast broadband law as telcos and consumer groups yesterday presented Government with a united front.

An 11-strong group, including Vodafone, TelstraClear, 2degrees, Federated Farmers, and the Telecommunications Users Association (Tuanz) have written letters to MPs, highlighting their concerns with the law.

Telecom is the only major player excluded from the consortium.

The group opposes the introduction of a "regulatory holiday" and the removal of the Commerce Commission as a regulator of the Government's $1.35 billion fibre broadband scheme until the end of 2019.

It also opposes other regulatory changes in the law, claiming they will raise the price of copper wire internet services by 20 per cent in urban areas.

"Our concern is that copper prices will go up to improve the business case for fibre," said Vodafone's head of public policy, Hayden Glass said.

However, Communications Minister Steven Joyce said the 20 per cent figure was "hyperbole of the highest order" and there was no indication prices would increase.

"These people are fighting the last war, they [think] its 2005 or 2006 over again. The reality is the regulated copper will be up against a new fibre network [which will keep prices down]."

The ultra-fast broadband (UFB) scheme aims to compete with copper internet lines by laying fibre cables throughout 75 per cent of New Zealand over the next ten years. It hopes to offer internet speeds of 100 megabits per second, over 20 times faster than last year's average browsing and download speeds.

A number of companies, including Telecom, are in negotiations with the Government to be a private partner in the broadband build.

If Telecom wins the tender, it has proposed to structurally split its retail arm from its network arm.

The Telecommunications (TSO, Broadband, and Other Matters) Amendment Bill and supplementary legislation paves the way for this split and prepares for the rollout of fibre.

Despite reassurances from Joyce, industry and consumer groups say the law will allow Telecom to create a monopoly if it wins the broadband contracts. "The consumers' champion - the Commerce Commission - should be allowed to do its job," said TUANZ chief executive Paul Brislen.

"There must be more checks and balances on how Telecom separates and the new monopoly that is created."

Brislen said Joyce had ignored criticism raised earlier and so it was necessary for the industry to come together to make its voice heard.

Joyce denied claims there was a "regulatory holiday", as prices would be set in contracts between the winner of the broadband tender and the Crown.

These contracts would offer a stable environment until 2019 to give investors confidence in the scheme, he said.

With much of the risk for investors taken out of the equation, Joyce said prices would be lower than if the commission was allowed to regulate.

"[The critics] all have a vested interest to have maximum oversight [from the commission] and lowest prices.

"Where I think they aren't understanding it is the two are a bit of a trade off and you can't have your cake and eat it too," he said.

Telecom chief executive Paul Reynolds said last week the company supported certainty for investors as risk would scare capital away.

Joyce reiterated yesterday there had been enough discussion on the law and it was time to get on with rolling out fibre.

He was confident the law would pass with only "minor tweaks" from a select committee considering it.