Labour's single watchdog plan a potential worry for Sky TV
In its information, communication and technology (ICT) policy released today, Labour has backed off the strong language about tearing up Crown Fibre contracts without compensation for companies that won deals under the $1.35 billion Ultrafast Broadband (UFB) initiative (Telecom, Northpower, Wel and Enable).
The comments were made by Trevor Mallard during the third reading of the Telecommunications Amendment Bill, which enabled the UFB, and the associated separation of Telecom (still subject to shareholder approval in an October 26 vote) - and seen as a potential issue for investors given that although Labour seems gone for all money at this election, there is a likelihood it will return to power at some point during the 10-year-plus timeframe of the Crown Fibre project.
The policy released this morning uses milder, vaguer language, calling for an independent review of the UFB.
Forsyth Barr analyst Guy Hallwright told NBR that with little detail, it was impossible for investors to draw any conclusions about the policy. But broadly, it seemed to Mr Hallwright that the party was "on the backfoot" over the UFB.
Even though it's a dense UFB policy area that has so far failed to fire the public imagination, many industry insiders will appreciate Labour's pledge to operate Crown Fibre networks on the principle of the “equivalence of inputs” (EOI) immediately, rather than from 2020 under the deeds of open access.
"This would mean Telecom and the other services providers have to provide access to the network on the same terms to all retailers, preventing Telecom Retail from gaining an advantage," the party policy says.
Labour ICT spokeswoman Clare Curran told NBR her party still "reserved the right to repeal some matters in the Telecommunications Act." There might be some contractual changes that impacted on the Crown Fibre winners' deeds. But until an independent review was carried out, things were still "up in the air."
Single broadband/broadcasting watchdog
Another key element is for a single watchdog to regulate both telecommunications and broadcasting - an idea that would seem a natural progression for some who have watched Telecommunications Commissioner Ross Patterson (who sits under the Commerce Commission) take a growing interest in pay TV, and its ability to help or hinder ultrafast broadband uptake as broadcasting and internet technologies converge.
Labour's single watchdog would sit in a new Ministry of Communications and IT, based in the Ministry of Economic Development [MED], "to bring together all policy involving broadcasting, communications and information technology issues."
Ms Curran told NBR her party had yet to put any costs on creating the new ministry. An industry levy was possible as a funding mechanism.
Forsyth Barr's Mr Hallwright said a converged regulatory regime could possibly be a potential worry for Sky TV, but with the policy light on detail it was hard to say, and any developments "might be a long way down the track."
Telecommunications Users Association chief executive Paul Brislen also gave the concept the nod.
"Tuanz thinks the idea of a converged regulator is a great idea. In effect it's the same content and same delivery mechanism in many respects but call yourself a telco and you are entirely regulated while broadcasters are entirely unregulated," Mr Brislen said.
"Given how important uptake is to the UFB project it's vital we have a good look at broadcasting in light of its role in the broadband world."
A single regulator regime is being set up in Hong Kong, Mr Brislen said. The UK, Malaysia and South Africa also have converged regulator, with other countries, including Australia, looking at the idea.
InternetNZ chief executive Vikram Kumar - whose organisation has put forward a similar proposal - welcomed the policy.
Sky TV chief executive John Fellet told NBR there was nothing inherently wrong with the idea of a single regulator. However, he also sowed seeds of doubt, saying such agencies tended to become dominated by telcos who didn't understand content.
Budget divide over digital divide
In its policy, Labour commits to maintaining the government's $1.35 billion Ultrafast Broadband spending allocation - though notes several times it will not exceed that cap.
However, Mr Kumar wondered if this would square with a second element of the policy - reducing the so-called "digital divide" between broadband haves and have-nots.
"It's reassuring to see Labour will back the continued roll out of UFB. We applaud this. The review of the policy framework is also very sensible," the InternetNZ chief executive said.
"On the other hand, by overlaying a policy objective of reducing the digital divide while keeping the investment cap the same, there could be some issues to resolve. Currently the whole UFB roll out is dependent upon uptake in the early years as the funds get recycled to fund subsequent roll outs. Therefore, the policy objective needs to be implemented in a way that doesn't reduce uptake in the early years."
No account suspension - but internet users might pay "copyright" levy
The party also plan also promises a review of the controversial internet file sharing law passed earlier this year.
Labour supported the changes to the Copyright Act at the time, but subsequently changed its mind about internet account suspension. It now says it would remove the provision from the Copyright Act within 90 days of taking office.
The party would also consider "expanding the role of NZ Onscreen as a broader online content storage facility and will actively encourage new business models where NZ creative content can be distributed online in and affordable and accessible way."
The downside: Labour will also "investigate the viability of a small copyright levy on internet access."
Software patents excluded
The policy also pledges Labour will enact and implement the draft Patent Bill currently before parliament that excludes computer software - a provision welcomed by many in the local software industry who see patents as impractical, expensive and often wielded as a market-blocking tool by larger companies, but opposed by Microsoft and other software multinationals based in New Zealand who see the move undermining intellectual property rights, and discouraging innovation.
[UPDATE: Microsoft corporate affairs manager Waldo Kuipers told NBR: "While you’re correct to say that Microsoft multinationals based in New Zealand oppose the proposed clause 15(3A), there’s far wider opposition to clause 15(3A) than that." Mr Kuipers said local companies including Fisher & Paykel Appliances, Aptimize and Intergen had also wanted software to be covered, not excluded, from the draft patent bill.]
Telecom shares [NZX:TEL] were up 0.20% to $2.56 in late morning trading.
RAW DATA: Labour's full IT policy (PDF)