New legislation precursor to possible Telecom break-up

Communications Minister Steven Joyce's Telecommunications (TSO, Broadband, and Other Matters) Amendment Bill is likely to get its first reading on Wednesday.

The amendment focuses on law changes necessary to facilitate the government’s Rural Broadband Initiative, a $300 million, contestable six-year project that replaces the old Telecommunications Service Obligation.

But the bill is also notable for its explanatory note, which notes that future amendments may be needed to – including law changes to facilitate the break-up of Telecom, should the company win the urban Crown fibre tender, the $1.35 billion Ultrafast Broadband (UFB) initiative:

It reads: “Depending on the forthcoming results from the UFB Initiative and RBI competitive tender processes, some additional legislative amendments may also be required in support of the government’s initiatives, in the following areas:

- Access rights to multi-unit complexes, private land, and the road reserve when constructing or maintaining telecommunications networks

- Amendments to enable the structural separation of Telecom NZ in the event that Telecom is selected as a preferred supplier under the UFB Initiative and that it accordingly decides to proceed with a demerger of its access network business.

Mr Joyce has made no secret of the fact that Telecom has made a national Crown Fibre bid, nor that the government would have to alter legislation to accommodate changes to the company's structure that go well beyond the remit of Crown Fibre Holdings (charged with selecting UFB partners).

But now, the possibility looks all the more concrete.

At a time Crown Fibre Holdings' negotiations with three lines company contenders are running far behind schedule, it has to make Telecom's UFB rivals nervous.

This week's legislation is also notable for formalising Mr Joyce's proposal of a ten-year forebearance from Commerce Commission scrunity - or "regulatory holiday" as critics like NBR guest columnist Michael Wigley and others have labelled it.

Telecom shares (NZX: TEL) finished the day up 3 cents (1.40%) to $2.16, against a broader market rise of 0.30%

The full version of the amendment is online here.

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TEn year regulatory holiday my eye. No no and no.

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Sellout to vested Telecom and overseas investment interests over those of New Zealand citizens. When are people going to wake up to the fact that Telecom stifles competition? CFH is dong a great job of showing the rest of the world how NOT to do an open-access rollout and a GREAT job of showing how to protect incumbent telcos in a time of massive change.

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Government should fund this project by itself.

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