Federated Farmers, Consumer, Tuanz and InternetNZ call for changes to legislation around the government's $1.35 billion ultrafast broadband (UFB project), and outline their broadband price fears.
Federated Farmers, Consumer, Tuanz and InternetNZ call for changes to legislation around the government's $1.35 billion ultrafast broadband (UFB project).
The Telecommunications Amendment Bill ushers in regulatory changes around the UFB and the $300 million rural broadband initiative; allows for the separation of Telecom into two separately-listed companies; allows the Crown to buy Telecom assets; and allows Telecom to buy into lines company or fibre partners without the usual level of M&A scruitiny.
The coalition of consumer groups shares many of Labour's concerns.
Primary among these are the so-called 10-year regulatory holiday, or "forbearance period", during which Local Fibre Companies will be free from Commerce Commission scrutiny.
And although wholesale pricing will be regulated (or certainly decided by the Crown to the degree that any bidder who doesn't agree with its template pricing is unlikely to land a contract), the consumer groups see risk over the 10-year life of the UFB.
Opponents accept that Crown Fibre wholesale pricing will set at a capped level (revealed here) for 10 years, and that it is at a fairly keen price.
"The government promises good prices for ultra fast broadband on day one," InternetNZ chief executive Vikram Kumar said in the groups' statement this morning (see full text below).
"But setting prices for ten years may mean that while the rest of the world is benefitting from falling prices, our prices either rise or decline much more slowly,”
Opponents of the bill also see state-owned company Crown Fibre Holdings being set up as the agency that selects and invests with partners, and effectively sets their priciing and (open) access guidelines. Can it police fibre companies in which it has a stake?
Judging by communications minister Steven Joyce's comments to NBR last week - and similar remarks he made following select committee hearings last week - it seems unlike the consumer groups' combined statement is going to cut much ice.
Mr Joyce replied that "Crown Fibre Holdings will set upfront contractual terms with successful UFB partners, including price caps, that will apply over the entire forbearance period and will not change during the period. However, CFH will not have an ongoing role as a regulator during that period.
The minister has also called the 10-year forbearance period a necessary "pragmatic" element to attract private investment.
"The Commerce Commission plays a central role as the independent regulatory agency. The commission will monitor and enforce the fibre open access Undertakings which require non-discrimination [the same pricing available to all retailers] by LFCs [local fibre companies]," Mr Joyce said.
"The sanctions that the commission is able to impose on LFCs are consistent with those set out under the existing copper regime. The commission will also continue to regulate copper prices.
"In addition, the commission is granted robust information disclosure powers under the Bill. This is a crucial tool for the commission to monitor the LFC's behaviour in relation to the supply of fibre services."
Speaking to Radio New Zealand following Tuanz, InternetNZ, TelstraClear and others airing their criticisms during the bill's accelerated select committee hearing, Mr Joyce was less diplomatic, calling elements of their criticism "nonsense".
RAW DATA: Consumer group statement (supplied by InternetNZ)
The Chief Executives of four consumer groups have today released a joint supplementary submission to Parliament’s Finance and Expenditure Committee, making a joint call for changes to the telecommunications legislation it is currently considering.
Consumer NZ, Federated Farmers, TUANZ and InternetNZ are all backing the amendments, which seek to put consumer interests first in the future of New Zealand’s telecommunications markets.
“We listened to Steven Joyce on Monday morning when he said he was most concerned with consumers. So are we,” says Consumer NZ Chief Executive Sue Chetwin.
“It is vital that we don’t lose the huge gains that Kiwi broadband customers have seen since competition was introduced on Telecom’s network in 2006 – but that is what the current legislation would bring to an end,” she says.
InternetNZ Chief Executive Vikram Kumar agrees: “To pay for the promise of ultra fast broadband in the future, Kiwis are being asked to pay higher prices for broadband today. This bill will lead to higher prices for most urban customers and reduced choice while we wait for the future to arrive.”
“Worse, we will continue to pay higher prices. It is simply impossible to know today what the right prices are over a ten year period for something that changes as quickly as the Internet and technology. The Government promises good prices for ultra fast broadband on day one, but setting prices for ten years may mean that while the rest of the world is benefitting from falling prices, our prices either rise or decline much more slowly,” he says.
Paul Brislen, CEO of TUANZ focused on the call for transparency and the issue of the proposed regulatory forbearance period: “If you want regulatory certainty you involve the regulator from the outset. If you want a regulatory holiday, you sideline the regulator and unfortunately that's what this bill proposes.”
Conor English, CEO of Federated Farmers, says: "our desired outcomes have always been to have the highest speeds possible (up and down), to as many people as possible, as efficiently as possible, as cheaply as possible and on an on-going basis. This legislation exempts specific bidders in the Rural Broadband Initiative from restrictive trade practices which are specified in the Commerce Act. Any exemption from the Commerce Act raises the issue of consumers being able to get a fair deal, and redress if they don't.
"Careful and robust competition law scrutiny is vital. The sections of this legislation that give that exemption need to either go, or be substantially tightened up, so that whomever wins the RBI has to comply with competition law once the tender is over, and scope for unintended consequences is eliminated."
The proposals the four groups have consolidated draw on their detailed submissions lodged with the Committee on 11 March, and follow the truncated process for public hearings last week.
The focus is on protecting competition in the copper market, improving the fibre regulatory framework, making Telecom’s structural separation work in the public interest, and removing Commerce Act exemptions for the big telco players.
“Consumers are the ultimate users of this broadband infrastructure. It has to be regulated in the public interest – and our suggestions show how this can be done,” the Chief Executives said.
