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Unbundling is high risk

Media release 12 November 2003

Unbundling is high risk

Forcing Telecom to provide access for competitors through local loop unbundling (LLU) is a high risk process says Business New Zealand Chief Executive Simon Carlaw.

"While all regulators find reasons to regulate, none have greater insight than anyone else into the future. The only constant in telecommunications is rapid change. Since other countries' regulators tried the LLU option, new technology has emerged for high-speed telecommunications networks.

"The OECD has confirmed* that the jury remains out on LLU consumer benefits. Doubtless some small Telecom companies have survived longer than they would have without the regulator's help.

"This outcome does not justify substantial interference with property rights, or risks to future investment in the national telecommunications network or to the take-up of new technology.

"By basing its LLU recommendations on only a five year projection, the Commerce Commission risks its credibility. Regulation must remain a last resort based on overwhelming evidence.

"The state of New Zealand's power generation, roading and rail networks provide ample evidence of the consequences of getting infrastructure strategy wrong."

*OECD: The benefits and costs of structural separation of the local loop

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