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Telecomm's Decision Damaging to Investment, Growth

Telecommunications Decision Damaging to Investment and Growth

“The government’s plans to further regulate telecommunications would violate private property rights and devalue the assets of tens of thousands of shareholders”, Roger Kerr, executive director of the New Zealand Business Roundtable said today.

“Measures like forced unbundling have been described as infrastructure socialism (“what’s yours is mine”, by government decree). By allowing competitors access to incumbents’ networks on non-commercial terms, the short-term competition they create is parasitical, not the dynamic competition we need from incentives to invest in new and enhanced infrastructure.

“Overseas experience suggests that such regulation gives rise to endless wrangling and modifications of detailed rules, which developments in technology rapidly make even more distorting or redundant.

“No publicly available analysis has been presented to justify such action. Indeed it runs counter to the revised advice of the Telecommunications Commissioner after an exhaustive process of inquiry. Such regulatory decisions should be made only on the basis of an open and transparent process, which includes consideration of compensation for regulatory takings of private property rights.”

Mr Kerr said much myth-making and special interest lobbying surrounded the debate about broadband. Special interests accounted for much similar regulation in other OECD countries, just as they did for farm subsidies. Academic research had shown that New Zealand’s performance on broadband was not out of line with other countries with similar per capita incomes.

“Unless the government can establish a much firmer justification for its decision in a regulatory impact statement accompanying any legislation, parliament should throw it out”, Mr Kerr said.

“Such arbitrary decision-making can only chill investment in a rapidly changing industry, damage the long-term interests of telecommunications users, add to the growing burden of regulation that is slowing New Zealand’s growth rate, and raise regulatory risks for all businesses operating in New Zealand.”

4 May 2006

ENDS

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