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Dispelling the Myths in Telco Regulation

Dispelling the Myths in Telco Regulation: InternetNZ
Media Release – For Immediate Release
Thursday 4 May 2006

"InternetNZ is concerned at three key myths which are emerging in response to yesterday’s announcements of telecommunications regulatory reform," said InternetNZ President Colin Jackson today.

Myth 1: "Investment will drop because of this package"

Facts: The opposite is the case. To quote from the Cabinet Paper:

"OECD views and experience suggest that increased competition at the wholesale level leads to increased overall investment”

The Cabinet paper also notes that up to $2bn of potential new investment is available as a result of these reforms.

* New entrants will invest because they now have access to the key economic bottleneck – the local loop.

* Incumbents will invest because they have to keep up with competitors, whether they would like to or not.

Myth 2: "We have low broadband uptake because we have low per capita GDP"

Facts: This is not true. The OECD figures (see last chart on the web page linked below) show no significant correlation between per-capita GDP and broadband uptake. A simple linear regression analysis on OECD rankings of GDP per capita and broadband uptake shows no statistically significant relationship. It is a simple coincidence that New Zealand ranks 22nd in both GDP and broadband. (OECD reference: )

The United States has the highest GDP per capita in the OECD yet is only 16th for broadband uptake. And South Korea has the second highest uptake yet is in 23rd place for GDP

Myth 3: "This is a heavy handed regulatory intervention"

Facts: This package puts New Zealand’s regulatory framework in the international mainstream. All other OECD countries apart from Mexico and Switzerland have unbundled their local loops. The public interest is put first in most regulatory frameworks. New Zealand’s framework has been unusual for not doing so and for being exceptionally light-handed – and has not delivered the results the country needs.

"This debate needs to focus on the facts, not the myths," concluded Colin Jackson.


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