22 April 2008 Media Statement

National broadband plan back to the future

National’s plan for broadband rollout lacks detail and credibility and smacks of opportunism says Communications and Information Technology Minister David Cunliffe.

“If this is National’s plan, it’s a case of back to the future. If this extravagant subsidy is ever rolled out all of the good work the government, industry, and business have done in dismantling Telecom’s monopoly position will be lost.

“National’s plan as presented would inevitably reinforce the position of the incumbent, Telecom, as the dominant fibre provider. National’s plan involves a Crown capital subsidy against which they would negotiate investment from the incumbent.

“This puts all of National’s eggs in Telecom’s basket and means the incumbent has both them and the market over a barrel in future access pricing negotiations.

“National’s plan replaces a narrow-band monopoly in the nineties with a new broadband monopoly. Why do we think they’ve changed? Neither the market or the public would trust them and that would reduce investment incentives from parties other than Telecom.

“National’s plan risks not only a new round of regulatory failure but would also be a huge waste of taxpayers’ money due to the lack of market leverage and the ability of the incumbent to take subsidies straight to the bottom line.

“I challenge John Key to debate with me how National’s plan avoids creating a new monopoly, wasting taxpayers’ money and reducing competition.

“Today’s announcement is contrary to what National’s Bill English said last year when he ruled out supporting widespread government investment in national broadband infrastructure.

“National’s plan flies in the face of this government’s widely welcomed moves to create competition in New Zealand’s broadband market. We’ve already enforced the operational separation of Telecom, unbundled the local loop and implemented a comprehensive Digital Strategy,” says David Cunliffe.

ENDS

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