Telecommunications reforms bad for economy and Kiwis

Recently announced proposals by the Government to reform the Telecommunications Service Obligation (TSO) and create a new levy to fund the development of rural broadband are bad for the economy and everyday Kiwis, says Hon Rodney Hide, Leader of ACT New Zealand.

Sweeping aside the existing TSO requirements to force Telecom to become the default provider of uneconomic rural services is an unjustifiable use of the Government’s regulatory power. Regulation should only be used as a last resort. The Government argues that Telecom should be able to cross-subsidise these uneconomic services from urban markets, yet Telecom faces intense competition in urban markets.

Rodney Hide says this proposal is extremely concerning. “It is inequitable and imposes anti-competitive obligations on Telecom.

“And in doing so, the Government is taking away millions of dollars from everyday Kiwis who have invested in Telecom through their KiwiSaver accounts and the New Zealand superannuation fund.

“It also seriously undermines the Government’s commitments to Regulatory Reform. The Government promoted Regulatory Reform as one of its six economic priorities and has stated that it wants better and less regulation through its Government Statement on Regulation.

“The Government has opted for a regulatory solution as a first step without negotiation with Telecom. This is incompatible with the principles of good regulation set out in its own Statement on Regulation. The Government had also committed not to impose additional costs on business or introduce measures that inhibit competition, which this proposal does” says Rodney Hide.

It is crucial that the government provides leadership in creating a world leading business environment for the benefit of all New Zealanders. “At a time when New Zealand firms desperately need certainty in the business environment, actions such as this create the opposite effect. Low quality regulatory decisions will deter international investment in the New Zealand economy.”

We urge the Cabinet to rescind these proposals and replace them with an approach that is in keeping with the commitments the National-ACT Government has made to New Zealanders,” says Rodney Hide.

ENDS

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