Select committee backs regulatory holiday for UFB

Select committee backs regulatory holiday for UFB

By Paul McBeth

May 16 (BusinessDesk) – Winning bidders in the government’s $1.35 billion roll-out of a broadband network will get their decade-long regulatory holiday if legislation is passed with the recommended select committee amendments.

Parliament’s Finance and Expenditure Committee has signed off on the proposed 10-year forbearance period, removing Commerce Commission oversight from pricing decisions until the end of 2019.

The antitrust regulator also won’t be able to force an unbundling of the ultra-fast broadband network until the end of the forbearance period. That means fibre companies won’t have to offer access to their base network at an equivalent cost during the period.

“The majority of us decided to propose only a few amendments in this area, and there recommend that both the forbearance period, and deferral of the UFB network, should remain in the bill largely unchanged,” the report said.

The regulatory holiday was mooted as a means to provide investor certainty, though opposition was near-unanimous during oral submissions to the Telecommunications (TSO, Broadband and Other Matters) Amendment Bill.

The committee eased back some of the proposed restrictions on the regulator, recommending it be allowed to collect information during the regulatory holiday. Forbearance would also end if the private partner ends its UFB contract with the government.

Committee members from the Labour, Green and Act Parties opposed the report, citing concerns about future competition in their minority views.

The report supports letting Telecom Corp. average prices on its unbundled copper local loop network, saying the phone company “faces profit erosion in this area, and a structurally separated Telecom could no longer cross-subsidise losses between the new Telecom and Chorus entities.

Telecom will also have to tell the Communications Minister how it plans to split earlier than originally planned.

The committee amended the legislation granting Telecom the privilege to buy rival network companies without requiring regulator authorisation, extending it to any UFB partner for a two-year period.

The bill now has to pass two further readings in Parliament before coming into law.

Shares in Telecom gained 1.3% to just above $2.33 in trading.

(BusinessDesk)

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