20 Apr 2010

'Limited scope' for Telecom to undercut broadband scheme

7:01 am on 20 April 2010

An economist at the Organisation for Economic Co-operation and Development believes the risk of Telecom undermining the success of the Government's proposed ultra fast broadband initiative is limited.

Dr Taylor Reynolds is in Wellington for the Telecommunications Users Association's conference.

He welcomes the Government's nationwide plan to roll out fibre to the home, and says it's being watched with great interest by other OECD nations.

"We're seeing governments really interested in getting fibre out there, but they're all doing it in different ways," he says.

Some are investing directly in networks, he says, others are offering subsidies, while New Zealand and Australia have nationwide plans.

Dr Reynolds said the risk of Telecom undercutting the effect of fibre by running its copper network at cheaper prices is limited - and points out is not always a bad thing to have a copper network alongside a fibre network, to help keep the system competitive.

He says it is important to have buy-in from Telecom, to decrease costs.

Dr Reynolds says New Zealand is unusual in that nearly all broadband plans have data caps, which he says dampens use of the internet.