18 May 2011

Backdown on broadband regulatory period

6:06 pm on 18 May 2011

The Government has backed down on a plan that would have prevented the Commerce Commission investigating or regulating prices during the building of the ultra-fast broadband network.

Under the change, the commission will regulate wholesale prices over an 8½-year period and is able to intervene to set prices.

Communications Minister Steven Joyce says he has listened to concerns from the industry.

"There's enough people around with the history of the telecommunications industry on their mind and they wanted to make sure that the Commerce Commission had that oversight."

The local fibre companies will, however, still get some protection.

If the commission does regulate prices to a lower level than those contracted, the Government will bear the risk, which may include deferring the repayment of funding that local fibre companies receive from the Government.

Telecommunications Users Association chief executive Paul Brislen says the change is a victory for the consumer.

"We've long argued that there's no need for a regulatory holiday; that if the investors want certainty in the market then they should get the regulator involved from the very beginning rather than excluding the regulator entirely."

TelstraClear will be among companies buying broadband from the firms building the network and campaigned for a referee to oversee any potential price hikes.

The company's chief executive, Allan Freeth, says that, as a result of the changes, there will be a greater chance for the ultra-fast broadband initiative to be a success.

He said wholesale prices - those charged to service providers - are likely to rise but at least under the new plan there is a referee to appeal to.

Dr Freeth says TelstraClear spent between $750,000 and $1 million on its campaign, which he believes is money well spent.