The Communications and Information Technology Minister says criticism of the Government's ultra-fast broadband plans is nonsense.
The Telecommunications Amendment Bill enables the Government's $1.35 billion roll-out of fibre optic cabling to three quarters of the country.
Labour's finance spokesperson David Cunliffe says the bill, which also allows Telecom to be split into two separate companies so it can take part in the Government's competitive tender for the service, is a step backwards.
Mr Cunliffe says it will undermine competition in the industry, as Telecom alone gets to decide the nature and structure of its separation.
He says industry critics are particularly worried that under the legislation the Commerce Commission won't have any oversight of the industry for the next 10 years.
The minister, Steven Joyce, says Telecom won't be given any advantage and cannot execute any monopoly power because it is up against the old copper network and it will take time to get uptake.
"But it gives confidence to the operators that once they have done a deal with the Crown they'll be allowed to continue that through that eight and a half year period until the network's up and running, and that seems entirely reasonable to me.
Lobby group predicts higher prices
A group which advocates for better access to the internet says the Government plans will result in consumers paying more for their internet connections.
Internet New Zealand's chief executive Vikram Kumar says the bill replaces Telecom's current structure enabling the company to make huge profits, including through its existing copper infrastructure.
Competition will be very low, he says, and customers will pay more for broadband.
The bill is being considered by the Finance and Expenditure Select Committee, which is due to report back to Parliament in May.