NZ govt backs down on UFB regulatory holiday

Dylan Bushell-Embling
18 May 2011

New Zealand's communications ministry has ceded to pressure to drop plans for a regulatory holiday on pricing of UFB fiber broadband services.

Communications minister Stephen Joyce announced that the regulatory relief period, proposed as a means to give investors confidence in receiving adequate returns, will be replaced with compensation from the government.

If regulator Commerce Commission enforces prices lower than those contracted between Crown Fibre – the state-owned entity set up to organize the rollout - and private partners, the ministry will grant remedies including deferred repayment terms for the government funding provided.

Joyce said the change would not affect the size of the government's UFB funding commitment of NZ$1.35 billion ($1.06 billion).

“In making this change the government is backing the prices negotiated by Crown Fibre, however, if the Commerce Commission believes prices should go lower at some point over the build period, government wears the risk not consumers,” he said.

Joyce had been backing the proposal to leave UFB wholesale pricing unregulated for the 8.5 year duration of the build despite opposition to the legislation from most corners of the telecom industry.

Opponents of the plan argued that the decision would leave consumers paying higher prices than needed and give UFB investors an unfair commercial advantage.

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