The government has announced that it intends to regulate to improve broadband services. Included is a proposal to unbundle the local loop.
The unbundling is part of a wider package that the government says should provide New Zealanders with better broadband internet services.
Unbundling the local loop will give telecommunications' companies the same access to copper wire technology as Telecom and put companies on an equal footing. The government says it has enough support in parliament to change the law.
The move is in response to concerns about the low levels of broadband uptake.
Regulatory action such as information disclosure, accounting separation of Telecom's business operations and enhanced Commerce Commission monitoring has also been announced.
The government says it is continuing to look at whether more measures, such as the structural separation of of Telecom's retail and lines operations, are necessary.
Communications Minister David Cunliffe says the package is a vital part of the government's drive to transform the economy and push New Zealand's broadband performance into the top quarter of the OECD.
"Access to fast, competitively priced broadband internet is vital for New Zealand to take full advantage of new technologies," Cunliffe said. "This package will help ensure we catch up and keep up with other developed countries."
The announcement was made after the NZX closed.
But Telecom was still trading in Australia following the announcement and i its share price dropped 7% almost immediately. Analysts in New Zealand expect its shares to drop here at least 5% on Thursday.
The package includes:
- Requiring the unbundling of the local loop and sub-loop copper-wire lines between telephone exchanges and homes and businesses, allowing other Internet Service Providers to compete fully with Telecom to provide faster, cheaper broadband.
- Regulatory action such as information disclosure, accounting separation of Telecom's business operations and an enhanced Commerce Commission monitoring role in order to ensure improved competition.
- Removing constraints on the existing regulated Unbundled Bitstream Service to ensure ISPs can offer better and cheaper broadband at upload speeds faster than 128kps.
- Encouraging investment in alternative infrastructure such as
fibre, wireless and satellite networks by measures including a
review of public sector investment in telecommunications
infrastructure to encourage a whole-of-government approach;
reviewing whether Telecom's ability to reduce local prices solely
in response to new competing infrastructure investment should be
constrained and developing a rural package and expansion of the
Digital Strategy Broadband Challenge fund.