Telecommunications Amendment Bill

Dr the Hon LOCKWOOD SMITH (National—Rodney) Link to this

I do not intend to take up too much of the Committee’s time on this. There is a matter, though, that I put in front of the Minister in the chair, David Cunliffe. I was reminded of it by Gordon Copeland’s contribution during the second reading, which touched a cord with me as a rural resident. The matter relates to rural telecommunications users.

At the Finance and Expenditure Committee it became a bit of a joke that on my computer at home I have access to the Internet at a speed of 23 kilobytes per second on a typical day. This is so slow that I cannot read PDF files, as I am not home long enough on weekends to download the Adobe Reader—it would take more than all weekend to download it, and I do not want to leave the computer running when I am not there. So I am acutely aware of the problem for rural New Zealanders. In the select committee we were told by Telecom that if this is not handled very carefully, investment in access to the Internet and telecommunications for rural New Zealanders will actually be delayed, as the focus will go into areas of higher population.

A submission that a lot of the select committee members were fascinated by was the one made to us by the Institution of Professional Engineers. What the members of the institution said to us was very significant. They said that unbundling the local loop on its own will not achieve significant improvement of access to high-speed telecommunications. The issue is the physical length of the local loop. It has been discovered recently in most OECD countries around the world that the length of that copper loop is hugely important, and that one cannot deliver really high-speed Internet access over distances beyond 1,800 to 1,900 metres—that is, 1.8 to 1.9 kilometres. If one wants to deliver, say, 5 megabytes per second—remember I talked about 23 kilobytes; five megabytes is many, many times faster than that—and one wants to get up to 90 percent of one’s customers with that kind of access, a copper wire needs to be of no more than 800 metres.

I ask the Minister what the typical length of the local loop of copper wire is here in New Zealand. We were told by the Institution of Professional Engineers that to get that kind of average length for the local loop, one would need an investment of something like $1.5 billion. If one were to try to deliver it with mobile, one would need vast numbers of cell sites. If we want this kind of high-speed access, the length of that local loop is crucially important. For rural New Zealanders it is hugely important. From memory I am about 10 kilometres from my local exchange. So, far from having 800 metres of copper wire, I have 10 kilometres of it. Technologically, the ability of this reform to deliver any improvement in access for me is very limited.

So those are my specific questions to the Minister the Hon David Cunliffe during this Committee stage. What is the typical length of the local loop here in New Zealand? How concerned is the Government about the advice from the Institution of Professional Engineers that local loop unbundling, technologically, cannot deliver the kinds of speeds the Government is looking for? The length of the local loop—of the copper wire—is hugely important. I am interested to know what the Government proposes to do about that. Will it just be ignored? Is there a plan to somehow ensure there is this kind of investment in local loop technology? Quite clearly, with the reform that this bill will bring into being, Telecom will not voluntarily make that investment; Telecom will be investing in areas of high population. What will happen to rural New Zealand?

R DOUG WOOLERTON (NZ First) Link to this

It is most fortunate that Dr Lockwood Smith has talked about those technological points and has gone through that detail. I want to talk about similar sorts of things, but in more general terms.

In speaking on Part 1, I want to say that this bill allows for competitors to come in and pay a price to access homes and businesses. My concern—and I know it is a concern of Lockwood Smith, Gordon Copeland, and others on the committee—is that they do not do an excessive amount of cherry-picking. I know that Mr Hide believes in a completely unfettered market, but sometimes the market will deliver huge benefits to one portion of the population but virtually nothing to others. I think it is a concern for all of us that we do not have a situation whereby competitors coming into the market just cherry-pick and provide services in the big cities.

It would do the cause of competitors more good if they could show Telecom, the Government, and consumers that their intentions are honourable, and that they intend, having set up businesses in city areas with larger populations, at least to attempt to go out and provide some sort of competition in locations further afield—and to our farmers, who we know produce most of our exports. I make that point because too often we look at a big company and say: “Hey, here is a company that is not performing as we think it should. What can we do about that? We can provide competition because it has not performed as we think it should since its sale as a Government enterprise.” Then we blame it for not doing all of those things. But if we are going to provide that competition—and Mr Hide says that we should—it is then up to that competition to show good endeavours and to seek to do something about our rural environments.

Sometimes the distance is not that far. The Hon Dr Lockwood Smith has talked about 10 kilometres down the road. I know approximately where he lives, but some of the farming areas we are talking about are more intensely settled. For example, I come from the Waikato and I believe that if competitors started in an area such as that they could get a reasonable return and provide a service. If competitors cherry-pick and just go after the good dollars in the cities, they will do their case some harm.

TE URUROA FLAVELL (Māori Party—Waiariki) Link to this

Tēnā koe, Mr Chairperson. Kia ora tātou katoa. I will take just a short call to give a brief explanation in respect of some recommendations that the Māori Party has made and put on the Table. I appreciate the discussion with the Minister the Hon David Cunliffe in respect of looking forward, and hopefully we will pick this up in the future.

The amendments we propose are for a very special, simple purpose. They allow for specified services to be reclassified as designated services. I pointed out in the speech I gave not long ago that designated services are services where the Telecommunications Commissioner can regulate everything, including price. However, specified services are services where the Telecommunications Commissioner can regulate everything except the price. We say that the regulation of everything except price is not actually regulation at all. We make a recommendation to extend the ability to regulate on price and to include not just fixed lines but also mobile services, particularly roaming and relocation, in order to open up that particular door.

For Māori to be able to enter the mobile market these changes are necessary. I simply ask the Committee to give these recommendations consideration as we go through this process. They are spread throughout Parts 1 and 2. Obviously, one piggybacks on to the other, but that is the general gist in respect of our recommendations. Depending on how things go, we would be prepared to pick up these recommendations and enter into discussions with the Minister in the future about this. Kia ora tātou.

Hon DAVID CUNLIFFE (Minister of Communications) Link to this

Like other members, I do not intend to take much of the House’s time here, but I note Mr Flavell’s submission that he wishes to see the immediate designation of mobile co-location and roaming. These two services are currently specified under the legislation, which means that they are under regulatory scrutiny, but under which no price is set in regulation. The Government could not support amendments to the bill on that matter at this time. There is a very good reason for that. The reason is that the Commerce Commission currently has those two services under review and out for public submissions in a schedule 3 process under the Act. It is due to report on that next year.

It may well be that there is an element of truth behind what Mr Flavell is saying, but that is a matter for the due public process to ascertain. It would be to undermine the role of the commissioner, I think, for this House to legislate over the top of that process. Māori Party members know that my door is open if they wish to make submissions on that matter. Indeed, they could also make submissions to the commissioner.

The CHAIRPERSON (H V Ross Robertson) Link to this

The remaining amendments to Part 1 in the name of Te Ururoa Flavell are out of order, for they are inconsistent with the previous decisions of the Committee.

The CHAIRPERSON (H V Ross Robertson) Link to this

We have some amendments to Part 2 in the name of the honourable member Te Ururoa Flavell, and I have to advise the Committee that they too are out of order because they are inconsistent with the previous decisions of the Committee.