Telecommunications (TSO, Broadband and Other Matters) Amendment Bill

I move, That the Telecommunications (TSO, Broadband and Other Matters) Amendment Bill be now read a first time. At the appropriate time I intend to move that the bill be considered by the Finance and Expenditure Committee, that the committee report back on or before 6 May 2011, and that the committee have authority to meet at any time while the House is sitting except during oral questions, and during any evening on a day on which there has been a sitting of the House, on Friday in a week in which there has been a sitting of the House, and outside the Wellington area, despite Standing Orders 187, 189(a), and 190(1)(b) and (c).

The Ultra-fast Broadband Initiative will make ultra-fast broadband available to three-quarters of New Zealanders through the deployment of fibre-optic cabling. The Rural Broadband Initiative will provide broadband services to 93 percent of rural schools and ensure that 97 percent of households have access to broadband with download speeds of 5 megabits per second or better. This bill provides the framework for the Government’s broadband policies. The bill ensures that the networks under both initiatives are open through new, binding open-access undertakings, ensuring that the networks are made available in accordance with non-discrimination and equivalence rules.

Under the Ultra-fast Broadband Initiative, for the first 10 years pricing is set through the competitive tender process. As members will be aware, that competitive process has resulted in prices for fibre services that are competitive with those for other services currently in the market. Therefore, before 31 December 2019 the Commerce Commission may not recommend to the Minister regulation of access to the providers network. The commission will have the ability to monitor and enforce the undertakings regime with penalties for non-compliance, and the ability to require the local fibre companies to disclose capital and operational costs and the characteristics of their network.

This bill also implements the Government’s telecommunications service obligation reforms. The telecommunications service obligation framework ensures the ongoing supply of basic, residential telephone services at a fixed price that would not otherwise be likely to be supplied on a commercial basis, plus the telecommunications relay services for the hearing impaired. The bill amends the definition of “net cost” of a deemed telecommunications service obligation instrument to require the commission to offset the costs and revenues from providing services to all end-users who had a residential connection on 20 December 2001. The bill amends the process for initiating a telecommunications service obligation cost calculation determination, providing that the commission will calculate the cost to the local service telecommunications service obligation only where the telecommunications service obligation provider requires a determination for that financial year.

The bill amends payment of compensation to a telecommunications service obligation provider by requiring the Crown to pay compensation due to telecommunications service obligation providers as assessed by the commission. That compensation is funded from a new levy called the telecommunications development levy. The annual amount to be collected for the telecommunications development levy is specified in the bill, and the money collected will first pay for any telecommunications service obligation charges, and then rural telecommunications infrastructure development and upgrades to the emergency-calling services.

The Ultra-fast Broadband Initiative and Rural Broadband Initiative processes are ongoing. As a result of discussions and outcomes between Crown Fibre Holdings and bidders, some additional legislative amendments may be needed. These may extend to measures to assist with the deployment of fibre, and, in the event that Telecom was selected as the preferred supplier in the Ultra-fast Broadband Initiative, amendments to enable structural separation. Should changes be required, the Government will introduce a Supplementary Order Paper containing any legislative amendments during Parliament’s consideration of the bill.

I commend this very important bill for the future of New Zealand’s telecommunications sector to the House.

The Minister expresses such passion for his portfolio, yet that was, I think, a 3-minute speech—an embarrassment. I am glad to get the opportunity to talk about the Government’s much-vaunted ultra-fast broadband policy. It was No. 2 in John Key’s top 10 pledges, made before the 2008 election. His personal guarantee was to deliver ultra-fast broadband fibre to 75 percent of New Zealand homes for $1.5 billion. People thought that sounded good. How are we doing? Two years later, and there is no broadband. Two whole years! When National became the Government, Labour already had a broadband policy. It was not packaged in such a sexy manner, but it was sound. Thirty-six broadband projects in communities across New Zealand worth several hundred million dollars were poised to roll out across the country, from Hobsonville to Otago. They included fibre to the home projects for new communities, existing cities, and rural areas. Many of them would have been built by now, but they all got canned by Steven Joyce.

It has taken 2 years for the Government to recast its policy with a complicated scheme that may or may not deliver ultra-fast broadband at prices that New Zealanders can afford. Two years later we get a bill brought to the House that is deeply flawed, a scheme dogged by complexity and secrecy. There was the first dribble of a decision this week to roll out fibre in some regional towns, covering about 16 percent of the country, so that before the end of the year Steven Joyce can get his photo in the paper and on the telly, with a hard hat on and pretending to lay out fibre paid for by the New Zealand taxpayer. That is not ultra-fast broadband, it is ultra-slow broadband. It does not fill one with great confidence.

Looking more and more like the big elephant in the room, Telecom remains a massive problem for the Government to solve. Labour supports this bill going to the select committee. We have strong reservations. We have already publicly opposed a key part of the bill, the proposal to introduce a 10-year regulatory forbearance period, up to 2019. This prevents the Commerce Commission from playing a watchdog role over ultra-fast broadband and perhaps the rural broadband initiative prices, as it has done in the mobile market. Labour has deep concerns that this bill weakens hard-fought legislative protections for consumers, and exposes the public to an unnecessary risk of future monopolistic practices. The Telecommunications Act already includes protections for investors, so the proposed regulatory holiday is unnecessary. The Government argues that it is not a regulatory holiday, but it is playing with words. We do not like it; we have said we are opposed to it. We will review it, should we win Government next year.

Labour wants New Zealanders to have ultra-fast broadband, but broadband is just part of what is needed to deliver a digital transformation strategy for this country. We want New Zealanders to have access to the best technology to help transform our economy and take advantage of the opportunity that technology provides, and we want to use technology to better deliver Government services and better engage with its citizens. We need digital vision and a concrete digital agenda. Under this Government and this Minister we do not have either. It was Labour who developed the Digital Strategy 2.0 and it is this Government and this Minister who canned the Digital Strategy—the vision that surrounded this new network. There is no vision, no sense of what New Zealanders will be able to do with this network. Instead, it is about ticking the box next to that election promise of ultra-fast broadband delivered to 75 percent of New Zealanders in their homes—a promise that should never have been made.

If Steven Joyce had had any sense, he would have taken Labour’s broadband scheme, re-branded it, and gradually expanded it throughout the country. Instead, we have had 2 years of nothing. We want to be ultra-fast, not ultra-slow. We want equitable access for New Zealanders across urban and rural New Zealand. We never understood why the Government needed to put in place two completely different schemes, one run by a Crown-established company, Crown Fibre Holdings, and the other one by the Ministry of Economic Development. We want a broadband programme that is underpinned by a set of principles: participation, accountability and transparency, access to technology, and affordable technology. That is the key thing, because it is all very well talking about building a new network, but if people cannot afford to access it, then it will not be much good.

Instead, this week the Government announced two—out of 27—contracts for urban broadband and three short-listed bidders for rural broadband, because it had to do things its way. This meant that successful projects already out there delivering fibre to people in rural New Zealand at affordable prices will be shut down—people like James Watts of InSPire Net, who has laid hundreds of kilometres of fibre between Woodville, Pahīatua, Eketahuna, and Palmerston North. InSPire Net charges $100 a month for 100 megabytes per second access, and the Government’s plan is to deliver 5 megabytes per second access. Watts and InSPire Net were shut out of the rural broadband initiative after the Government said it would take proposals only from national companies. Watts has said publicly that the most disappointing part would be to watch the Government pay someone to dig into schools that are already connected, courtesy of the community’s own hard work. It is people like James Watts whom we should be leveraging off.

Instead, if there is one thing this Government and this Minister have excelled in, in trying to work out how to make its broadband policy slogan work, it has been secrecy—the cloak of commercial sensitivity to exclude the public from knowing what is going on in developing its newest network, paid for by them. Why? Firstly, the Government did not know how to make it work, and it has mucked about for 2 years, creating a complex, cumbersome, dual system in urban and rural New Zealand, which may or may not deliver affordable broadband. Secondly, Telecom. It has been the elephant in the room from the beginning, and it remains the elephant in the room. If Telecom is to be a successful bidder in ultra-fast broadband, then it has to structurally separate. The country should know that the bill contains amendments to enable the structural separation of Telecom if it is chosen as a preferred supplier.

I am told by the Ministry of Economic Development and the Minister’s office that amendments to enable this could be introduced in a Supplementary Order Paper at the select committee. It is extremely concerning that in its submission to the ministry’s suggestions on how Telecom should structurally separate into two businesses, the Commerce Commission said that the ministry seemed more concerned with the interests of investors, rather than consumers. Even more concerning is the suggestion that instead of introducing a Supplementary Order Paper at the select committee, it could be introduced in the Committee of the whole House. That would give the public and the Opposition no time to submit or formulate arguments. I would like the Minister to confirm that that is not so. It would be taking secrecy, arrogance, and disregard for the democratic process to the greatest extreme.

I put on record my discomfort and unease at what appears to be at least a perception of conflict of interest. A board member of Crown Fibre Holdings consulted for technology vendor Huawei Technologies for a number of months and presented at a Huawei Technologies conference on 17 September, at the same time as Crown Fibre Holdings was directly involved in a process to select technology partners. SAMENA, a multi-continent telecommunications consortium of South Asian, Middle Eastern, and North African telecommunications companies, wrote in its web newsletter on 31 August that Huawei Technologies was hoping to supply fixed-line fibre broadband infrastructure and beat competitors Alcatal-Lucent, Ericsson, and Nokia Siemens to become the technology partner of the successful bidder or bidders in ultra-fast broadband. They referenced John Key’s Television New Zealand interview in July, when he said that Huawei Technologies could be a possible partner in ultra-fast broadband. Tell me that that is not a potential conflict of interest, needing a quick response from the Minister and the board chair. But did we get one? No. it was denial and more secrecy. It all adds up to a muddle, a mess, a flawed process, and a new network being paid for by $1.5 billion of taxpayers’ money that appears skewed in the direction of investor interests, not consumer affordability.

There have been very few decisions made in 2 years. There is the big question of whether Telecom will be involved and, if so, what legislation will be needed to allow it to be involved. Will the public be able to scrutinise and submit on the legislation if Telecom does not get the contract? Will Telecom furiously compete with its existing copper network and make it unattractive for years for New Zealanders to access fibre? There are so many questions and doubts. It is not a good look and it is not something to be proud of.

I rise to support the first reading of the Telecommunications (TSO, Broadband and Other Matters) Amendment Bill. This is another piece of legislation that supports this Government’s drive to enable businesses, schools, learning institutions, and individuals to communicate with one another. It is about amending the Telecommunications Act of 2001, and supports the implementation of this Government’s policy programme for the telecommunications sector.

The bill is about creating jobs, it is about creating efficiencies in businesses, and it is about creating better technologies. It is one of the six drivers of National’s economic programme. Boosting broadband is part of that initiative. We have heard from the Minister that it is about the ultra-fast broadband initiative, it is about rural broadband initiatives, and it is about the framework reforms that we are to set up.

I support this bill, and I look forward to the select committee and hearing submissions. Thank you.

More and more of these speeches sound like valedictory speeches. It is like those members have given up. They want to run away. They want to go home. They do not have the courage of their convictions, and they are not prepared to stand up for what they believe in.

The ASSISTANT SPEAKER (Eric Roy): Order!

“Courage of convictions” is allowed.

The ASSISTANT SPEAKER (Eric Roy): OK, I will watch the member.

“We don’t have the courage of our convictions.”, is what members opposite say. They are not prepared to stand up in this House and say what they believe, and to speak from the heart. They read half a page of research unit notes.

💬 Chris Hipkins: It’s not even half a page; it’s a couple of sentences.

He is a faster reader than Paul Quinn, but that is not saying a hell of a lot. But there is no conviction on their part whatsoever.

It was a marginal call. We will support the Telecommunications (TSO, Broadband, and Other Matters) Amendment Bill to the select committee, but with severe reservations. I think it is fair to say that some of us are worried about how close our spokesperson on communications, Clare Curran, is getting to Mr Joyce, and the fact that he has somehow convinced her to let this bill go to the select committee.

💬 Lynne Pillay: Three minutes he talked tonight—3 minutes.

Was it 3 minutes? That is quite a long one for him. I am told that is quite a contribution on the part of Mr Joyce.

The Government is clearly struggling in this area. It was one of National’s biggest pre-election promises in 2008. An amount of $1.5 billion has been sitting—

💬 Hon Member: And it’s coming.

Well, it is coming, and it was coming the Christmas before last. This Christmas is coming, but the Government was meant to be making progress on this area before Christmas of 2008. It is now Christmas 2010, and not a single centimetre of extra cable has gone down. Not even a millimetre of broadband fibre has been laid as a result of the Government policy since that time. The Government said it would progress it by Christmas, and we all believed it. It was Christmas 2008 when John Key made that promise. But like so many things—like so many things—this is a case of broken promise after broken promise, and John Key has made no progress at all.

It is fair to say that I have some time for some of the people who are involved in the Crown Fibre Holdings board. Some of them, I think, have some real integrity. But they have been dealt a dog in the regulatory area by this Government. The regulatory forbearance period outlined in this bill basically gives whoever wins the Ultra-fast Broadband Initiative and the Rural Broadband Initiative a 10-year holiday from price regulation. It is absolutely outrageous when we know that in this area prices come down, down, and down. What will we have? We will have a Crown-anointed monopoly that is allowed to keep its prices up and to strangle the public in this area.

💬 Clare Curran: It’s a dribble.

I do not really understand why it is a dribble, but I do not think even the broadband is dribbling out. The Commerce Commission—[Interruption] Melissa Lee is finally apologising. She is saying she is sorry for her performance in Mt Albert. We forgive her. We found her entertaining; we thought she was great.

💬 Chris Hipkins: She can come and stand against me.

I do not want her to come and stand against me. I would prefer to have Paul Quinn standing against me, rather than Melissa Lee, because he got 1 out of 10. I think Melissa Lee got 2 out of 10. Did she get 2?

💬 Jonathan Young: Come on, get back to the broadband, Trevor—it’s very interesting.

I will be interested in Paul Quinn’s speech, because I do not think he knows about the broadband that is available out in Hutt South—he does not visit it often enough. I think he uses the jungle drums when he is trying to communicate with Hutt South from Roseneath, rather than the broadband that Hutt South—

💬 Hon Member: Like this.

He might go like that a bit, but if he did that a little bit better, and if he was 2 inches taller, he would have been an All Black. Everyone knows that if Paul Quinn was 2 inches taller, or even had broadband, he might have been an All Black. If he had some fibres that connected in the neurology area he might have been an All Black. I am not sure whether this legislation will help him, at all.

Some of us are pretty unhappy with the way that the Minister for Communications and Information Technology has kept on changing the goalposts in respect of ultra-fast broadband. It has been seen to be unfair—and a number of the people who have been involved have felt it has been very unfair—that the Minister has kept on changing the rules mid-process. People have been coming into a tender process, going out of a tender process, and coming into a tender process again on the basis of some very unclear arrangements. I appreciate the Minister’s position. He does not know the extent of the involvement of Telecom. He does not know the way that that will work. He does not know whether there will be full separation. And I do not blame Telecom for taking so long in this particular area.

I am sure the Finance and Expenditure Committee—I assume the bill will go to a select committee—will get the Commerce Commission in and hear from the commission about its concerns. I know there is a lot of anxiety in the industry around the taxation arrangements and the possible tax advantages that will go to Telecom, and around whether that is fair or unfair as things change.

An area of a lot of concern is the Minister’s apparent nonchalance about what is ethical and what is not ethical in this area, such as the arrangements where one of the directors is acting as a consultant to the suppliers of one of the bidders for the Ultra-fast Broadband Initiative. Venn’s son—what is his name—Jonathan Young might shake his head and say it is nothing to worry about, but I think there is something to worry about if someone who was involved in making the decisions is also involved and has a relationship with the people who will be supplying the equipment to the people who win those decisions. I think there is an inherent conflict in that situation, and I do not think it is a recoverable position. I do not think it can be isolated, and I am quite concerned about that arrangement.

I will go back to where I started. I find the lack of progress almost incredible. I find it almost incredible that a Minister could make so little progress in an area over a 2-year period. I think it is fair to say that. I now apologise to Clare Curran, because she indicated to me that she thought the Minister would not make much progress, and I said he was one of National’s brightest Ministers. I said he was a bright, new, shining boy; he knows quite a lot about the communications area; he has been involved in the radio industry; and he had more oomph than anyone on their front bench. I thought that if anyone in National could get it sorted, then Steven Joyce could. I thought he would have sorted it by now, and I thought he would have made a lot more progress than this. I defer to my colleague Clare Curran, who warned me that she thought he was not capable of doing the job. In fact, some of her worst fears are coming true.

Broadband is the way of the future. Our exports will be weightless. The stuff that goes up and down this fibre network will be the future of this country. To have the sorts of essentially Third World arrangements we have—both in rural areas and in most of our cities, where we are way, way behind many of the countries we are competing with—is an indictment on the Minister. We have made almost no progress in this time, and it is likely to be 6 months before this area is progressed.

I am pleased to take what I would normally consider to be a short call on the Telecommunications (TSO, Broadband, and Other Matters) Amendment Bill, but in comparison with some of the offerings I have heard this evening, it might be a relatively long monologue. The Government, one would imagine, has quite a lot riding on this bill; it is one of the major planks of its election campaign a couple of years ago. It is one of the major infrastructure investments that the Government believes will turn round our economy, make this a better place, and provide all sorts of useful services.

Government members in the House tonight seem to have remarkably little to say about the bill. One would expect a degree of commitment, a degree of confidence, and—dare I say it—even some pride in this legislation. That does not seem to be coming through this evening. That fact has been observed not only in this House but also in some social media that I saw earlier this evening before I came into the House. There were some comments on air to the effect that people were wondering why the Government was so reluctant to advance some robust arguments in support of its own legislation. One commentator suggested that perhaps Government members just did not have much to say, but others noted that that has not stopped them from speaking at length on previous occasions.

I will talk about the benefits proposed in this legislation. The Greens will support this bill going to the Finance and Expenditure Committee, albeit with major reservations, and, of course, reserving the right to withdraw that support if we do not see some needed changes to this bill. We recognise the considerable benefits of fast and ultra-fast broadband, and those benefits are well known both locally and internationally. There are considerable advantages for businesses to establish this facility, this infrastructure. I know from my own experience, in my former life as a business adviser on sustainability, that the ability to communicate not only with voice but also through images is a significant advantage. I worked in a number of large companies who invested quite heavily in videoconferencing equipment, which not only reduced their operating cost but saved time for their employees and reduced their carbon footprint considerably. It enabled them to have high-quality communications to do business over the wires, rather than requiring people to travel around the country. There is a clear advantage to that, and ultra-fast broadband will facilitate that.

This infrastructure will enable people to choose particular lifestyles and conceivably take pressure off our urban centres to the extent that people using this infrastructure could choose to live in rural environments and still have the instant communication advantages of living in the city. For that reason, I think it is not a bad thing that some of the initial roll-outs will be in the smaller provincial and rural areas, because that is desirable on many levels.

This infrastructure will be a very valuable educative tool that will put students in our rural schools, as well as in our urban schools, within very easy reach of information. It will enable the sort of initiative we saw recently where a virtual conference was held in New Zealand. This academic conference engaged people from around the country and was conducted for the most part as a virtual conference.

There are major advantages in this sort of technology, and for that reason the Greens will lend this bill our qualified support at this point.

We must recall, however, that this technology, like every other, is not a panacea; it is a technology and it is a tool. We have this unfortunate habit of allowing our technological capability to run in advance of our social adjustments. We often invest heavily in research into technology and invest rather too little into our sociology of place and of community. Faster communication is not necessarily always better communication. It is important that we maintain awareness and continue to research and think very hard about the social and cultural consequences of new technologies in our haste to adopt them and to adapt them. We ought not to lose sight of the larger picture or the reality that these sorts of technologies do affect social change, as well as provide tools for business, for education, and for standard forms of communication.

In essence, this bill sets out the path for the Government’s roll-out of ultra-fast broadband and its rural broadband initiative, and it makes changes to the telecommunications service obligations. On the surface it is a reasonably complicated document. It is almost perhaps overly complex, one would think, but much of the bill is about working out who pays what and when and in what circumstances. A great deal of the bill focuses on pricing: who will pay, and how prices will be managed and regulated, and therein lies some of the rub with this bill.

This legislation gives new power to the Telecommunications Commissioner.

The explanatory note says that future amendments to the legislation may be needed to facilitate the breakup of Telecom if that company should win or win in part the tender to roll out the ultra-fast broadband initiative. The provision to substantially alter the bill in the event that Telecom does win some part of the tender means that, to some extent, we may be heading into unknown territory. There is a degree of scepticism and concern. Arguments will have to be made at the select committee that that is an appropriate course of action, and we will need to be careful to iron out and attend to all the possible ramifications of that.

The matter of the regulatory holiday, the 9 or 10-year relief from regulation, if you like, has been mentioned already. It has been commented on at some length in the interested media; Computerworld, InternetNZ, and Telecommunications Users Association of New Zealand, among others, have all had comments to make, and there are some very real and very serious concerns within that community of interest. The information and communications technology community knows and understands this issue best and can think through the consequences of getting it wrong.

Debate interrupted.

Sitting suspended from 10 p.m. to 9 a.m. (Friday)