Smith Lockwood: Telecommunications Amendment Bill — Second Reading In Committee Third Reading 
Smith Lockwood: Telecommunications Amendment Bill — Second Reading In Committee Third Reading 
[Volume:636;Page:7151] 
Dr the Hon LOCKWOOD SMITH (National—Rodney) 
: 
 This Telecommunications Amendment Bill that we will pass today is very important legislation. Therefore we need to be very mindful about its full ramifications and honest about what we hope it will achieve and what it may not achieve. National supports the legislation despite the fact that the evidence is not all one way on it because we too hope it will achieve significant benefit for many New Zealanders in improving their access to telecommunications technology. 
But we should acknowledge that the evidence is not all unequivocal. One of New Zealand’s foremost academics working in this area gave a very extensive submission to the Finance and Expenditure Committee. That academic Bronwyn Howell from Victoria University is unquestionably New Zealand’s leading academic in this area. Some people may disagree with her views but she is certainly one of the leading academics in this area. She made a couple of points to the select committee that I want to make sure are on the record in the House. She pointed out to us that our performance in the past has not been abysmal. She said that evidence showed that New Zealand was in a leadership position in the OECD in terms of Internet uptake and usage over the years from 1996 to 2006. She said that far from New Zealand being the dunce in the class it was actually leading the OECD in Internet uptake. 
She also pointed out that at a recent conference in Europe where the issues of local loop unbundling were being looked at most papers showed that local loop unbundling had caused some quite perverse outcomes and results and often chilling effects on infrastructure investment. She said that European Union data was showing that there was very little impact of unbundling on broadband uptake. I do not think we should necessarily be too troubled by that but we should note it because we should not expect this legislation to produce unrealistic outcomes. 
The very last thing that the Minister himself addressed in his contribution to this third reading debate was the position of this kind of infrastructure on rural New Zealand. I was sad that he did not respond to my question during the Committee stage because the Institution of Professional Engineers raised this issue with the select committee. I think it would be fair to say that all members of the select committee were quite impressed by the submission of that organisation. Let me make it very clear—members of the organisation supported this legislation. It is not that they were not supporting it but they made very clear to the select committee that we have to be honest about what it will achieve. 
They pointed out—as I mentioned during the Committee stage—that in fact there is a limit to what copper wire can deliver in terms of high-speed Internet access or high-speed broadband access. They pointed out that the maximum distance—technologically—from an exchange where high-speed access can be delivered is 1.8 to 1.9 kilometres. I asked the Minister what the typical local loop length is in New Zealand. Sadly the Minister did not respond to that. 
The Institution of Professional Engineers also pointed out to us that if we want really high-speed such as 5 megabits per second we needed a copper wire length of no more than 800 metres—that is under a kilometre. I pointed out that at home I am a good 10 kilometres from my local exchange—and most of rural New Zealand would be that far from their local exchange. I am not that far from local townships; I am not in the backblocks of beyond. I have a State highway going past my front gate. I am only 150 kilometres from the biggest city in New Zealand—Auckland. So there are very serious issues about rural infrastructure because one of the major parts of our economy—the primary sector of our economy—is increasingly dependent on telecommunications. This is a serious issue. 
When Telecom representatives were in front of the select committee and were asked about what this would do to the balance of Telecom’s investment they were pretty honest about it. They said it would see the company probably focusing more investment in the more high dense population areas. This is what my colleague from New Zealand First Doug Woolerton who was on the select committee expressed as a concern of his during the Committee stage. He hoped we would not see the major investors like Telecom cherry-picking—to use Mr Woolerton’s term. There is nothing in this legislation to prevent that. In fact Telecom was sufficiently upfront and honest with the select committee to acknowledge that probably there will be a bit of a shift in balance of investment. 
That is why I am deeply troubled by the position that rural New Zealand remains in following the passage of this legislation because we know that the length of copper wire servicing much of rural New Zealand will technologically not deliver high-speed access. Although I am encouraged that the Minister referred to that in the final moments of his third reading address just now I think the Government needs to make sure the impacts of this legislation are carefully monitored. Although I know that some members disagreed with the evidence of Bronwyn Howell I think it would be foolish to ignore totally what she said. 
If members took nothing else from the extensive evidence she put in front of the committee it would be that there is a need to monitor outcomes because any regulatory legislation like this can produce unexpected outcomes. We know from experience in Europe that some of the outcomes there where local loop unbundling has been put in place have been unexpected and not all as desirable in those countries as those who had been advancing the legislation had hoped. 
I make it clear that National supports the legislation. We hope—and we expect—that the outcomes from this legislation will be positive for much of New Zealand. But we also have to be honest about what is driving 5-megabit access to the Internet. Much of it is not data handling much of it is actually entertainment. Much of it is actually the desire to be able to access video on Internet and that is what requires that kind of broadband access. 
Rodney Hide 
: Porn! That’s what the farmers want. 
Dr the Hon LOCKWOOD SMITH 
: I hear my colleague Rodney Hide calling out there and we know that one of the countries in the world with the highest broadband uptake per head of population—one that stands out—is South Korea and we all know what has tended to drive that uptake in South Korea. It is certainly not business; it tends to be entertainment of a particular kind. 
Darren Hughes 
: What is the member talking about? 
Rodney Hide 
: Darren’s too young! 
Dr the Hon LOCKWOOD SMITH 
: Rodney Hide says Darren Hughes from Labour is too young to know what is driving some of this Internet access demand. I do not want to waste my time on that kind of debate. All I want to say is that National supports this legislation. 
We believe that one of the very important requirements that National wanted is in the bill. It has gone into new section 69AAC—in the interpretation of what operational separation means. It was National members of the select committee who got in paragraph (b) that states operational separation “does not include a requirement that any business unit must be operated by different owners:” That removed that sword of Damocles if you like from over the head of Telecom—that this legislation is not a forerunner to full structural separation. We must respect the fact that much of the serious kind of investment that we need in telecommunications infrastructure in New Zealand will come from Telecom—our biggest telecommunications company—and it will not be able to deliver that for us if that threat lies over its head. I am pleased that that bottom line was put in the legislation. 
I think the balance of legislation is sensible but National remains troubled about the position rural telecommunications infrastructure remains in because all the indications tend to be that this legislation will result in greater focus in the higher populated areas not our rural areas that are so important to our economy. I hope the Government takes on board the need to monitor the outcomes of this legislation. National will be voting for it.