by Winslow Taggart
We’ve blogged a bit about the “mad dog” issues at the Commerce Commission. Today it’s the NBR’s turn to highlight the extreme decisions of the ComCom, with commentary from the financial sector confirming the issues highlighted on this blog around a month ago.
In a submission to telecommunications commissioner Ross Patterson, Mr Bascand says the commission’s approach puts the success of the government’s ultra-fast broadband initiative at risk.
And could be a turn-off for foreign investors considering buying shares in partially privatised state-owned energy companies.
His comments follow what he describes as last month’s “policy shock” of draft regulations for the unbundled copper local loop – the traditional mainstay infrastructure of the national telephone system, which fibre-optic cable will replace as ultra-fast broadband rolls out nationwide.
The government’s $1.5 billion subsidy plan is intended to accelerate uptake of UFB, but the Commerce Commission’s approach suggests it “has a mandate to tilt the playing field back to copper” while using a flawed benchmarking approach to regulation, Mr Bascand said.
Don’t mention Sky TV, who received supposedly happy news from the ComCom only to have it all turn to dust when the Mad Dogs tacked on a paragraph about investigating Sky TV’s broadband relationships.
It also seems that Harbour Asset Management aren’t the only ones. In addition to Milford Asset Management, First NZ and Forsyth Barr, Global firm Goldman Sachs also points out how government is about to get shafted by the ComCom.
However, last month’s draft decision had led Goldman Sachs to cut its forecast of UFB uptake by 10%, suggesting outcomes that “run entirely counter to government policy”, tilting the playing field in favour of copper and forcing Chorus to accept uneconomic returns on its copper network.
However the issue was handled, the government should be aware international investors now look askance at New Zealand regulators, making them wary of investing in partially privatised assets where regulatory risk remains high, such as the electricity sector.
The question this blog asks is this – who needs Labour and the Greens running interference on an asset sales programme when the Commerce Commission can do it just as easily for them?