Libertarianz Slams Broadband Proposal

29 April 2009 12:50:00

Responding to the Government’s Broadband Investment Initiative Draft proposal, Libertarianz Telecommunications spokesman Luke Howison condemned the basis on which the government is approaching its investment decisions. “The Minister has said that the decision to invest public money in an uneconomic fibre network was based on faith, and there certainly doesn’t seem to have been much reason applied to the proposal the government has come up with,” said Mr Howison.

Faith-based decision-making is something we might have expected from the Taleban, but it has no place in the running of a modern economy. This $1.5 billion spending proposal looks like another of National’s ‘Think Big’ schemes which were such a disaster the first time around.

Labour hasn’t been much better: it hounded Tuku Morgan over spending $89 on a pair of underpants, but has an apparent lack of concern by comparison over a far larger amount. It seems that the numbers are so huge that no-one really appreciates the magnitude of the expenditure involved.

There appears to be no analysis of the demand for this network, and no information has been provided about potential prices so potential users can decide if they would want to purchase services on it. Projections in Australia are for prices of around $270 per month for retail services and if these rates applied in New Zealand the demand would be very limited.

The government is claiming that the main benefit of this new network for residential users will be that they will be able to watch 15 TV channels simultaneously. No analysis has been done of the economic benefits this will offer over watching only three channels at once which current technology delivers.

While the proposal tries to present itself as forward-looking and visionary, it is really just about identifying a currently fashionable investment and then throwing huge amounts of taxpayers’ money at it. It is very easy to be visionary when you are spending someone else’s money and have no accountability for the financial success of the investment.

The best thing the government could do would be to remove the barriers to private sector investment in telecommunications and to accept that if there isn’t enough customer demand that investments will be (and should be) directed elsewhere.

For more information contact:

Luke Howison
Libertarianz Business Spokesman
Phone 027 314 3007
Email: [email protected]

Libertarianz: More Freedom, Less Government
www.libertarianz.org.nz