Analysts ‘rubbish’ Howell’s critical broadband submission

TUANZ and InternetNZ called on two researchers to critique Bronwyn Howell's submission, which questions the economic value of broadband services

A row has broken out between two academics over the proposed reforms to the Telecommunications Act.

Last month, researcher Bronwyn Howell sent a 167-page submission to the Select Committee considering amendments, questioning the benefits of broadband uptake on the economy, and also suggesting that local loop unbundling wouldn’t increase broadband uptake much.

InternetNZ and TUANZ have responded jointly, with the aid of two researchers: Auckland economist John Small and Tommaso Valletti, who is based at Imperial College, London. The two rubbished Howell’s comments. Small says her arguments “would not pass muster in a first-year economics course.”

He also accuses her of “blatantly misrepresenting the work of others,” particularly that of Network Strategies, on the government’s telco stocktake, a crucial contribution to the Telecommunications Amendment Bill.

Small accuses Howell of selectively considering Network Strategies’ data where New Zealand ranked in an extreme position. “That is not what they did at all,” Small says.

Howell also says dial-up is “substitutable” for broadband, in an economic sense, in the home and that no user who could buy a dial-up connection would buy a broadband link unless it was cheaper, says Small. She says the same about fixed and mobile connections. Howell suggests that rather than broadband penetration increasing GDP things work the other way around: that more people in rich countries can afford broadband, says Small. But this is too simple,and a number of factors lead to broadband uptake, says Small.

Evidence from European analysts suggests adoption of broadband, with its higher transmission speeds and “always on” characteristics, has facilitated businesses in “increasing productivity and competitiveness”, says Small.

Valletti questions Howell’s contention that some nations, such as the US, having tried local loop unbundling, are experiencing disappointing results. But such comparisons must be approached with care, says Valletti. Legislative and commercial environments are different. For example, cable television companies are significant competitors in the US telephony market.

Howell’s submission has been welcomed by a number of MPs. Small says her analysis “may have been reasonably convincing to non-economists. But the deeper you dig the more rubbery it gets.”

In response, Howell says her work was intended simply as a critique of the “many weaknesses” in the Ministry of Economic Development’s original analysis. “As such, it was never meant to be a detailed academic analysis of the relationship between broadband penetration and unbundling. So, to criticise my work for not being such an analysis completely misses the point.”

The critics have still not substantiated the MED’s case, Howell charges.

She says her citations from the literature were designed to convey a sense of the debate around issues that are assumed by Ministry to be clear-cut.

“They were not designed to provide a survey of the literature itself. To criticise my work for not being of that kind again misses the point.”

Howell’s work has been criticised in the past as the institute for which she works, the New Zealand Institute for the Study of Competition and Regulation (ISCR), is funded by Telecom and a number of other corporates, including Contact Energy, Meridian and Vector.

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