On the eve of the second reading of a controversial spy bill, legislation to ensure telecommunications can be intercepted has been labelled unduly intrusive and heavy-handed.
Parliament's Law and Order Committee on Wednesday heard submissions on the Telecommunications (Interception Capability and Security) Bill.
The bill extends obligations on telcos to have the capability to intercept communications and is companion legislation to legislation that would give the Government Communications Security Bureau the power to spy on New Zealanders.
Mobile phone company 2degrees told MPs it understands networks need to be free from cyber attacks and unlawful access, but its general counsel Tim Matthews said the bill is unduly intrusive and heavy-handed.
"We expect the regime will negatively impact competition and pricing in the telecommunications market by causing delays to network changes and improvements while network operators engage with the Act and with the decision makers appointed under it."
Mr Matthews says telcos will have to consider if changes to their networks raise actual or potential national security risks and economic wellbeing when they have no ability to assess that.
Microsoft New Zealand said the legislation goes much further than getting telcos and other service providers to help out on law enforcement.
It said services such as internet banking and shopping would have to be re-engineered so they could be intercepted if the Communications Minister decides they should be. The services would be fundamentally undermined and innovation stifled.