Levy to fund rural broadband scheme

Critics complain policy anoints Telecom as the default provider of rural service

The Government looks set to press ahead with plans to fund the bulk of a $300 million upgrade to rural broadband through a levy on telecommunications companies, despite opposition to the scheme.

Nearly 1000 rural schools would get ultrafast broadband through fibre-optic cable within six years and more than 500,000 rural New Zealanders would get speeds of 5 megabits per second. A series of regional tenders would be let to supply the necessary infrastructure.

Communications Minister Steven Joyce said the plan had received a "strong and positive" response, with 67 submissions giving the Government a clear mandate to move quickly.

The Government's final policy on rural broadband and an industry levy to pay for the scheme would be decided early next year.

Federated Farmers said it supported the ambition of a step-change in broadband services, but it was "not good enough" that rural New Zealand would get less funding and a slower service than towns and cities, where the Government proposes to lay fibre to people's homes.

The New Zealand Regional Fibre Group, which comprises lines companies and utilities that hope to partner with the Government in its urban fibre roll-out, applauded the proposal to connect most rural schools with fibre, but saw "significant deficiencies" with the plan.

"The fundamental cause of the deficiencies, as we see them, arise from an apparent acceptance of Telecom as the most likely provider for rural areas," it said.

"The policy positions set out in the proposal seem to accept a world in which Telecom provides rural broadband on terms that suit Telecom, and remains the vertically-integrated monopoly provider."

Telecom, Vodafone and TelstraClear all objected to the rural scheme being funded by a levy on telcos. Analysts have calculated Telecom could be $340m worse off over six years. It would shoulder the full cost of providing phone services to uneconomic customers.

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