The government has signed contracts with Telecom and Vodafone to roll out the $285 million Rural Broadband Initiative.
The agreements were reached following two months of negotiations, after the joint-telco bid was from selected from a shortlist of three proposals.
ICT Minister Steven Joyce says in a statement today that the RBI contract will mean “252,000 customers in rural New Zealand will receive access to high speed broadband that compares well to urban levels of service and prices.”
The final contract provides for:
- 86 percent of rural houses and businesses access to peak speeds of at least 5Mbps
- 154 new cell phone towers and 380 existing cell towers upgraded to enable fixed wireless broadband, as well as improved mobile coverage.
- Telecom to extend its fibre network by 3,100 kms
- Additional 6,200 sq km of mobile coverage
- 700 rural schools connected to fibre networks, 48 schools digital microwave radio connections
- Wholesale prices comparable to urban pricing
- Telecom and Vodafone competitors able to access infrastructure on non-discriminatory basis
- Telecom extending urban-like fixed-line broadband speeds to 57 percent of rural customers
- Upgrade path to 4G
In the statement Joyce says Telecom applied for a revision of their operational separation undertakings, known as Variation 5. As a result of submissions to the request, he will shortly be “making a counter proposal with minor changes to Telecom to clarify the intent of the variation.”
RBI infrastructure is expected to be rolled out by Telecom and Vodafone mid-year and will be completed over six years.
In a joint statement both Vodafone and Telecom welcomed the signing of the two separate commercial agreements for the roll out of RBI.
Chorus CEO Mark Ratcliffe says work would get under way immediately.“Because we’re able to build on significant existing infrastructure, capability and experience we can achieve a whole lot in a very short period of time. Within the first year we will have connected around 500 rural schools to fibre.”
The statement says that both Telecom and Vodafone will be making significant investments of their own, to complement the $285 million of government funding.
Updated - 12.15pm
At a media conference fronted by ICT Minister Steven Joyce, Chorus CEO Mark Ratcliffe and Vodafone managing director Russell Stanners, Joyce says the agreement exceeds government objectives.
Stanners says Vodafone will invest more than $100 million in the rural broadband initiative over and above the government contribution; Ratcliffe says Telecom’s investment will be “tens of millions of dollars”.
Subject to regulatory approval, Vodafone expects to build up to 21 of the 154 new towers within 12 months, Stanners says. The largest of these will be in the 25 to 35-metre height range. 380 existing towers will be upgraded. Each cell tower will accommodate up to three infrastructure providers.
He expects contract negotiations with suppliers to be concluded within about two months. EDI Downer is currently the main supplier.
Joyce was asked if the government had looked at positioning the RBI as a case of national interest. “We looked at fast-tracking it under the Resource Management Act but decided to deal with things on a case-by-case basis.”
In an earlier statement (see above) today he government noted that the final contract provides an upgrade to 4G, but Joyce says Vodafone will have to compete on the open market for spectrum when it comes up for auction in two years.
Joyce was also queried about the changed wording around 5Mbps, which is now referred to as “peak” rather than “minimum. “The requirement is the same,” he says. However, Ratcliffe points out that there are actually two speed requirements, one related to a small number of remote areas.
Rosalie Nelson, of IDC, asked for a more exact definition of non-discriminatory compared to equivalence of inputs.
Joyce says non-discriminatory has been written into the contracts with Telecom and Vodafone.
“The intention is to publicise many of the contract details in due course,” he says.