Telecom has revised the pricing schedule for rural connections and capped the cost of a new connection at $500, although it reserves the right to charge one third of the true costs in extreme cases.
Telecom had come under increasing fire from government, rural lobby groups and telecommunications users for announcing a new raft of charges that based connection costs on density of population. That initiative would have seen rural users paying, in some instances, several thousand dollars for a connection.
The new schedule retains the same density scheme, with users split between high medium and low density, paying $95, $250 and $500 respectively.
Telecom has also instituted a low income connection fee of $95 for those customers who "genuinely can't afford more".
Government ministers have been quick to praise the decision. In a joint statement, the Ministers of Telecommunications, Industry and Regional Development and Rural Affairs have applauded the move.
"The government has always recognised that Telecom should be able to charge for new connections and re-connections to its network. But our concern was that some people in low density areas would have been facing a large financial obstacle to access a phone service and they may not have been able to afford to get a phone connected," the statement says.