Telecom NZ, Voda win $300m rural NZ bid

The New Zealand Government has begun negotiations with Telecom NZ and Vodafone for the implementation of its NZ$300 million Rural Broadband Initiative, Communications Minister Steven Joyce announced this morning.

The scheme aims to connect 97 per cent of rural schools to fibre with a minimum connection speed of 100Mbps and connect 97 per cent of rural households to fibre with a minimum speed of 5Mbps by 2016.

The tender for the initiative went out in April last year, with the applicants narrowed down to three in December. Joyce said that Vodafone and Telecom NZ's joint proposal provided the NZ Government with confidence it could be deployed because it is based on existing technology.

"The government specifically asked for parties to consider collaborating on joint bids to reduce construction costs — and this bid does just that," the minister said in a statement.

The proposal put to the government by the two telcos would see the connection of 719 schools to fibre networks, an expansion of Telecom NZ's existing fibre network to 252,000 people in rural New Zealand, as well as the construction of 154 fibre-connected cell towers for wireless broadband.

"The joint proposal was the only one that increases mobile coverage, and it will ensure serious competition in the last mile with many rural customers being able to choose from fixed wireless, ADSL2+ and mobile broadband," Joyce said.

Joyce said the investment in the project will lead to affordable wholesale and retail prices.

"I have ... been clear that strict open access rules will be included in any contract. This will promote healthy competition in both the rural wholesale and retail broadband markets," he said. "Other providers who have not been successful in the tender will be able to provide services using the government-funded infrastructure. The infrastructure will also support new technologies like 4G as they roll out."

Joyce encouraged the unsuccessful tender applicants to now work with Telecom NZ and Vodafone.

The negotiations are expected to be completed in the first quarter of 2011 and the roll-out is scheduled to begin later this year.