NZ govt finalises Rural Broadband Initiative plans

bealtine

The New Zealand government has finalised its plans for rural telecommunications, with the cabinet signing off on proposals for the roll-out of high-speed broadband in rural areas and the reform of the Telecommunications Service Obligations (TSO). The government confirmed that 97 percent of households will have access to broadband services of at least 5 Mbps, with the remainder reaching at least 1 Mbps. A big part of the plan will be connecting fibre directly to rural schools. Under the Rural Broadband Initiative, fibre connections will be delivered to 97 percent of schools across the country and 99.7 percent of students. The remaining most remote schools will achieve speeds of at least 10 Mbps. The Rural Broadband Initiative will be developed separately but alongside the government's Ultra-Fast Broadband Initiative in urban areas. The Rural Broadband Initiative is expected to cost around NZD 300million, and it is being funded by a NZD 48 million direct government grant, plus NZD 252 million from a new Telecommunications Development Levy being set up as part of the accompanying TSO reforms, which were also confirmed by cabinet. The TSO reforms will introduce a Telecommunications Development Levy, which is expected to raise over the next six years: NZD 48 million for payments for delivery of TSO services and upgrades to the emergency calling services system, and NZD 252 million for the Rural Broadband Initiative. The overall cost to the industry of this new levy is expected to be offset by the reduction in local service TSO charges resulting from the TSO reforms. The government will undertake a two-phase Rural Broadband Initiative tender process. It expects to call for expression of interest during April and anticipates commencing allocating funding to successful bidders before the end of the year. In response to the government's announcement, incumbent Telecom New Zealand issued a statement saying it expects income to be negatively impacted from the initiative. The company said that if these plans are enacted in their current form, Telecom's EBITDA guidance for each of the 2011, 2012 and 2013 financial years will be adversely impacted by up to NZD 56 million.