The government has successfully completed contract negotiations with Telecom and Vodafone for the Rural Broadband Initiative (RBI), which will deliver on the government’s plan for vastly improved and affordable broadband services for rural New Zealand.

The agreement has been reached after two months of negotiations.

The Minister for Communications and Information Technology, Steven Joyce, says this is a significant milestone in a journey towards New Zealand being a better connected and digitally enabled, productive and growing economy.

“Not only have we secured an agreement that exceeds the government’s RBI objectives, but we will have 252,000 customers in rural New Zealand getting access to high speed broadband that compares well to urban levels of service and prices.

“I am confident that we have secured the best deal for creating a step change in broadband services for rural New Zealand.”

Last November Telecom and Vodafone submitted a joint proposal to the government’s $285 million tender for the provision of broadband services in rural New Zealand. 

The final contracts with Telecom and Vodafone provide for:
• 86 per cent of rural houses and businesses having access to broadband peak speeds of at least 5Mbps (compared with 20 per cent of rural homes and businesses at present; the RBI objective was 80 per cent)
• the construction of 154 new cell phone towers and the upgrading of 380 existing cell towers to enable fixed wireless broadband to rural customers, as well as improved mobile coverage
• Telecom extending their existing fibre network by approximately 3,100 kilometres, with some homes on route being provided with the opportunity of fibre to the premise at urban prices
• an additional 6,200 square kilometres of mobile coverage across New Zealand (making a total of 125,700 square kilometres)
• 700 rural schools connecting directly to fibre networks, and 48 schools having digital microwave radio connections – this equates to 95 per cent of rural schools having access to ultra-fast broadband speeds of 100Mbps (the RBI objective was 93 per cent)
• wholesale prices comparable to urban pricing
• all competitors to Telecom and Vodafone being able to access rural broadband infrastructure funded by the government on a non-discriminatory basis
• Telecom extending urban-like fixed-line broadband speeds to 57 per cent of rural customers
• an upgrade path to 4G.

Mr Joyce says the Rural Broadband Initiative (RBI) is a high priority infrastructure project for the government.

“It has been important to ensure we achieve the best value we can for rural communities and taxpayers, while having the confidence that the providers selected can deploy a resilient network that at the same time allows for competitive products to be provided to rural customers.”

As part of finalising the contracts, Telecom applied for a revision of their operational separation undertakings. These were consulted on recently.

”Concerns about the clarity of Telecom’s proposed variation were raised by submitters.  On that basis, I will be making a counter proposal with minor changes to Telecom to clarify the intent of the variation, which I expect to be responded to quickly,” says Mr Joyce.

“The revised undertakings will ensure that operational separation is upheld while enabling Telecom to offer RBI prices for services provided over government subsidised RBI infrastructure.”

Telecom and Vodafone are expected to begin the roll out of RBI infrastructure mid-year. It will be completed over the next six years.