quickymart:DonGould: Why would a west coast based ISP not work?
The biggest issue is the low population density, spread out over a vast area, and highly rural. Yes, I know wireless might work - but you would need to cover an area the distance from Auckland to Wellington, with only around 30 000 people: the population of Timaru. It's not all flat smooth land either - quite hilly and mountainous in parts - so another difficulty for wireless service. The setup costs alone would be extremely high - and most people in the towns can already get a reasonable ADSL service.
I'll up the population to at least 37,000 people which doesn't change the economic and topographical challenges.