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BDFL - Memuneh
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# 41119 10-Sep-2009 11:13
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Just received:

Communications and IT Minister Steven Joyce has today announced coverage targets for the roll out of broadband to rural communities. 

He says getting fast broadband to the 25% of New Zealanders living outside the footprint of the government’s urban initiative is a priority.

“Around half of rural households are coping with dial up speeds currently and that’s not good enough in the 21st century.”
Mr Joyce says he expects the following to happen within six years:

· 93% of rural schools will receive fibre, enabling speeds of at least 100Mbps, with the remaining 7% to achieve speeds of at least 10Mbps.
· Over 80% of rural households will have access to broadband with speeds of at least 5Mbps, with the remainder to achieve speeds of at least 1Mbps.

“Providing fibre to the vast majority of rural schools will effectively deliver the capacity to provide faster broadband to the communities they serve. Fibre backhaul is currently the primary limiting factor in the delivery of rural broadband and getting fibre to schools will address that.”

Getting fibre backhaul into rural communities will also allow other technologies such as wireless and cellular to play a larger role in rural New Zealand.

Enabling rural cell phone towers to be connected to fibre will also improve mobile phone services in rural areas.

Taken together with the government’s $1.5 billion ultra-fast broadband investment initiative, the achievement of these rural targets will mean that 97% of New Zealand schools and 99.7% of New Zealand students will have access to broadband speeds of 100Mbps or greater.

Similarly, 97% of New Zealanders will be able to achieve broadband speeds from their homes and businesses of at least 5Mbps, with 91% having speeds greater than 10Mbps.

Mr Joyce said that the initial focus will be on those areas that will not benefit from Telecom’s fibre-to-the-node upgrade programme.

“Telecom’s current programme will get us from 75% to 84%.  The new challenge will be delivering fast broadband beyond the 84% and delivering fibre to the majority of rural schools.”

Mr Joyce says he expects the rural policy to cost around $300 million.

“It is my expectation that this policy will be delivered through a mix of public and private funding.

“We are working with urgency to deliver higher speeds to rural areas.  The last thing we want is to see a rural / urban digital divide develop in this country.

“Rural communities are an integral part of our economy and we cannot afford to let them fall behind. By putting a target of six years on this part of the roll out, we will in fact achieve fast broadband in rural areas ahead of achieving ultra fast broadband for most homes in urban areas, and that’s appropriate.”

Further announcements on details of the broadband investment programme in both rural and urban areas will be made shortly.

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191 posts

Master Geek

  # 254992 11-Sep-2009 12:06
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It will be interesting to see which company will get the tender for rural broadband. Personally I hope that it is Vector as I feel that they could put a rural fibre network up in the quickest time and also I don't see why Telecom should get the contract as they haven't been willing in the past to supply non urban people with broadband.

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Ultimate Geek

  # 255121 12-Sep-2009 00:14
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The last thing we want is to see a rural / urban digital divide develop in this country.

This is stupid. Unless he plans on spending hundreds of billions of dollars (obviously not), there is always going to be a rural / urban "digital divide", and there's nothing wrong with that. Without that kind of investment, all it would do is hold back the urban areas, which is BAD. Urban areas should have top priority, plain and simple.

Mr Joyce said that the initial focus will be on those areas that will not benefit from Telecom’s fibre-to-the-node upgrade programme.

So much for competition.


BDFL - Memuneh
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  # 259325 29-Sep-2009 11:29
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And here is an update on this topic:

Hon Steven Joyce
Minister of Communications and Information Technology 

29 September 2009 Media Statement
Government releases coverage and funding plan for rural telecommunications

The government has today released its coverage and funding plans for rural telecommunications.

Communications and Information Technology Minister Steven Joyce today released two proposals for public comment.  These proposals focus on progressing the rural fast broadband initiative and reforming the Telecommunications Service Obligations (TSO) levy.

Mr Joyce says delivering fast broadband to rural communities is a priority for the government.

“We’re proposing to fund the $300 million rural initiative through a combination of direct government funding and revenue from a more transparent and effective industry levy than the current TSO levy.”

The government will provide a direct contribution of $48 million and further interim funding of up to $52 million.  The remaining funding will be sourced by replacing the existing TSO industry funding with a more transparent contestable industry-wide mechanism that focuses on developing rural telecommunications.

Currently Telecom receives approximately $70 million per annum largely to compensate it for supplying local service to rural customers.  This money is sourced from the industry via the TSO levy which is paid by market participants (including Telecom which contributes approximately 70%) on a market share basis.

Mr Joyce says he is concerned by the lack of transparency around where this money is spent and whether rural customers are benefiting from it.

“The existing TSO levy has been in place since 2001 and has been a source of considerable controversy within the industry. A recent review of the TSO had identified that the current methodology for assessing how much the TSO commitment was costing Telecom a year was flawed.

“I want to stress that changes to the TSO levy would not affect the TSO obligation, which includes free local calls.  The idea is not even on the table.  Likewise, there are no plans to further loosen the rules around foreign ownership of Telecom.”

The current TSO levy methodology counts the costs Telecom incurs but does not include the full range of benefits Telecom derives from the TSO.

The government is proposing to change the methodology for how much Telecom is compensated for uneconomic customers.  By counting both the costs and the benefits of the TSO it is likely that the TSO levy will reduce to zero for the foreseeable future.”

The new telecommunications development levy to replace the TSO levy would look to recover around $50 million per annum over the next six years - about $20 million less than is currently the case.

“When the government tenders for the provision of rural broadband it will be an open and competitive process, with full transparency on where the money is spent,” says Mr Joyce.

The discussion documents setting out the details of the government’s rural broadband initiative and a proposed reform of the TSO, including the proposal to establish a telecommunications development levy, are available at and

Submissions on both papers close at 5.00pm on Friday 30 October 2009.

Question and Answers

How will the Rural Broadband Initiative be funded?
The government is proposing that the $300 million initiative will be funded over six years, by a combination of direct government funding and levy contributions. This will be supplemented by revenue generated by schools’ demand and by industry and rural community contributions.

The government recognises the need to accelerate investment in the rural telecommunications network and therefore will front-load spending in the early years of the Rural Broadband Initiative.  In order to achieve this, besides the $48 million already appropriated in Budget 09, the government will temporarily use up to $52 million of funding currently appropriated for the urban broadband initiative to increase the amount of funds initially available for rural broadband.  The additional $52 million will be reimbursed in later years from the proposed levy.  This will not decrease the funds available for the urban broadband initiative.

Does the funding cover the ongoing costs for fast broadband connections?
Schools and other rural users connected to the broadband hubs established under this initiative will pay service charges for their connections in a similar way to their urban counterparts.

Why is the Government proposing to use industry levy revenue for funding the Rural Broadband Initiative?
The Local Service TSO is largely intended to ensure the availability of ordinary telephone service in rural New Zealand.  The Government considers it appropriate to consult on whether there should be some rebalancing in how levy funding is made available to enable wider subsidy funding of telecommunications, including rural broadband. This is consistent with the approaches taken in some international jurisdictions where non-commercial rural fast broadband development is supported by an industry levy.

How much levy funding will be allocated to the Rural Broadband Initiative?
After deducting TSO charges and grants to improve the emergency call service system, the annual levy revenue would be available to be allocated as competitive grants to assist financing the deployment of rural telecommunications infrastructure. 

If the levy is set at $50 million for six years, it is expected that approximately $42 million per annum ($252 million total) would be available for the Rural Broadband Initiative.

Will line rentals increase as a result of the proposed levy?
The proposed new Levy would be set at a level no higher than the equivalent amount for all existing TSO levies currently.  Therefore the Government considers that there should not be a detrimental impact on services and prices to telecommunications users.

What TSO reforms are proposed?
Reform is proposed for how TSO charges are arrived at to compensate Telecom for supplying local telephone service in commercially non-viable areas. 

Reform of levy arrangements for subsidising telecommunications is proposed with the introduction of a new consolidated industry levy that will collect funding to pay all TSO charges (including any TSO charges paid to Telecom) and enable contestable grants for the deployment of rural telecommunications infrastructure.

Will broadband requirements be included in the Local Service TSO?
It is not proposed that broadband service be included in TSO Local Service requirements. The government’s proposed option for funding the rural broadband initiative is to allocate some subsidy funding from revenue collected by the new consolidated industry levy. 

Does the Government support toll free local calling continuing to be a TSO requirement?
The government recognises the importance of the TSO as a mechanism to assure the affordability and availability of essential telecommunications services. The government is committed to the option of toll free local calling as a feature of any TSO for local residential telephone service.

191 posts

Master Geek

  # 259326 29-Sep-2009 11:33
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Thanks for that, Freitasm.

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Ultimate Geek

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  # 259332 29-Sep-2009 12:09
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A very interesting development. I'm sure Telecom NZ is none to happy to have that revenue stream removed! No doubt they will try to rebut the Minister's assertion that they should probably get nothing - or close to that.
Very good to see an open, transparent process is proposed for the new levy.
Although I'm not sure that a new industry levy is an equitable way of going about this rural broadband initiative. I wonder what other countries use this system, and whether they regard it as successful.

kind regards Andrew TD

BDFL - Memuneh
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  # 259597 30-Sep-2009 08:03
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And Vodafone sent this out:

The Emperor has no clothes

Vodafone welcomes the Ministry of Economic Development’s Telecommunications Service Obligation discussion document, particularly where it points out that the “commercially non-viable customers” don’t actually exist.

Vodafone recently wrote to Telecom and the Commerce Commission asking for a list of so-called “commercially non-viable customers” (CNVCs)  and was told that no such list exists.

Despite their lack of existence, these customers cost Vodafone $18 million a year and yet apparently only need dial-up internet speeds.

Vodafone chief executive Russell Stanners says the time for reform of the TSO  is upon us.

“The TSO regulation was introduced with the best intentions but has become a millstone around the neck of the  industry.

“We’re told there are 58,000 customers – five per cent of Telecom’s fixed line base -  who aren’t commercially viable yet when we ask to see the list, we’re told there is no list.”

The MED discussion document outlines changes that could be made to the TSO and Vodafone will be making a full submission on the matter.

“The MED has rightly pointed out that the numbers just don’t stack up. These customers are counted as though they’re a cost to the country when in fact they’re some of the most important customers in New Zealand. The new TSO will hopefully address that situation before the industry pours yet more countless millions of dollars into a scheme that can’t name a single customer,” says Stanners.

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  # 259602 30-Sep-2009 08:11
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Seems like a complete waste of money. How does broadband internet contribute towards a better NZ wide community?

I would prefer to see this money spent on Health, Education and NZ Super fund (the usual things that help) and also helping the less fortunate families that can't afford such things as feeding their family.

At the end of the day, other than letting people surf the net faster, what benefits will this $252 million dollars have on the wider community? Nothing.

Sorry, whilst broadband internet is a nice thing to have, having NZ'ers fed properly, healthy, educated and providing for the elderly should be higher priority.

Yes I work for a Telco, however this is my own personal opinion.

Check out my LPFM Radio Station at cool


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  # 259607 30-Sep-2009 08:35
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Guess you live in an area where you take BB for granted.

Unfortunately $252 Mil put into health would just go into a big black hole and at the end you would still have big waiting list. Personally i think that like Sat TV Sat BB would serve the rural community better.



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Master Geek

  # 259741 30-Sep-2009 14:31
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Hi Zolly Monsta,

As old 3 eyes put, okay if you have it already and you work for a Telco company, presumably Telecom.

The fact is that there are many in these commercially non viable communities who contribute to the countries GDP. Farming for example are on 8% GDP and yet they, as a whole, have to get BB by satellite etc due to the fact that Telecom hasn't been providing fibre.

I am in the unusual position of living 25kms out of NZ biggest city, work in health, need VPN access to work, but am not provided for by Telecom. Telecom's excuse - not commercially viable. SOrry to say but Telecom didn't deserve to have this money and its their own fault that they are going to lose it.
Personally I would like ot see the power companies get a shot at laying fibre to these areas as I think they would be able to do this the quickest and without the disruption.

187 posts

Master Geek

  # 259745 30-Sep-2009 14:46
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...I am in the unusual position of living 25kms out of NZ biggest city, work in health, need VPN access to work, but am not provided for by Telecom. Telecom's excuse - not commercially viable. SOrry to say but Telecom didn't deserve to have this money and its their own fault that they are going to lose it.
Personally I would like ot see the power companies get a shot at laying fibre to these areas as I think they would be able to do this the quickest and without the disruption.

I live 30km out from a city - I travel daily - yet with a faster than dialup connection I could do at least 50% of what I do at home and also be in a position to run my opwn business from home advising other rural dwellers how they can use broadband internet to their advantage - not just Youbook and MyTube!

191 posts

Master Geek

  # 259753 30-Sep-2009 15:32
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Also I think that the people complaining about the fact that we don't need faster spees are also short sighted and I put them in the same category as flat earth believers and "the television is a passing fad" group. We never know completely what is around the corner and so overproviding is better than not providing.


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  # 260441 2-Oct-2009 08:41
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Mr Joyce has been very poorly advised!
Satellite is the only solution for rural broadband.
And i'm not talking about the Farmside solution - as these cowboys can only see 40% of NZ.
There is a new satellite solution about to be launched.
97% of NZ coverage. They will provide ALL schools first of all and business.

Very affordable and fast.

Watch this space..

191 posts

Master Geek

  # 260469 2-Oct-2009 10:14
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Can't agree with that hypothesis - satellite is not a good solution, uploads speeds have always been poor and won't cover all rural. Wireless is really the only short term realistic option, with some clever bouncing of signals then all is good.


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  # 260478 2-Oct-2009 10:32
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Sorry my friend you clearly don't know what you are talking about (or are you a Farmside customer if so i am sorry!)
With the new service you can have anything from 512k - 10mb downloads with VERY low contention - now why has the government or the telcos not been told about this??



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  # 260479 2-Oct-2009 10:33
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Oh sorry you can also enjoy 512k upload speeds - faster if you want to pay for it!

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