Major carriers win NZ rural broadband bid

Competitors slam Telecom, Vodafone for lack of technological foresight

Rural broadband in New Zealand is expected to improve from the halfway through this year, with the country’s government awarding major carriers Telecom NZ (ASX: TEL) and Vodafone NZ the tender for its $285 million project.

Under the initiative, 98.7 per cent of all New Zealand households will get download speeds of one megabit per second (Mbps) or faster; above the 97 per cent of residents first proposed by the government.

The operators’ joint tender, submitted in November, would enable both Telecom and Vodafone to build an open access wholesale fibre and mobile network of some 154 mobile towers across the country.

Telecom will also build out its current fibre network by 3100 kilometres, providing new rural points of presence and connecting up to 46 per cent of rural customers en-route to fibre-to-the-premise (FTTP) services.

The companies would jointly provide up to $200 million in private sector funding on top of government injection into the Rural Broadband Initiative (RBI).

Though the wireless technology to be deployed by Vodafone is primarily fixed, the tenderers claimed it would improve mobile coverage to the country as well.

New Zealand ICT minister, Steven Joyce, said in a statement that contracts would be signed separately with the operators by the end of the first quarter this year, with construction to begin by halfway through 2011.

“I have also been clear that strict open access rules will be included in any contract,” he said. “This will promote healthy competition in both the rural wholesale and retail broadband markets.

"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.”

Despite the open access portions of the project, competitors to the carriers’ bid lamented the government’s decision.

“The opportunity to deploy much better broadband has been lost," Kordia chief executive, Geoff Hunt, told Computerworld New Zealand. "It is really disappointing.

"New Zealand had an opportunity to invest in 4G technology, which is where Australia and China are going. We’re really disappointed.

“Without competition, it is hard to see this duopoly doing anything other than rolling out the minimum requirement of 5 Mbps over six years. Urban users in the same timeframe will have access to 100 Mbps.”

The rural broadband initiative is expect to give access to high speed broadband to the 25 per cent of New Zealanders not covered under the parallel $NZ1.5 billion Ultra Fast Broadband initiative, which aims to deliver services of at least 100Mbps to urban areas over the next 10 years.

Telecom lost out in its initial bids for construction of the country’s equivalent to the National Broadband Network (NBN).

Follow James Hutchinson on Twitter: @j_hutch

Follow Computerworld Australia on Twitter: @ComputerworldAU

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