Paul Reynolds, Telecom CEOKEY POINTS:
Telecom faces fines of tens of millions of dollars if it reneges on a commitment to roll out high-speed broadband services throughout New Zealand.
Communications Minister David Cunliffe said the plan by Telecom to build a high-speed network for 80 per cent of New Zealanders will deliver broadband speeds that are "a helluva lot better than today".
Telecom is spending $1.4 billion over the next five years on a network capable of delivering up to 20 megabits per second to towns with 500 or more phone lines.
Building a "next generation" broadband network forms part of a binding commitment to the Government under which Telecom will also split its business into three units.
The Government is forcing the telco giant to create a retail, a wholesale and a network division in a bid to boost competition for phone and broadband services.
Telecom will then be required to offer rival telcos the same deals on services it gives its own retail operation.
Under the Telecommunications Amendment Act passed last December, the company could face fines for breaching its commitment and $500,000 a day for every day the breach continues.
"Plus I've got all sorts of other swords of Damacles in my toolbox if I need them," said Mr Cunliffe.
"But I don't think I will because everybody knows this is legally binding."
Telecom chief executive Paul Reynolds said by world standards it was a big commitment for a phone company.
Dr Reynolds said Telecom would run "like greyhounds out of the gate and get the job done" - expected to be within four years.
"The foundations of this company are broadband," said Dr Reynolds. "The future prosperity of the country will be, in part, based on a rich array of broadband and IP [internet protocol] services.
"Our customers, whether they be wholesale or retail customers, are clambering for a rich array of broadband services so we just want to get on with building the foundations of our company."
Telecommunications Users Association president Merv Altments said he was giving the announcement a "conditional tick".
Mr Altments said the investment by Telecom would mean broadband customers could do "some serious business" out of the towns where the investment will occur.
Internet NZ spokesman David Farrar also welcomed the plan by Telecom to roll out fibre to the street.
"That's really the key," said Mr Farrar.
"The more you roll out fibre closer to the home the faster speeds people can get."
Currently within five years
* 93 per cent of New Zealanders can get broadband through their phone line, 2 per cent by wireless and the remaining 5 per cent by satellite broadband.
* Average broadband speeds range from 2Mb/s to 3Mb/s depending on how far a customer is located from the local telephone exchange and other variables.
* Of the 93 per cent of New Zealanders who can receive broadband over their phone line, 38 per cent had taken up the service as at end of September this year.
* All towns with 500 or more lines will have access to high speed broadband.
* Examples of towns that could benefit include Edgecumbe, Ngatea, Methven, Riverton, Pleasant Point and Waikouiati.
* 80 per cent of New Zealanders will get broadband speeds of 10 Mb/s.
* 50 per cent will get speeds of up to 20 Mb/s.
Source: Telecom New Zealand
