Rural net deal expected within fortnight

Steve Rieger says Vodafone and Telecom will work together on the RBI deal but the contracts are separate. Photo / Greg Bowker

Communications Minister Steven Joyce says he expects the Government will sign rural broadband contracts with Telecom and Vodafone within a fortnight.

The announcement came yesterday at the Tele.Con 11 summit after the two telcos revealed more on building a broadband network across rural New Zealand.

Vodafone's general manager of wholesale and new business development, Steve Rieger, confirmed a deal was imminent.

"We are in the last days of the process. We're getting very close to a contract with the [Ministry of Economic Development]."

He said although it was unusual for the two competitors to be working together, the scheme was not a joint venture.

"The contracts are separate," he said.

"It's a build partnership, but we've got very distinct responsibilities."

Vodafone would focus on building cell towers which would give rural households access to wireless broadband and Telecom would connect schools to fibre internet and link cell towers to the main network.

Telecom would also improve its copper internet services, offering faster speeds to customers who choose that service.

The rural broadband initiative (RBI) will offer 80 per cent of rural households and businesses speeds of 5 megabits a second on fibre and 30 per cent of customers speeds on copper of up to 20 megabits a second. And 93 per cent of rural schools will get internet speeds of 100 megabits a second.

Telecom's Michael Gaunt said almost two-thirds of these schools would get fast speeds within a year, giving them quicker internet than the majority of urban schools.

Gaunt said any households close to the fibre cables hooking up these schools would be able to directly tap into the network.

With the option of wireless, fixed copper, or fibre internet, Gaunt said "rural customers would have urban-like choice".

Both Telecom and Vodafone would be putting private investment into the initiative to augment the $300 million industry levy funding the scheme.

"There's not enough money in the RBI. I don't think either one of us could do it with the funding available. [Vodafone] will be spending $100 million of our own to complete the job," said Rieger.

He said the network would be open-access, and encouraged retail providers to put their own equipment on Vodafone's cell towers - a concept called co-location.

This would allow other service providers to offer services to rural customers and compete with Vodafone and Telecom, Rieger said.

But 2degrees chief commercial officer Bill McCabe said the model being proposed was not the best solution.

"Co-location is, I think, the least efficient way of infrastructure sharing," he said.

"We're surprised that other options [used in telco networks in other countries] weren't incorporated as options in [Telecom and Vodafone's] bid."

McCabe could not confirm if 2degrees would put its own equipment on the towers and said he would need to see more details before giving a definite answer.