Three left in race for rural broadband

Steven Joyce. Photo / Alan Gibson

Three bidders are still standing as the Government whittles down the list of providers in the running to boost rural broadband speeds.

Communications and Information Technology Minister Steven Joyce yesterday shortlisted a pairing of Vodafone and Telecom, a Maori-led initiative, Torotoro Waea, and a consortium made up of Kordia, Woosh and FX Networks.

He expects to begin negotiations before Christmas with a final agreement signed early in the new year.

Knocked out of the running was a grouping of local lines companies and fibre infrastructure players grouped under the New Zealand Regional Fibre Group (NZRFG) umbrella.

Vodafone and Telecom's pitch for rural New Zealand includes a 3000km extension of Telecom's fibre network and Vodafone building 154 new cell towers available for use by all mobile network operators.

Funding for the $300 million rural initiative will come from, in the most part, the two telco giants.

The Government will chip in $48 million in direct funding but $252 million or $42 million a year will be funded through a new Telecommunications Development Levy introduced to replace the Telecommunications Service Obligation (TSO).

Forsyth Barr telecommunications analyst Guy Hallwright said without detailed information on the bids it was hard to work out what the financial benefits might come to.

"I would imagine it probably wouldn't be that huge, but it would be better to have it than not have it if you were Telecom or Vodafone because otherwise you would be paying the levy but not getting the benefits."

Telecom is still awaiting a decision on whether it has made it through to the next round of urban fibre negotiations.

Further progress announcements on the urban fibre scheme are expected before Christmas but a decision on the key Auckland area is not expected until next year.

New details emerged yesterday on a rural bid combining the fibre assets of FX Networks with the wireless capability of Kordia and Woosh (together known as OpenGate) to provide the "last mile" connection.

The group are promising high speed connections over a wireless network based on the next generation of mobile technology, LTE (long term evolution), using 2.3GHz spectrum already owned by the companies.

The Torotoro Waea partnership combines 24 members representing iwi and wananga with telecommunications expertise from Opto Network.

Opto Network was established last year by industry veteran Roger de Salis to focus on running out fibre networks to rural areas and backed by former CallPlus boss Martin Wylie.

Antony Royal, spokesman for Torotoro Waea, said the rural broadband initiative was too important from an educational perspective to be captured by entities that weren't aligned with the values of Maori.

"It will be a network that needs to be financially sustainable but the primary driver is not what our return on shareholders funds are. Our primary driver is the value we can derive for our community."

RURAL CHALLENGE
* 97 per cent of schools connected to fibre delivering speeds of 100 megabits per second (Mbps). At least 10Mbps for remaining schools.
* 80 per cent of rural households connected to broadband at speeds of 5Mbps or better. The remainder connected by at least 1Mbps.

REMAINING BIDDERS
* Telecom/Vodafone.
* Kordia/Woosh/FX Networks.
* Torotoro Waea.