InternetNZ gives thumbs up as Nats promise $100m more for rural broadband

InternetNZ CEO Jordan Carter
Money-go-round: Chorus and Vodafone are major contributors to the Telecommunications Development Levy, but also its primary recipients by dint of holding the Rural Broadband Initiative contract

InternetNZ has welcomed a move by ICT Minister Amy Adams to top up the six-year, $300 million Rural Broadband Initiative (RBI) with $100 million more in contestable funding if National is re-elected.

Ms Adams has also promised $50 million to boost mobile phone coverage in remote areas.

The policy would be funded by extending the Telecommunications Development Levy, currently due to expire in 2016, for another three years.

The Levy (successor to the old Kiwi Share Levy that used to go straight into Telecom's pocket) extracts $50 million a year from telecommunications companies, proportionate to their revenue (see Commerce Commission table right).

As the law stands, the levy will reduce to $10 million a year after 2016.

Funds from the levy go toward the RBI build, which is being carried out by contract winners Vodafone (building new cell towers fixed wireless broadband leg) and Chorus (fibre). Unlike the $1.35 billion the Crown is investing in various companies involved in the urban Ultrafast Broadband (UFB) rollout, the $300 million for the RBI (which includes both money from the levy and $48 million direct from the taxpayer) does not have to be paid back, and Chorus and Vodafone get to operate RBI infrastructure on a commercial basis (with the proviso they give all retailers equal access). 

The fact the new funding is contestable is a blow for Chorus, which had been feeding off rumours that National will put more money toward public-private broadband. 

And it's definitely a knock for Spark, which as our largest telco has been levied close to $20 million a year. If the industry tax is extended another three years, that's an extra $60 million or so it will have to pay the Crown.

It was not immediately clear if the $50 million for extending mobile services was contestable [UPDATE: it is], but Ms Adams did have specific ideas about where it should be spent.

“State Highway 6, which runs along a significant proportion of the West Coast, would be a top candidate for this fund. So would State Highway 73, the main route between Christchurch and the West Coast. Both are major tourist routes and improvements to mobile coverage would be welcome," the ICT Minister said in a statement.

Thumbs up from InternetNZ
InternetNZ CEO Jordan Carter said anything that helps our incredibly important rural sector get better connectivity will go some way towards building a better New Zealand through a better Internet.

"The RBI has seen some real gains in getting better Internet to rural New Zealand. It's very pleasing to see the growing focus by a wide range of political parties as they realise the potential and need for proposals that address the gap in connectivity. It shows that parties are treating ICT policies with the seriousness they deserve."

"Already we have seen Labour release a comprehensive ICT policy and now National is proposing some ambitious ideas.

"The idea of a contestable fund is great. It will allow communities to develop plans that really match their needs, rather than Wellington making all the decisions. Improving Internet accessibility is a core tenet of InternetNZ's and so anything that goes towards making New Zealand a 100% connected country receives our support," Mr Carter said.

Good, but not enough
The InternetNZ boss cautioned, "While $100 million would be a substantial investment, it would not likely be sufficient to provide all of rural New Zealand with high quality, high speed connectivity.

"We hope this proposal spurs additional plans for private sector investment, and that whatever government takes office after the election keeps a watching brief on the state of rural connectivity. It's important to the country that we ensure that there is not a significant digital divide between rural and urban New Zealand."

Labour on backfoot
Today's policy announcement has also put Labour on the backfoot. 

National has already comprehensively out-spent the previous Labour government on broadband; Labour's ICT policy promised new spending in the region of $21 million.

Again, David Cunliffe and Clare Curran find themselves out-Laboured by Steven Joyce and Amy Adams.

This afternoon, Ms Curran said, "Amy Adams must guarantee that the new fund announced today will be truly contestable and not just a slush fund for large telcos or a continuation of the existing failed Rural Broadband Initiative."

“Today’s new fund is an admission that the RBI has failed and under-shot the ambitions of New Zealanders.

“Broadband connections in rural New Zealand are poor by world standards. New Zealand needs the best rural broadband possible because of the importance of primary production."

It appears that the National may have woken up to the importance of community solutions – a solution that Labour has already embraced, Ms Curran said.

“This fund must be genuinely contestable and not a repeat of previous mistakes such as ultra-fast broadband where their conventional thinking resulted in relying on a big incumbent to deliver the best solutions for its bottom lines rather than for communities."

ckeall@nbr.co.nz

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