Joyce reveals rural broadband contenders

A partial list of the 39 parties vying for the government’s $300 million rural broadband initiative (RBI) has been revealed for the first time.

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The RBI, which is a separate project to the urban focused $1.35 billion ultrafast broadband (UFB), aims to bring faster internet to rural areas by laying new fibre optic cable, supplemented by wireless and possibly satellite broadband in some areas.

Speaking via a (terrible) videolink to the opening day of the TelCon11 conference in Auckland yesterday, Communications Minister Steven Joyce said those who had submitted expressions of interest included:

  • Chorus (Telecom’s network division)
  • Vodafone
  • Axia-NetMedia (the Canadian fibre company that, allied with potential equity partner Vodafone, is also chasing UFB business)
  • “Some” Regional Fibre Group members (Vector has openly pitched, promising to use its existing overhead lines to bring cable to the country)
  • FX Networks (a fibre network operator and Commerce Commission darling that recently won a major KAREN contract)
  • Farmside (a satellite broadband provider that has a marketing alliance with Vodafone)
  • Federated Farmers and Fedztel (a new company, more here)
  • Compass Communications (a second-tier ISP)
  • Opto Network (a start-up launched in November 2009 by industry vet Roger de Salis; uses FX Networks’ backhaul)
  • Woosh (which has a lot riding on scoring a Rural Broadband Initiative contract as its commercial business continues to struggle)

The MED will now chew over the expressions of interest before releasing an RFP around August.

The $300 million rural broadband initiative – the first funding for which is due to be allocated in 2011 – will be bankrolled by $48 million from the government, plus $252 million raised from telcos in a revamped version of the TSO levy (aka the Kiwishare levy) called the Telecommunications Development Levy.

If Chorus wins some or all of the RBI money, it will be something of a hollow victory for Telecom, which previously received all of the TSO Levy (primarily drawn from Vodafone and TelstraClear) for essentially maintaining existing phone line and dial-up internet infrastructure for around 50,000 so-called commercially non-viable customers.

It may seem slow...
The RBI aims to ensure 93% of rural schools are connected to fibre, enabling speeds of at least 100Mbit/s, with the remaining 7% achieving speeds of at least 10Mbps.

Under the RBI, more than 80% of rural businesses and households will have access to broadband with speeds of at least 5Mbit/s, the government promises, with the remainder a not-so-flash 1Mbit/s.

By contrast, town and city dwellers are promised speeds of between 10Mbit/s and 20Mbits by the end of 2011 under Chorus’ government mandated, $540 million roadside cabinet and fibre network upgrade project.

“If you think these speeds sound low, you should recognise that around half of the rural community is currently experiencing only dial-up speeds,” Mr Joyce told the TelCon11 audience yesterday.

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4 Comments & Questions

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I cannot understand why rural schools (in fact any school) need 100mbits.

How about that for businesses for employ people, pay tax and keep the country running!

[The government has previously essayed the concept of using schools as a broadband hub for the rest of the rural community, in terms of the way the network is physically structured. The rural community at large, of course, produces most of New Zealand's export receipts.

In terms of whether schools need 100Mbit/s broadband, remote learning by video conferencing is one use that's been put forward. CK]

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So, there have been proposals from companies with retails interests - Vodaphone, Woosh...

Was it Stephen's policy that companies that implement broadband network should not have retail interests? Or was that directed just at Telecom/Chorus?

[The prohibition on a retail telecommunications provider holding a majority share in a Local Fibre Company is a provision of the separate, urban-focussed Ultrafast Broadband (UFB) initiative - CK]

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I would discourage Steven Joyce from even considering TELECOM/CHORUS as look at there track record,disgusting.The current fibre to the node cabinazation projects that the are busy with is pure cosmetics,to try to empress government, in the background the are stealing from the BACKBONE from 1 cabinet and pushing to another ,and now those cabinets are fully congested ,but when CAMPBELL LIVE tried to interview the techs VISIONSTREAM gave them a formal notice saying if you talk you are fired,Give the contracts to someone else STEVEN ,as PAUL REYNOLDS are making enough in his CHORUS SMOKESCREEN TELECOM

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Telecom is not the only company with fibre investment throughout the country. Others such as Kordia and Vector have also invested heavily, hence, they are just as viable participants to receive part of the govt's funding. Why should Telecom's share price and financial considerations be of higher priority to the other parties that have invested in meeting the govt's criteria to participate?
If you compare Telecom with other similar sized Telecommunications companies around the world, it is overstaffed, with ~8 to10 layers of management between a graduate and the CEO.
I would also question how much of Telecom $3billion investment in fibre over recent years has actually gone into fibre infrastructure and not to the 'clipping of the ticket by Chorus and its sub-contractors that charge a premium such as Downers.
How much of the 'pup' of infrastructure that Paul inherited from Theresa is up to a recognised best practice or standard, if XT is anything to go by? Also, based on the many other outages 111, and large customer impacting outages of the years (November 2008, and 2009) what technical redundancy or disaster recovery does Telecom have, if any?
Telecom spent approx $500 million to build its 3G network in NZ. According to reports at the time, Vodafone spent about the same amount building 3G networks in Aust, NZ & Fiji. Telecom's suppliers have been charging a premium for years due to historically poor supplier management... thanks again Theresa! How much did 2Degrees spend building its mobile network? I'll guess a lot less than $500 mill?
How much of the govt's funding would be spent on Telecom addressing its own issues and interests prior to direct national fibre infrastructure? I hope CFH has suitable safeguards to ensure our tax payer funds are spent where they're supposed to be and that each participant has a minimum standard in line with international best practice for technology deployment and operation to ensure the best performance and availability!

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