NZ Gov't makes down payment on $NZ1.5b broadband plan

Stuart Corner
Thursday, 28 May 2009 11:38

IT Industry - Strategy

The New Zealand Government's 2009 budget has commited $NZ290 million of initial funding for its $NZ1.5B national broadband network plan.

When it took power from the Labour Government at the last election in 2008, the National Party scrapped Labour's plan to spend $NZ350m to support rollout of broadband Internet infrastructure on a contestable, technology-neutral basis and instead committed up to $NZ1.5 billion for the roll out of fibre to businesses, schools, hospitals and 75 percent of homes over the next 10 years. It expects that this investment will be at least matched by the private sector.

The 2009 budget has provided: $NZ200 million capital for infrastructure investment; $NZ34 million for making schools broadband-ready; $NZ8 million of operating spending (including $NZ6 million for the Crown Fibre Investment Company that will be the vehicle for investing its $NZ1.5 billion.

The CFIC will invest, alongside private sector co-investors in regional fibre companies (Local Fibre Cos LFCs) that will roll out FTTP networks in the 25 cities and towns that it intends the network to cover. These LFCs will sell dark fibre to service providers and will be prohibited from providing services to end users. Retail service providers will be able to participate in LFCs but only with minority shareholding and/or minority voting rights.

The plan is already meeting strong opposition from an unlikely coalition of normally fierce competitors. In a rare show of unity Telecom NZ, TelstraClear and Vodafone commissioned a joint study that was highly critical of the plan. TUANZ however rallied to the government's side, branding the study as "backward-looking, negative and self serving."

The $NZ34 million allocated to schools will give those that are not ready to exploit a new faster broadband services an 80 percent government subsidy to upgrade their networks. The Ministry of Education will also provide schools with support to make use of their broadband services. This will include infrastructure support such as software, hardware and helpdesk support; ICT professional development for teachers and school leaders; guidance drawn from school-based research and innovation; access and advice for schools on online services.

The Government has also announced a $NZ16m investment in KAREN, the Kiwi Advanced Research and Education Network to support its ongoing operation and transition to a self-funding model.