New Zealand’s RBI finalised

16 Mar 2010

New Zealand’s communications minister Steven Joyce has announced that plans for the rural broadband initiative (RBI) have been finalised, with the government ratifying proposals to roll out high speed broadband networks across rural areas and reforms to the Telecommunications Service Obligations (TSO) system. Under the RBI, 97% of rural households will have access to broadband services of at least 5Mbps, with the remainder reaching at least 1Mbps. Schools will also benefit from the plan with direct fibre connections delivered to 97% of schools across the country and 99.7% of students. The RBI is being implemented separately but alongside the government’s Ultra-Fast Broadband Initiative in urban areas and is expected to cost around NZD300 million (USD210.35 million), funded by a NZD48 million direct government grant, plus NZD252 million raised via a new Telecommunications Development Levy being set up as part of the accompanying TSO reforms. The new levy will see NZD50 million a year raised through contributions from telcos. All will then be able to compete for the right to tap the fund to develop rural broadband services. The reform is bad news for incumbent Telecom New Zealand, which has said it expects to lose around NZD56 million of its earnings before interest, taxes, depreciation and amortisation (EBITDA) in 2011, 2012 and 2013. The state will now hold a two-part RBI tender process for contracts to help facilitate the national rollout of high speed internet services. It expects to call for expressions of interest during April and anticipates commencing the allocation of funding to successful bidders before the end of the year.