RBI tender awarded to Telecom and Vodafone; Kordia calls decision a ‘tragedy for rural New Zealand’

7 Feb 2011

Crown Fibre Holdings, the government agency in charge of managing New Zealand’s long-awaited Rural Broadband Initiative (RBI), has selected the joint bid from full service telecoms provider Telecom New Zealand and Vodafone New Zealand, the country’s largest cellco by subscribers, to enter into commercial negotiations with the government. The joint effort beat off rival bids from four other consortiums, including Maori partnership Torotoro Waea and OpenGate (an alliance between state-owned Kordia, Woosh Wireless and FX Networks). Once commercial negotiations have been concluded, Telecom will be responsible for rolling out the fibre-optic component of the project – linking schools, hospitals and rural exchanges – whilst Vodafone will be responsible for the design and construction of an open-access cell tower infrastructure.

First unveiled in March 2010, the RBI seeks to provide fibre to 97% of rural schools and minimum 5Mbps transmission speeds to 80% of rural households within six years. Communications and Information Technology Minister Steven Joyce said that the government will commence commercial negotiations with the two companies immediately, and aims to sign contracts before the end of March. Joyce commented: ‘The government specifically asked for parties to consider collaborating on joint bids to reduce construction costs, and this bid does just that’. The decision signals a remarkable U-turn from the government agency, which controversially omitted Telecom from its priority negotiations list in September 2010.

Of the companies which missed out on the contract, Kordia (part of the OpenGate consortium) reacted angrily to the decision, with the National Business Review quoting CEO Geoff Hunt as saying: ‘the decision effectively condemns rural communities to suffer from same old duopoly services that continue to under-deliver and hold rural New Zealand hostage’. Hunt explained: ‘The government had an opportunity through the RBI to provide a technology step-change in services for rural New Zealand that would have laid a future-proof and highly competitive foundation for the next 15 years. We should remember that this was supposed to be the rural broadband initiative and not the rural mobile initiative. The 3G element of the Telecom/Vodafone solution is being superseded all around the world by fourth generation wireless technologies like TD-LTE.’ Kordia’s communications boss, Emma Morrison, declared the decision a ‘tragedy for rural New Zealand’.

New Zealand, Kordia, Spark, Vodafone New Zealand