Govt moving ahead with Broadband Investment Initiative

The Government will press ahead with its $1.5 billion Broadband Investment Initiative, making few changes to a plan first outlined in March despite concerns the project is underfunded and is too fragmented.

Communications Minister Steven Joyce said the Government would invest in a new company, Crown Fibre Holdings, that would seek co-investment from private sector partners to establish local fibre companies that would roll out fibre in 33 cities and towns, with the goal of connecting three-quarters of homes within 10 years.

Priority would be given during the first six years to connecting schools, hospitals, health service providers and homes in new sub-divisions.

The Crown Fibre Investment Company would consider both national and regionally-focused proposals "as well as consortium and proposals aggregating any combination of regions".

Some experts believe the actual cost of the initiative would be more than $5 billion.

The Australian government proposes spending up to A$43b to deploy fibre to 90 per cent of its population. That is almost four times as much per capita as would be spent in New Zealand, should the New Zealand government's investment be matched dollar-for-dollar by the private sector.

Telecom had put forward an alternative proposal, that the Government should pay for its network arm Chorus to connect schools and hospitals with fibre.

Mr Joyce said in a statement that proposal was "not sufficiently attractive to justify moving away from a contestable regionally-based process".

Telecom would be welcome to partner the Government in the Broadband Investment Initiative and put forward a bids covering a number of regions, or a national proposal, but Mr Joyce indicated it would need to "structurally separate" into two separate companies to be a full participant.

The Government expected Crown Fibre Holdings to complete negotiations with partners by the middle of next year.

The fibre networks would cover cities and towns that are projected to have the largest population by 2021. These include Masterton, Levin and Kapiti. Queenstown and Greymouth, which would have been excluded under criteria the Government issued in March, now make the cut.

Local fibre companies would be able to invest in unlit fibre-optic cable, and could provide some basic wholesale services to retailers if that was financed by their private sector investors.

- © Fairfax NZ News