Schools will be allowed to compete with mainstream telecommunications companies by sharing their fibre-optic broadband connections with their local communities.
Associate Education Minister Nikki Kaye said the policy would mainly benefit rural and poor communities.
An industry source feared that the move could reduce demand for fully fledged residential ultrafast broadband connections, but Ms Kaye thought this unlikely.
Several schools have already teamed up with internet providers to offer wireless broadband to nearby residents, using their government-funded fibre connections as "backhaul".
Ms Kaye said the Ministry of Education would draft clear guidelines on the new policy.
All new arrangements would need to be individually sanctioned by the ministry.
- Fairfax Media