Cabinet clears rural broadband rollout

Cabinet has signed off plans for the rollout of high speed broadband in rural areas - signifying what the Government has labelled a "major step change" in rural broadband.

Communications and Information Technology Minister Steven Joyce said the plan would give 97 per cent of households access to broadband services of at least 5 megabits per second, with the remainder reaching at least 1Mbps.

"For many remote and not so remote rural areas this will be light years ahead of where they are today," Mr Joyce said.

A big part of the plan would be connecting fibre directly to rural schools.

The rural broadband initiative would help deliver fibre connections to 97 per cent of schools across the country and 99.7 per cent of students, Mr Joyce said.

Most rural schools would achieve broadband speeds of at least 100Mbps, while the remaining most remote schools would achieve speeds of at least 10Mbps.

The rural broadband initiative was expected to cost around $300 million and was being funded by a $48 million direct government grant plus $252 million from a Telecommunications Development Levy being set up as part of the accompanying Telecommunications Service Obligations, which have also been signed off by Cabinet.

Telecom says the plans will cost it up to $56 million a year in earnings between 2011 and 2013.