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$40m top up for rural broadband

Sarah Putt, Contributor. 15 November 2018, 8:01 pm

The Coalition Government has dipped into its $3 billion Provincial Growth Fund (PGF) to invest $40 million in rural connectivity. The funding will be used to expand the Rural Broadband Initiative Phase Two (RBI2) and the Mobile Black Spot Fund (MBSF) - two initiatives launched by the previous National Government. 

The announcement was made jointly by Minister for Regional Economic Development Shane Jones and Minister for Broadcasting, Communications and Digital Media Kris Faafoi in Manawatū- Whanganui, a region which will receive $4.5 million from the new funding allocation.

"Today's announcement is significant for regional New Zealand. It is no secret that people living in our regions, particularly in remote areas, face slower internet speeds than their urban counterparts," says Jones.

Crown Infrastructure Partners (CIP) is implementing the RBI2/MBSF expansion and is aiming to use the existing $105 million expansion funding to take RBI2 and MBSF as far as possible to cover rural New Zealand, to close the connectivity 'digital divide' says Faarfoi.

"The $40 million investment will add to the $105 million already allocated to the RBI2/MBSF expansion. Given the scale of the additional investment, there is no doubt this will improve digital connectivity in the regions," he says.

In addition to Manawatū-Whanganui, the new PGF investment in rural connectivity will be allocated across six surge regions - Northland, Bay of Plenty, Tairāwhiti, Hawke's Bay, and the West Coast.

The announcement comes as the Commerce Commissions issues it list of those telcos liable to contribute to the Telecommunications Development Levy which goes towards funding RBI2.

As noted in a recent Techblog post, the TDL was legislated into being in 2011, and it states that $50 million must be raised each year from all telcos earning in excess of $10 million annually. As the Commission explains in its release, "the Government uses the annual levy to pay for telecommunications infrastructure and services which are not commercially viable including the relay service for the deaf and hearing-impaired, broadband for rural areas, and improvements to the 111 emergency service."

The TDL is itself due for review, with the legislation governing the process and annual amount of $50 million, only in place until 2019.

Today's announcement of the PGF's contribution is being presented as a top-up to two existing rural broadband infrastructure programmes, but will the expiry of the current scheme mean that telcos will no longer need to contribute to public programmes improving broadband to marginal customers? Or is this an opportunity to redirect the telco industry's contribution (after RBI2 is complete) to a fund that addresses the digital divide that exists for New Zealand households unable to afford broadband connectivity? A report last week on Digital Exclusion suggests that policy makers in central government "revisit the baseline for social inclusion and consider whether basic Internet in every home is today's equivalent of last century's landline with free local calls."

The reference being to the 'Kiwishare', which required the then Telecom to maintain unlimited local calling as part of a fixed monthly phone rental (which could only increase at the rate of CPI each year). This was tied in with the Telecommunications Service Obligation, which effectively meant that Telecom was subsidised by its competitors to charge rural customers the same price as urban customers for a landline, even though it cost more to deliver the service.

It's an interesting idea and one that will no doubt be explored as the Commerce Commission continues to seek views on legislation governing the country's broadband infrastructure.



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