The Government has unveiled plans for a new Crown-owned investment company that will spend up to $1.5 billion on high speed broadband infrastructure.
The new company will drive the Government's plan to boost broadband speeds to 100 megabits per second - more than 50 times faster than speeds generally available today - by laying fibre-optic cables to homes and businesses.
The money will be dispersed via private companies on a regional basis in a series of "public-private partnerships".
Government plans to pay for the rolling out of open-access "dark fibre" networks, meaning companies are given equal access to the cables, which does not line the pockets of existing broadband network providers.
"They will be able to watch TV comfortably and easily over their computer screens, they will be able to run businesses from home," said Prime Minister John Key.
The move would bring New Zealand into the 21st century, enabling it to compete with countries such as Korea, Singapore and Hong Kong
Communications and Information Technology Minister Steven Joyce gave details of the planned new Crown-owned investment company, called "Crown Fibre Investment Co" or CFIC.
This will, alongside private sector investors, put money into "regional fibre companies" that will install fibre-optic networks in 25 New Zealand towns and cities.
The 25 centres identified are based on population and range from Auckland, with 1.2 million people, to Oamaru, with 12,681. Nowhere smaller than Oamaru would be considered.
Those in areas outside the 25 identified would eventually get better services but that would be in the second phase of the initiative. They could expect faster broadband but would not have the fibre enabling the ultra-fast broadband, said Joyce.
The 25 centres, in order of population, are: Auckland, Christchurch, Wellington, Hamilton, Napier and Hastings, Dunedin, Tauranga, Palmerston North and Feilding, New Plymouth and Hawera, Kapiti and Levin, Nelson, Rotorua, Whangarei, Invercargill, Wanganui, Gisborne, Cambridge and Te Awamutu, Blenheim, Timaru, Taupo, Masterton, Whakatane, Ashburton, Tokoroa, and Oamaru.
Once finished, says Joyce, this investment model "will deliver on the government's commitment of ultra fast broadband to 75 per cent of New Zealanders where they live, work and study over the next ten years."
The government is proposing to establish a Crown-owned investment company ("Crown Fibre Investment Co" or CFIC) to drive the government's investment.
Joyce said CFIC would operate "an open, transparent and contestable process to select local partners.
Auckland based energy network company Vector is likely to be a prime candidate to join up with the new investment company in rolling out fibre optic cables to homes and businesses.
Vector has 500km of fibre optic network laid in Auckland's business districts and is expanding that network by an extra 300km as part of an agreement with Vodafone.
A report commissioned by industry heavyweights Telecom, Vodafone and TelstraClear said their own investment plans would deliver broadband speeds adequate for the needs of everyday internet users without the need for a boost from the Government.
Consulting firm Castalia challenged the belief that high broadband speeds for households - up to 50 times faster than what is presently available - would deliver significant economic benefits.
Telecom New Zealand said today that the release of the broadband Investment plan provided further clarity on how it planned to advance its own fast broadband vision.
"This additional information will be welcomed by all players. We will now evaluate and assess the proposal in detail as we begin to prepare our formal submission to government," said chief executive Paul Reynolds.
"Specifically, Telecom will be reviewing the opportunities the initiative presents to work with the proposed Crown Fibre Investment Company to extend the reach of Telecom's own ultra-fast broadband network, and to utilise the fibre networks others may build.
This was being done, said Reynolds, "against the backdrop of Telecom's existing $1.3 billion programme, comprising both commercial investments and the investment commitments we agreed with the Government last year as part of our Undertakings on operational separation."
Reynolds said Telecom "looked forward to working with government funding to complement the government's plans to take fast broadband even further, including to those areas that currently are not commercially viable."
Plans for the Crown fibre company were welcomed by the Telecommunications Users Association, TUANZ.
"The Minister's paper is at the top end of our expectations," said chief executive Ernie Newman.
"It sets out a clear structure for the proposed partnerships, and will give potential partners in the private sector all the information they need to come up with regionally-based proposals. Excellent progress is being made."
Newman said the plan appeared to be "sector-neutral" - meaning it opened the way for a wide range of potential co-investors including telecommunications companies, power lines companies, or regional groupings.
This was important, said Newman, as a greater diversity of investors were "showing their hands and broadening the range of innovative, cost-effective solutions."
"We are especially pleased with the sense of momentum that the paper conveys. No doubt some potential investors will find the initial deadline for submissions challenging. However, the essence of the plan has been well signaled, and we would expect most potential partners already to have their thinking well advanced.
Newman said that much as TUANZ supported the target of covering 75 per cent of New Zealanders within 10 years, the target was "starting to look too soft."
"We hope that in the medium term the target can be re-visited with a view to increasing the percentage of people with access, and shortening the time line," said Newman. "This will be of particular benefit to people in rural areas, who are the group with the most to gain from the services that this technology will unlock."
An open infrastructure model would ensure, said Joyce, all telecommunications companies had the option of using the fibre.
"This model aims to provide government investment on favourable terms, while minimising government involvement in commercial operations which we believe the private sector is better positioned to direct."
"This is a big investment both in terms of the money committed and the returns it will bring. It's essential that we get it right the first time."
"The government now looks forward to receiving submissions from interested parties," said Joyce.
The deadline for submissions on the plan is April 27
- Addional reporting NZPA
See the draft proposal for comment here