Auckland local authorities are investigating building a broadband network in Auckland to take on Telecom.
The seven local councils and the Auckland Regional Council are concerned the region's economic and social well-being is being stunted by Telecom's virtual broadband monopoly.
They want to ensure Auckland businesses and residents have access to high-speed, affordable broadband.
The first competition could come on the North Shore, where the council and power company Vector are looking to use spare fibre optic capacity on the Vector network to provide broadband.
Auckland City is also looking to lay fibre optic cables along a new busway between Britomart and Newmarket which passes large users of broadband such as Auckland University, Auckland City Hospital and high-tech companies in Carlton Gore Rd.
Auckland City councillor Richard Simpson said that to be internationally competitive, Auckland needed to match cities such as Stockholm and be committed to 1000 megabits-per-second broadband by the year 2010. At present, Telecom's jetstream dawdled along at less than 10 megabits, he said.
"This is the Huka Falls compared to a garden hose," Mr Simpson said.
Telecom, which has almost a broadband monopoly in Auckland and controls more than 90 per cent of the New Zealand market, is on notice by the Government to lower prices and speed up service. The company has promised faster and cheaper broadband next month.
The Auckland Broadband Liaison Group, comprising the seven councils and the regional council, has applied to a $24 million fund set up by the Government last year to enable the development of affordable open-access broadband.
The group has passed the first hurdle and is proceeding to develop a business case. North Shore City Council and Vector have also applied to the fund.
The Herald understands the two applicants are in talks with a view to putting forward the North Shore case as a regionwide trial.
Countries where central and local government have taken a role in providing broadband infrastructure include the United States, Canada, Denmark, Sweden and Japan.
A report being considered by Auckland City's economic development committee today said the key argument for Government involvement was that broadband was an essential infrastructure with intangible social and economic benefits that market forces could not provide.
Arguments against Government involvement included crowding out private sector investment and distorting the market.
Ernie Newman, chief executive of the Telecommunications Users Association, welcomed competition in the Auckland broadband network, saying it could be an economic goer. He said it was crazy for the largest city not to have competition.
Telecom spokesman John Goulter said last night that the company welcomed competition but he pointed out that broadband was a high-investment, high-risk area.