Vodafone and rural telco provider Farmside have joined forces to offer a broadband and phone package aimed at severing rural New Zealand's link to Telecom's copper network.
Currently Vodafone and other phone companies help Telecom pay the cost of providing basic phone and internet services to commercially non-viable customers.
TheCommerce Commission calculated those customers cost Telecom around $60 million a year of which Vodafone writes a cheque to its telco rival for approximately $18 million.
Vodafone has been critical of what it sees as a subsidy for Telecom's copper network when non-viable rural customers could be served by its mobile network.
The telco is offering to connect these non-viable customers to either its mobile network or Farmside's satellite voice and broadband service, throwing in $500 worth of set-up expenses for free.
Vodafone chief executive Russell Stanners said if either Vodafone or Farmside were able to offer a service to these customers they were no longer non-viable and telcos would not need to pay Telecom to provide a service.
"Our understanding today is there are a group of customers who can't access alternative voice or broadband services - now they can," said Stanners.
The Commerce Commission is considering a request from Vodafone to release the location of non-viable customers. The Government is also reviewing the provision of services to non-viable customers - governed by the Telecommunications Service Obligation - and has promised $48 million to sort lacklustre internet service in rural areas.
Farmside chief executive Tony Baird said alternative technologies - not traditional copper or fibre networks - are the way to get broadband services to rural New Zealand.
He said the company's satellite service had 10,000 customers and was capable of taking on another 40,000.
More transactions are done online, therefore providing decent broadband in rural areas will be critical for driving the country's economic recovery, he said.
"More and more fibre in urban areas is probably not going to help the economy as much as getting broadband out to rural New Zealand," said Baird.
