Federated Farmers has thrown its weight behind a Telecom proposal to use Government funding to help connect every school in the country to high-speed fibre-optic broadband within three years.

The powerful rural lobby group's support for the plan comes as the Government wades through a raft of submissions on how best to spend $1.5 billion expanding the country's broadband network.

National promised before last year's election to give 75 per cent of homes access to high-speed broadband and the Government has earmarked the $1.5 billion as its contribution to a public-private partnership aimed at achieving that goal.

Last month Communications and Technology Minister Steven Joyce outlined plans for a Crown-owned investment company - Crown Fibre Investment Co (CFIC) - to drive the initiative, and invited submissions from potential "co-investors".

Telecom's response, released by the company when the deadline for submissions closed this week, included two options:

Contracting Telecom subsidiary Chorus to build and manage a Crown-owned national network of fibre cable ducts, or;

A collaboration between the CFIC and Chorus to provide fibre connections to all the country's 2600 schools and 93 hospitals within three years.

Federated Farmers telecommunications spokesman Donald Aubrey said the schools proposal would provide a vital rural network which could then be expanded out to homes in outlying areas through "community-scale solutions".

"Farmers never expected fibre optic cable to every woolshed in every part of the country, just the infrastructure that will allow connection to ultra-fast broadband. Telecom's proposal will deliver vital, wide geographic coverage," Aubrey said.

In its submission, TelstraClear said the Government needed to ensure it avoided potential conflicts of interests as both an industry regulator and an owner of broadband infrastructure.

"The Government's FTTP [fibre-to-the-premises] investment has the potential to radically transform New Zealand's telecommunications - like nothing that has come before it, including Telecom's privatisation 20 years ago," TelstraClear's submission said.

"If designed and implemented in the right way, the Government's investment will create opportunities for competition in as yet undeveloped applications and services and extend infrastructure-based competition further than was thought possible in an economy of our limited scale."

The telco, a subsidiary of Australian giant Telstra, said the flipside of the Government's proposed structure - which includes a network of regionally-based local fibre companies (LFCs) - would be a return to earlier monopoly conditions.

"Done wrong, there is a risk that infrastructure competition could be crowded out, the mantle of monopoly will pass back from private to public ownership, and the regulatory clock will be reset to 2001 as the grinding process of controlling the new LFC monopolies under the Telecommunications Act reboots."

In its submission, Vodafone also raised concerns related to the proposed LFC structure.

"The fragmented LFC regional concept poses significant issues for any investor. Loss of scale may negatively impact the business case and we have concerns around technical co-ordination, national standards, and interface management," Vodafone said.

"This may limit the creation of an effective and consistent range of products and services capable of being offered efficiently on a national basis."

The Telecommunications Users Association (Tuanz) said while it strongly supported the Government's goal of taking fast broadband to three-quarters of the population, New Zealand had to move fast to ensure its technology infrastructure was competitive with that of other countries.

"Tuanz urges the Government, alongside the CFIC and LFCs, to seek creative ways to fast-track these initiatives even further with a view to covering significantly more of the population, significantly faster, than provided for in this plan."