7. Hon TAU HENARE (National) Link to this
to the Minister for Communications and Information Technology
How is the Government planning to improve broadband services in rural areas?
Hon STEVEN JOYCE (Minister for Communications and Information Technology) Link to this
I recently announced the Government’s $300 million Rural Broadband Initiative, combining direct Government funding with revenue from a proposed new, more transparent, and effective industry levy than the current telecommunications service obligation levy. Our target is to improve the coverage of fast broadband services so that 97 percent of New Zealand households and enterprises are able to access broadband services of 5 megabytes per second or better, and so that 97 percent of New Zealand schools are able to access ultra-fast broadband of 100 megabytes per second. Given New Zealand’s dependence on its rural sectors for economic growth and productivity improvements, there are considerable benefits to be obtained by delivering fast broadband right throughout the rural sector.
Currently Telecom receives approximately $70 million per annum largely to compensate it for supplying local services to rural customers. This money is sourced from the industry by the telecommunications service obligation levy, which is paid by market participants, including Telecom, on a market share basis. However, there is concern about the lack of transparency around where this money is spent and what benefit rural customers actually receive. Instead, we are proposing a new, more transparent and contestable telecommunications development levy, which will deliver $300 million over 6 years. It will be contestable and made available on a grants basis primarily to develop rural broadband. Further details regarding the tender process will be released following the consultation process that is currently under way.