Rural broadband - a step forward but questions linger

Federated Farmers welcomes the Government’s funding plan for rural broadband although some questions remain over the initiative.

“The rural broadband funding initiative announced today is critical to New Zealand’s economic and social future,” says Donald Aubrey, Federated Farmers telecommunications spokesperson.

“The Federation is approaching today’s announcement with caution though, until we receive more detail on the proposal and the reallocation of the Telecommunications Service Obligations (TSO) levy.

“For a start, the proposed ‘new’ industry levy will collect considerably less than the TSO levy it supplants. While the TSO levy is used to ensure the availability of ordinary telephone service in rural areas, the proposed industry levy will be used to roll broadband out across New Zealand’s hinterland.

“It remains unclear why the proposed industry levy will raise only $50 million per year while the TSO levy collects $70 million per year. Rolling broadband out across the country is an expensive task and an extra $20 million per year would be particularly helpful.

“But the Federation is relieved the Government has guaranteed the new initiative will not affect the industry obligation to provide free local calls as offered through the TSO levy.

“Despite the guarantee, we need to tread carefully while a proposal to essentially phase out funding for this obligation is on the cards.

“The Federation is also wary of what will happen six years down the track, when the new levy is at an end. Although we understand the money raised from the levy will go into a contestable fund - which is positive news - will it be available for infrastructure beyond the rural school gate?

“Ensuring quality broadband reaches New Zealand’s farms and rural businesses is of the utmost importance. Federated Farmers looks forward to engaging with the Government to flesh out today’s proposal and develop a workable, fair solution for the rural sector,” Mr Aubrey concluded.