Telecom, Vodafone joint rural broadband approach

Media Release
12 November, 2010

Ending the digital divide: Telecom and Vodafone announce joint approach to rural broadband

Telecom and Vodafone today announced they had submitted a joint response to the Rural Broadband Initiative (RBI), in which the companies will combine their resources to build new, open access network infrastructure for the provision of broadband in rural areas using a range of technologies.

The RBI seeks to provide fibre to 97 percent of rural schools and a minimum 5Mbps broadband service to 80 percent of rural households within six years.

It also aims to provide priority users with access to fibre-based broadband services.

The proposed solution announced today will meet the requirements of the scheme through the extension of Telecom’s existing fibre infrastructure to key rural points of presence, including schools and hospitals, and an expanded Vodafone wireless infrastructure that harnesses the power of this fibre to deliver high speed broadband services wirelessly.

It will bring rural broadband users greater choice in terms of providers and technologies, both fixed and wireless.

The proposal extends Telecom’s fast broadband (10Mbps+) rollout to 92 percent of the country, bringing city-grade fixed broadband to even more rural users.

At the heart of the proposal is the principle of open access. Both fibre and wireless components will be available on an equivalent basis to access seekers and wholesale customers, allowing any party to offer a retail service over the new infrastructure. This means that rural customers will have not only faster data services but also a much wider choice of technologies and suppliers for these services.

Telecom will be responsible for building fibre to schools and hospitals, cell sites and rural exchanges and cabinets.

Vodafone will be responsible for the design and build of open access tower infrastructure that Vodafone and Telecom XT will co-locate their mobile services on, as indeed could any other wireless service provider who wishes to do so.

Both Telecom and Vodafone will also be making additional investments in their networks in the areas covered by the RBI scheme to offer broadband services to their customers.

“This solution sees New Zealand’s two largest telecommunications providers combining their extensive resources and skills to bring the benefits of high speed broadband to rural communities as quickly as possible,” said Telecom CEO Paul Reynolds.

“It is in these very communities that so much of the nation’s economic wealth is generated.

“By collaborating, our companies are showing that the telecommunications industry is working for the good of New Zealand to deliver a solution that will accelerate the commercial success and social connectivity of New Zealand’s rural and regional communities, employing fixed and mobile technology."

Vodafone CEO, Russell Stanners, said: “We want to provide the best technology fit, giving the best bang-for-buck for the New Zealand taxpayer.

“Wireless is now recognised internationally as playing a critical role in reaching rural areas, where it is the most efficient way to deliver high speed internet access. The spin-off benefit of building more cell sites to deliver a broadband service to homes and businesses is the significant expansion of mobile voice, SMS and data coverage in rural New Zealand."

The joint proposal builds on the extensive community engagement process both companies have undertaken with rural communities and stakeholders.

Vodafone and Telecom remain open to future collaboration with other parties to deliver broadband services to regional and remote parts of New Zealand.

The Ministry of Economic Development is running the bid process for the RBI, and a decision by the Minister is expected to be made by Christmas.

ENDS

Note: If the joint bid from Telecom and Vodafone is accepted it is unlikely there will be any material changes to Telecom’s EBITDA or Capex guidance.

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