August 27, 2014 10:00am by David Farrar

$100 million for rural broadband

InternetNZ has welcomed a move by ICT Minister Amy Adams to top up the six-year, $300 million Rural Broadband Initiative (RBI) with $100 million more in contestable funding if National is re-elected.

Ms Adams has also promised $50 million to boost mobile phone coverage in remote areas.

The policy would be funded by extending the Telecommunications Development Levy, currently due to expire in 2016, for another three years.

The Levy (successor to the old Kiwi Share Levy that used to go straight into Telecom’s pocket) extracts $50 million a year from telecommunications companies, proportionate to their revenue (see Commerce Commission table right).

As the law stands, the levy will reduce to $10 million a year after 2016.

Funds from the levy go toward the RBI build, which is being carried out by contract winners Vodafone (building new cell towers fixed wireless broadband leg) and Chorus (fibre). Unlike the $1.35 billion the Crown is investing in various companies involved in the urban Ultrafast Broadband (UFB) rollout, the money does not have to be paid back, and Chorus and Vodafone get to operate RBI infrastructure on a commercial basis (with the proviso they give all retailers equal access).

The fact the new funding is contestable is a blow for Chorus, which had been feeding off rumours that National will put more money toward public-private broadband.

I think it is a good thing that the funding will be contestable, so rural regions get the best bang for the buck.

Today’s policy announcement has also put Labour on the backfoot.

National has already comprehensively out-spent the previous Labour government on broadband; Labour’s ICT policy promised new spending in the region of $21 million.

Again, David Cunliffe and Clare Curran find themselves out-Laboured by Steven Joyce and Amy Adams.

Labour need all the spare money to pay families on welfare more money for staying on welfare.