Telecom will be building the bulk of New Zealand's ultrafast broadband network.
The Government has announced that the bulk of the contract to roll out ultrafast broadband has been awarded to the communications provider, which will break up into two listed companies later in the year.
Telecom, which has the contract in 24 of the 33 cities and towns covered by the scheme, saw off competition from fibre and electricity lines companies joined under the banner of the Regional Fibre Group.
The Telecom deals will see fibre optic networks built in Auckland, most of the South Island, and the eastern and lower North Island as part of New Zealand’s biggest-ever infrastructure project.
Telecom chief executive Paul Reynolds – who is expected to stand down following the separation of the company – estimates the network will cost between $5 billion and $6 billion.
Wel Networks and Northpower won separate contracts and will be building around 16 percent of the network – responsible for Hamilton, Tuaranga, Whangarei, New Plymouth, Wanganui, Tokoroa and Hawera.
Enable Networks, which is owned by Christchurch City Council, will build the network in Christchurch, Rangiora and surrounding areas.
A Government investment of $1.35 billion will support the broadband scheme, and is designed to reduce the financial risk for the network builders.
Telecom, Wel, Northpower and Enable will only need to pay back the government investment when customers have begun to purchase services.
Minister for Communications and Information Technology Steven Joyce says the network will boost New Zealand’s economy and allow us to jump ahead of international competition.
"Ultrafast broadband is a key part of the government's economic growth plan,” Mr Joyce said.
“Broadband speeds of 100 Mbps and more will revolutionise the way many businesses operate - for example high-quality videoconferencing will remove the tyranny of distance, enabling face to face contact with clients anywhere around the world."
Entry level products will cost $40 or less for households, and the 100 megabit product will be around $60 per month. Speeds are expected to increase over time as the cost of data-transmitting technology comes down.
The network will provide 75 percent of New Zealand homes with the choice of 30 or 100 megabit per second broadband, and is due to be completed by 2020.
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