Chorus seeks $1.5B to close New Zealand rural digital divide

Chorus calls for a $1.5 billion project addressing New Zealand's digital divide, as a government discussion paper canvasses reforming the industry levy to fund rural infrastructure.

Robert Clark, Contributing Editor, Special to Light Reading

June 4, 2024

2 Min Read
Lupines in a field, with mountains in the background, in Milford Sound, New Zealand.
Chorus says more needs to be done to ensure rural parts of New Zealand don't fall behind.(Source: Aneta Hartmannová/Unsplash)

New Zealand broadband wholesaler Chorus has called for a national public-private project (PPP) to close the rural digital divide.

Anna Mitchell, the head of Chorus' fiber frontier project, says an expansion of fiber reach to 95% of the population would cost around 2.5 billion NZ dollars (US$1.5 billion) over ten years.

She said following the completion of the ultra-fast broadband (UFB) scheme at the end of 2022 the government lacked a strategy to ensure rural areas did not fall behind.

The UFB scheme, a public-private partnership (PPP) involving Chorus and three smaller broadband providers, built out fiber to 87% of New Zealand premises.

Chorus is investing NZ$40 million this year to extend its fiber network to an additional 10,000 households and businesses.

But Mitchell, writing for a rural newspaper last week, said New Zealand lacked "a co-ordinated long-term plan for the country's rural connectivity infrastructure" following the phase-out of the copper network.

She says the new program could be partly funded by raising the Telecommunications Development Levy, which is paid by operators according to their share of industry revenue.

Raise the levy

The levy, which funded the mobile-only rural broadband initiative, was reduced from NZ$50 million (US$30.8 million) to NZ$20 million ($12.3 million) a year in 2020. Mitchell suggests returning it to NZ$50 million.

The government isn't closing the door on that idea. In an industry discussion paper, issued last week, it acknowledged the importance of the levy as a means of funding rural connectivity and called for making it more flexible.

Minister for Media and Communications Paul Goldsmith told rural news service Dairy News that rural connectivity was "arguably the best it has ever been," but there were "ongoing challenges" in building out affordable connectivity to rural locations.

A New Zealand Institute of Economic Research report in 2022 estimated that the total benefit in closing the rural digital divide was around NZ$16.5 billion ($10.2 billion) over ten years.

The report, commissioned by Chorus, estimates an overall increase in rural value-add each year of NZ$189.5 million ($116.9 million) in the business sector alone.

Chorus reported 1.06 million fiber and 124,000 copper broadband connections at the end of the March quarter. Its fiber network passes 1.5 million premises, with 1.27 million ready for service.

The company announced last May it will withdraw all copper connections by 2033.

About the Author(s)

Robert Clark

Contributing Editor, Special to Light Reading

Robert Clark is an independent technology editor and researcher based in Hong Kong. In addition to contributing to Light Reading, he also has his own blog,  Electric Speech (http://www.electricspeech.com). 

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