Bids from suppliers seeking funding under the Rural Broadband Initiative (RBI) closed last Friday.   And the prospects are glum for rural households and businesses compared to our urban cousins.

The government saw the importance of broadband infrastructure to rural areas and set objectives for the $300M rural broadband initiative to provide data speeds at a minimum rate of 5Mbps to 97% of New Zealand’s households and enterprises with the remaining 3% receiving 1Mbps or better.  Additionally, 97% of schools were to get at least 100Mbps and the remaining 3% at least 10Mbps.  That changed subtly in the Minister’s press release of 12th November to “...national coverage will see 80 per cent of rural households getting speeds of at least 5Mbps and the remainder receiving at least 1Mbps.  In addition, the proposals offer to connect at least 93 per cent of rural schools to fibre.”

Only three of the five RBI bidders have identified themselves. 

Kordia (ex Broadcast Communications Limited aka BCL) has previously announced their intention to partner with Woosh and FX Networks. Kordia’s core business is providing the national links for television transmissions, a business that will become obsolescent in 2013 when analogue TV is switched off.  Kordia and Woosh own radio spectrum that is suitable for wireless systems so their focus for rural broadband will be on wireless solutions.

In a move that surprised many industry observers, arch-rivals Telecom and Vodafone announced a joint RBI bid.  

Pragmatism appears to be the prime reason for these two bedding down together.  The government have “actively encouraged” bidders to be a part of a national alliance if they are to be successful.  

An alliance between the Telecom Retail arm that provide their XT mobile services and Telecom Chorus would not work even if Telecom were to fully separate from Chorus in time for the RBI tenders to be awarded.  

An alliance between Telecom Chorus and new mobile phone company 2Degrees would only serve to strengthen the competitiveness of the new entrant. 

So Telecom was left only with the prospect of an alliance with Vodafone.

The press release from Telecom/Vodafone was interesting in delineating how the relationship between them will work.

“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 wireless service provider who wishes to do so.”

Which is a clear implication that fibre to the farm is not in the thinking of this bidder. 

The third party to announce their bid, the NZ Regional Fiber Group (NZRFG), are the only group to put a focus on fibre networks.  Their intention is to provide urban-quality open access fibre networks as far in to the rural heartland as is possible with the funding available. This is expected to provide schools with 1Gbps and fibre to the farm at 100Kbps.  That is10 times and 20 times faster respectively than the government’s goal).  In the most remote areas, the NZRFG have partnered with wireless providers to reach the last mile of those really remote households.

In Rural Connect’s view, anything less than fibre to the farm will only serve to deepen the digital divide between rural and urban areas.  This needs to be a deciding factor as the MED evaluates competing bids.  Economic fibre to the farm services have already been achieved in some rural areas.  Otherwise rural users will have only the poor man’s RBI - rural buggered infrastructure.