A Government decision to award a rural broadband contract to Telecom and Vodafone might leave rural internet users with worse service than those in urban centres, the Labour Party says.
The Government today announced it had started commercial negotiations with Telecom and Vodafone over their joint bid to the $285 million Rural Broadband Initiative (RBI) tender.
The proposal was one of three to be short-listed, and Communications and Information Technology Minister Steven Joyce said the Government had confidence it could be deployed.
The joint bid involved an extension of Telecom's fibre network to deliver fixed wireless and fixed wire broadband to 252,000 rural customers, and the construction of 154 fibre-connected cellphone towers to for fixed wireless broadband.
"The joint proposal was the only one that increases mobile coverage, and it will ensure serious competition in the last mile with many rural customers being able to choose from fixed wireless, ADSL2+ and mobile broadband," Mr Joyce said.
However, Labour MP Clare Curran said giving the contract to Telecom and Vodafone might stifle competition, making the digital divide between urban and rural New Zealand worse.
"Concerns are already being expressed that with the two biggest market players being awarded the rural broadband contract, there will be little opportunity for competition at the wholesale level and a resulting lack of pressure for price competition for rural New Zealanders," Ms Curran said.
"The Vodafone/Telecom bid gives no guarantee or commitment that it will deliver rural access to broadband above the 5Mbps required of them by the contract specifications.
"Other bids have promised more. On the face of it, it appears rural New Zealanders may be poorly served compared with their urban cousins."
Ms Curran said the Government needed to release its reasons for awarding the contract to Telecom and Vodafone.
"It may be that the best decision has been made, but the public needs to know the reasons why."
