After two months of negotiations with Telecom and Vodafone, a deal has been finalised.

The Minister for Communications and Information Technology, Steven Joyce, says this is a significant milestone in a journey towards New Zealand being a better connected and digitally enabled, productive and growing economy.

"Not only have we secured an agreement that exceeds the government’s RBI objectives, but we will have 252,000 customers in rural New Zealand getting access to high speed broadband that compares well to urban levels of service and prices,” he said.

"I am confident that we have secured the best deal for creating a step change in broadband services for rural New Zealand.”

The final contracts with Telecom and Vodafone provide for:

• 86% of rural houses and businesses having access to broadband peak speeds of at least 5Mbps (compared with 20% of rural homes and businesses at present; the RBI objective was 80%).
• The construction of 154 new cell phone towers and the upgrading of 380 existing cell towers to enable fixed wireless broadband to rural customers, as well as improved mobile coverage.
• Telecom extending its existing fibre network by approximately 3,100 kilometres, with some homes on route being provided with the opportunity of fibre to the premise at urban prices.
• An additional 6,200 square kilometres of mobile coverage across New Zealand (making a total of 125,700 square kilometres).
• 700 rural schools connecting directly to fibre networks, and 48 schools having digital microwave radio connections – this equates to 95% of rural schools having access to ultra-fast broadband speeds of 100Mbps (the RBI objective was 93%)
• Wholesale prices comparable to urban pricing
• All competitors to Telecom and Vodafone being able to access rural broadband infrastructure funded by the government on a non-discriminatory basis.
• Telecom extending urban-like fixed-line broadband speeds to 57% of rural customers.
• An upgrade path to 4G.

Telecom and Vodafone are expected to begin the roll out of RBI infrastructure mid-year.

It will be completed over the next six years.

"From the outset we’ve believed our proposal, which over-delivers on the Government’s RBI objectives, could deliver the most benefit to rural New Zealand. Not only does this deliver broadband access, but rural Kiwis will see a significant expansion of mobile voice, SMS and data coverage,” said Vodafone CEO, Russell Stanners.

Mark Ratcliffe, CEO of Telecom’s network business Chorus, added that work would get under way immediately.

"Because we’re able to build on significant existing infrastructure, capability and experience we can achieve a whole lot in a very short period of time. Within the first year we will have connected around 500 rural schools to fibre," he said.