Telecommunications company TelstraClear is warning that consumers will pay the cost of a new industry levy for better rural broadband.
Cabinet has approved the Government's $300 million plan to introduce high-speed broadband to rural areas over six years.
Most of that, $252 million, will be funded through a levy on the telecommunications sector, with $48 million from Government.
TelstraClear group manager of regulation Chris Abbott says the company wanted taxation to cover the broadband initiative, and the levy costs will have to be passed on to consumers.
However, he says TelstraClear welcomes a change to the Telecommunications Service Obligation, or TSO.
Under the TSO, Telecom at present receives between $60 million and $70 million a year to subsidise the cost of providing basic phone and dial-up services to rural communities, but that will be scrapped under the Government's plan.
Telecom's share price fell to an all-time low on Tuesday after it said the broadband plan would cost it up to $168 million over the next three years.
The phone company's share price fell 4 cents to $2.17.
Vodafone spokesperson Paul Brislen says rural consumers are now well served by mobile operators, and Telecom's rural monopoly is over.
Broadband popularity grows
Meanwhile, the latest survey shows broadband continues to grow in popularity.
The New World Internet Project Survey of over 1200 New Zealanders indicates 83% are now using the internet, up from 79% in 2007.
Dial-up use is declining, as the proportion using broadband rises from 67% to 82%.
Two-thirds of survey respondents said the internet is so important to
their everyday lives that losing access to it would be a problem.
Nearly half of users report using social networking sites.
