The Government has ssued details of its $300 million rural broadband plan, saying it plans to fund the rollout with a new industry-wide levy.
Communications And Information Technology Minister Steven Joyce says the new telecommunications development levy will replace the Telecommunications Service Obligations levy (TSO).
Under the TSO levy, Telecom receives $70 million per year to compensate it for providing a phone service to rural customers - but it does not have to reveal who those customers are.
Under the Government's proposal, that will be scrapped and the industry will pay levies amounting to about $50 million per year to help fund the rollout of broadband in rural areas.
Telecommunications Users Association chairman Chris O'Connell says many are saying the fund should be contestable rather than being "handed straight to Telecom."
Telecom says it is meeting all its requirements under the TSO, and has been pushing for a reform of the arrangements on principles of contestibility and transparency.
The company says it's important subsidies applied to fund services to uneconomic customers are borne equally by all consumers, not just Telecom's.
The Telecommunications Industry Group, of which Telecom is a member, says it will be looking for ways to pass on any levies to customers.
Federated Farmers is concerned that scrapping the TSO levy will mean less money for broadband development.
The Government plans to seek tenders from companies willing to provide the technology to link rural schools to ultra-fast broadband in the first six years and extend the networks to communities.
It is putting in more money than originally indicated, taking its contribution from $48 million to $100 million, a third of the funding required.
The Government says a shake-up of rural broadband funding is required if it is to achieve its target of widepread broadband access in the next six years.
Rural Women New Zealand telecommunications spokesperson Jacky Stafford is concerned the investment will not happen fast enough and that rural areas will continue to lag behind urban areas.
Submissions on the Government's proposals close at the end of October.