Taking a page from the Australian broadband playbook, New Zealand has decided not to sit around while incumbent DSL operators milk the withered dugs of their cash cow until it keels over from old age. Instead, the Kiwis have established a government-owned corporation to invest NZ$1.5 billion for open-access fiber to the home. By 2020, 75 percent of residents should have, at a bare minimum, 100Mbps down/50 Mbps up with a choice of providers.

Crown Fibre Holdings Limited is the company, and it's wholly owned by the government—for now—and the company's mission couldn't be any clearer. Two of its six guiding principles include "focusing on building new infrastructure, and not unduly preserving the 'legacy assets' of the past" and "avoiding 'lining the pockets' of existing broadband network providers."

The New Zealand government set up the company late last year, but the government won't install and own the network by itself. Instead, Crown Fibre will partner with local companies across New Zealand to roll out fiber. Those companies will have to invest their own money as well, but in return they become part of the national dark fiber open-access system envisioned by Crown Fibre.

Here's how it works: every fiber builder who takes government money needs to lay basic, unmanaged dark fiber that any ISP can light in order to offer service to a particular home or business. The fiber companies can also run some particular Layer 2 services, but they can't offer full-blown Internet access directly. Instead, they are allowed to sell Internet access to their own retail unit so long as it operates like a separate business, and all other ISPs must be offered access at the same rate.

This keeps the government from simply "setting the price" and undercutting the market, but it also means that anyone can use the fiber infrastructure without competitive disadvantage.

Once the ten-year buildout ends, Crown Fibre will convert to a "successful, profit driven business" that oversees the complete network, shares in its revenues, and ensures national interoperability. (For the complete business arrangements, see appendix 2 of the government's Invitation to Participate [PDF]).

The government's 2010 budget, announced a few weeks ago, includes more cash for Crown Fibre's work. "This funding will enable Crown Fibre Holdings to start making substantial contract commitments with the private sector to start rolling out the new fibre network," said Deputy Prime Minister Bill English.