Speaking at an industry conference yesterday, Communications Minister Steven Joyce confirmed a commitment to a high speed broadband network capable of upload and download speeds of 100 Mbit/s - about 50 times faster than generally available today - over 10 years.
Investment in broadband infrastructure would be critical for economic growth as the country moved out of recession, he said.
"It's the speed at which we grow after the recession that will determine the state of the taxpayers' balance sheet in 10 years' time."
The historically low levels of investment in broadband infrastructure had put the brakes on New Zealand's ability to take advantage of the opportunities the technology offered.
Government funding would be directed at laying "dark fibre" - the physical fibre optic network capable of carrying broadband and voice data.
"The plan is to have stuff going in the ground around the end of the year."
Telecom head Paul Reynolds said he was pleased to hear the Government was still committed to its promise to spend money on fibre networks.
"We've always said it would take a government contribution to make fibre-to-the-home viable."
Telecom is among telecommunications players, including electricity lines companies such as Vector, interested in government funding to improve the broadband network.
The expectation is the private sector would match government money, but Mr Joyce would not be drawn on which companies would be in the best position to join the Government on building a high-speed network.
