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Fonterra Broadband Initiative

Introduction: Over the past year Fonterra has been progressing a rural telecommunications initiative to explore the possibilities of providing its farmer suppliers with a vastly improved and modern communications infrastructure.

Fonterra believes access to improved communications services is fundamental to enabling the future success of Fonterra and its dairy farmer suppliers. A key theme of Fonterra’s strategy launched late last year is to remain the world’s lowest cost producer of dairy products. The service being proposed, FonterraNet, is considered to be critical to delivering The Fonterra Strategy, as it would allow improved knowledge transfer, development of new technologies and improved communications with suppliers.

Currently many Fonterra suppliers experience considerable frustration in using the internet and can not benefit effectively from the benefits it could bring. About three-quarters of Fonterra suppliers use the internet, with 70% of these experiencing connection problems. The FonterraNet solution proposed by Telecom and BCL will end the problems experienced by many remote internet users of slow and dropped connections, with the proposed package as good as service currently available to urban dwellers.

To build understanding and appreciation of fast internet/broadband services, demonstrations are being conducted by Telecom to Fonterra’s suppliers over the next couple of weeks. These will also provide a strong indication on whether suppliers want Fonterra to continue to progress the initiative.

Fonterra, like many other companies in the rural sector, requires a nationwide internet solution capable of servicing all its shareholders and suppliers. Therefore, the company is also discussing opportunities with Government on possible synergies between the Telecom/BCL proposal and the Government’s telecommunications strategies, including Project Probe. Fonterra executives have met with key Government Ministers, including Agriculture Minister Jim Sutton and Telecommunications Minister Paul Swain

The FonterraNet Proposal: Fonterra suppliers are attending demonstrations at meetings from Whangarei to Gore from February 24 to March 12. All suppliers have been sent invitations to attend these meetings, which will show them how their farming businesses and lives could benefit from the proposed package, including:

Always available high speed internet access Access to a nationwide Private Network Service which connects all FonterraNet users with each other, with Fonterra and via an Internet gateway to the World Wide Web (the Internet) Flat fee unlimited surfing on the FonterraNet private network (includes and 500MB worth of monthly free downloads on the World Wide Web IP Telephony service between FonterraNet users – which enables FonterraNet users to make voice calls to each other via Internet Technology (by-passing the public telephone network) Special broadband enabled applications in the Fonterra Dairy Portal (currently, where all Fonterra suppliers will be able to monitor production, receive training and Fonterra communications in a more graphical and user friendly format through a high speed Internet connection Ongoing technical and user support for FonterraNet via a designated help line.

One of four technologies is proposed to deliver the FonterraNet service to suppliers, depending on where they are located. Wire - this uses ‘digital subscriber lines’ technology over the Telecom copper lines, similar to Jet Stream. Wireless - this uses wireless technology, transmitted from transmission towers operated by BCL to an antenna on the farm. This service will cover a majority of Fonterra farmer suppliers. Wireless II – this uses wireless technology, together with a ‘wireless extension’ service for farms that are not in ‘line-of-sight’ of a BCL wireless tower. Satellite – this uses satellite technology, and will be available wherever none of the other services is available.

The Costs:

Fonterra expects 80% of its farmer suppliers who subscribe to the proposed FonterraNet package will have a net monthly cost of about $80, provided they download less than 500MB of data or less monthly on the World Wide Web. Other Benefits: Fonterra believes that fast internet will not only provide another tool to suppliers in improving productivity in their farm businesses, but also serve to benefit the suppliers’ families by opening up greater communication avenues. It is anticipated that FonterraNet will have a major, beneficial impact on farming families’ quality of life.

Widespread Agribusiness Support: Fonterra has received widespread support in progressing a national solution for rural internet users. Many other agribusinesses also require a nationwide fast internet solution to service their shareholders and customers.

Fonterra has had a significant level of support from the agribusiness sector throughout New Zealand. They include: Federated Farmers Landcorp Westland Dairy Products ENZA The New Zealand Meat Board or Meat New Zealand Rural Women Livestock Improvement

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