The Government is pushing ahead with its $1.5 billion plan to get ultra-fast broadband to three-quarters of New Zealanders within the next decade.
It is setting up a new Crown-owned company and will seek investment from commercial partners to develop a fibre-optic network.
Telecommunications Minister Steven Joyce says private sector investment will need to at least match the Government's funding.
The Government rejected an alternative Telecom proposal becaise it connected fewer firms and houses, provided ducts and not fibre, and was not going to generate the level of investment the Crown expects under its preferred model.
Instead, the Government will proceed with a plan in which only wholesale companies or consortiums can be partners in the infrastructure.
Mr Joyce says the investment will allow individuals and businesses to take advantage of improving technologies, including high-quality video conferencing.
The Government has expanded the number of towns and cities covered by the programme from 25 to 33. Schools, hospitals, businesses and apartment buildings will be the first to benefit.