HOME Technology Nov 2008
Broadband battle looming
Unbindling boosts competition

Competing Internet providers are gearing for a huge assault on market leader Telecomís broadband customers and targeting enticing deals at the 35 percent of New Zealanders still on dial up.

Broadband users crossed the 50 percent threshold late last year and while there are currently around 891,000 subscribers, New Zealand still has one of the highest global rates of people still on dial-up, second only to Colombia.

According to a Commerce Commission report thereís been a 25 percent growth in broadband uptake over 2007 partially bolstered by a price war between Vodafone and Telecom in the retail DSL market. Just over a third or 200,000 of Telecom's broadband connections, are now through wholesale arrangements with third parties.

However many broadband customers believe theyíre getting a raw deal with average speeds as low as 1.4Mbit/sec-3Mbit/sec from exchanges designed to deliver at least 7Mbit/sec speeds. This has been attributed to a combination of the often poor state of the nationís copper telephone lines and exchange overloading since Telecom opening up full network speeds to all account holders 18 months ago.

Uptake quickening

Overall New Zealand broadband penetration continues to hover at 19th place out of the 30 OECD nations, although we achieved sixth highest growth in connections in the first half of this year.

Promises about how quickly we might regain our composure in the OECD broadband stakes are rife with dubious claims we can still make the top half for uptake, speed and coverage during 2010.

One of the targets in Digital Strategy 2.0 is that 80 percent of Internet users will have 20Mbit/sec or higher by 2012 and 90 percent would have 10Mbit/sec. It also promises open-access fibre networks in at least 15 cities and towns by that date.

The target is 97 percent of New Zealanders, including those in remote areas, having broadband access either by cable or satellite and the remaining 3 percent having at least 1Mbit/sec. The ultimate goal is 100Mbit/sec speeds for almost everyone.

Other admirable goals of the Digital Strategy include expanding the Aotearoa People's Network to offer free connections from schools, libraries and marae in all communities by 2010.

Funding catalyst

To fill in the gaps around the country the government has put up $340 million as a contestable Broadband Investment Fund. Itís currently sifting through 19 applications and 56 expressions from those eager to get the job done.

Vodafone, which acquired pioneering ISP ihug in 2006 has been installing its equipment in Telecom exchanges across Auckland and reselling to Slingshot and others. Orcon, another pioneer of local loop unbundling with a huge funding injection from State-owned Kordia, is also rolling out its unbundled network.

In some exchange areas Orcon is dropping flyers and going door to door trying to convert Telecom customers. Meanwhile Telecom has raised the bar, automatically offering existing broadband customers 10Gb capacity and free national calls if they stay loyal for the next 12 months.

TelstraClear for example is looking to unbundle up to 680 exchanges nationwide. It is already offering VDSL2, very high speed broadband, over copper, to medium-sized businesses in seven city centres through its own roadside cabinets and Telecom and Vodafone are also looking to move to the higher speed technology.

Thereís no question demands on the broadband infrastructure are only going to escalate and many countries are already struggling to keep pace with their future planning. According to a Speedtest.net survey sponsored by Cisco Systems the quality of connections is just as important as broadband penetration and said a lot about the maturity of a countryís Internet infrastructure.

The survey which focuses on broadband upload and download speeds in 42 countries said the quality of connections available and New Zealand was seriously slacking.

  Back2front    General Interest Webzine