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Broadband breakthrough ahead
Data limits likely to be lowered
The broadband breakthrough the market has been waiting for may be on the horizon with a Commerce Commission determination that Telecom must supply TelstraClear with full speed digital subscriber line (DSL) internet access at no greater price that it’s currently paying.

While TelstraClear has eased off its push into the domestic market to focus more on business customers, the Commission’s ruling is expected to have a flow-on impact to the rest of the internet service provider (ISP) community, possibly by Christmas.

Seeby Woodhouse, managing director of Orcon Internet says the move will be incentive for him to drop data caps on higher speed accounts and ramp up the speed to existing customers. "We’ve been able to offer 2Mbit/sec for about six months and that’s what most new customers are going for, but my guess is providers will soon be able to offer plans up to 3.5Mbit/sec. If that’s the case, we’ll probably ‘grandfather’ our 256kbit/sec accounts and make 2Mbit/sec entry level - $39.95 with a 1Gb cap and $10 for the next 10Gb is a lot of data," he says.

All Ihug’s broadband plans are now 2Mbit/sec, with entry level at just $30 a month as long as users subscribe to its direct dial tolls service. "Our customers know 256kbit/sec barely qualifies as broadband, it’s just fast dial up.  For people to take advantage of everything broadband can offer - sending digital photographs to streaming movies - they need the fastest possible speed for around a dollar a day," says chief executive Mark Rushworth.

He’s eager to see ‘real deal’ broadband, and along with other providers will continue to lobby until it arrives. The proposed changes in speeds and data caps are likely to further intensify fierce competition in the broadband market, as providers try to entice dial-up and low end DSL users to accelerate their speed.

Labour, as part of its election promises, said it would pressure Telecom to improve its record in providing faster wholesale internet services to ISPs, aiming at $30 a month rather than the current market average of $40. Telecom had agreed to sign up 250,000 residential broadband customers by the end of this year, with a third of those coming through resellers such as Orcon and Ihug. While Telecom says it has passed its own target, by November it had only signed up 47,000 of the 83,000 wholesale accounts required to meet the wholesale target and prevent it from coming under tighter regulation.

Broadband, whether from a wireless operator like Whoosh or the 100 or so ISPs who’re clambering to get access to faster speeds for their customers, is the key to all the promises technology companies have been making this past decade. The telecommunications carriers have abundant ‘big pipe’ capacity but rationing domestic customers until they can find a way to make money on new services. Slow access to the internet is frustrating for those who see the enormous possibilities ahead. It’s like we’re on the cusp of massive change but someone’s stepping on the hose.

It is the government’s stated intention to get us into the top quarter of the OECD Broadband Statistics but over the past two years we’ve remained stuck at 22nd place out of 30 nations. Our fast internet access – 256kbit/sec plus – had lifted only marginally from 4.5 per cent to 6.9 per cent of users in the year to June 2005. "These statistics pose a challenge to the industry and the government. Telcos, ISPs and the government need to lift their game if we’re ever going to gain the benefits that widespread access to high quality, affordable broadband will bring," says InternetNZ president Colin Jackson.

To reach the government’s goal by 2010, about 80 percent of residences or 600,000 customers would need to be connected to broadband – that’s a 300 percent growth spurt over the next five years. Meanwhile Alcatel has been giving Telecom’s core network a $1.4 billion make-over, so it can deliver much higher speed connections for a range of services including fast internet, voice over IP (VoIP) and on-demand video. It is currently rolling out ADSL2+ chip sets to its exchanges which can deliver 15Mbit/sec speeds into selected areas.

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