Telecom CEO Theresa Gattung says Telecm is already taking major steps that will ensure it is in line with the Government’s recently released Draft Digital Strategy and able to deliver high end services including video on demand.

She says there are currently a million customers on dial up and 100,000 on broadband ‘of one sort or another’. "The immediate challenge is to convert the million on dial up across to broadband and while the ratio is currently five dial-up customers to ever one broadband."

She says the gap between broadband and dial up is now as little as $10 per month and "close to the tipping point where customers see value in making the move." Dial up is increasingly being viewed as a transition path with an increasing number moving up to broadband and more 128kbit/sec customers moving up to 256.

"A year ago we would have said it is not viable to move beyond a 70 per cent penetration of DSL but we’re accessed the best thinking around this area and Alcatels mini DSLAMs have meant it is now possible to push this out much further to 92 per cent."

Ms Gatung says Telecom is committed to the next generation of DSL services and to next generation networking including VDSL. The question remains will this be delivered beyond the CDB to all exchanges. "We’re looking at Europe and how video over DSL stacks up as a business case and what are people prepared to pay for."

"We are looking at a once in a decade decision to move to a next generation network (NGN) including renewing our switches and investigating the economics of fibre to the home and delivery of the kinds of services envisaged in the digital strategy document."

Ms Gattung says partnering with Alcatel and EDS to deliver a full IP network capable of delivering voice, video and data was a significant shift. "Fibre to the cabinets is not the most important part of this change, we are currently engaged in a complete revamp of our PSTN switches, billing and customer support systems."

She says interconnection and everything else is different in the IP world. "It is a different customer experience. Customers will have much more control over their whole relationship rather than deal with different account directors for provisioning they’ll do that themselves, for example selecting bursty bandwidth on-line for a period of time."

"We have a big investment programme over the next few year to completely reshape the interface between telcos and customers," says Ms Gattung.