BCL's Extend open for business

By PETER GRIFFIN

Broadcast Communications is officially open for business on its new rural broadband service Extend, which brings 100,000 businesses, farms and homes within reach of fast internet access for the first time.

But its set-up costs have dismayed BCL's retail partners, ihug and Iconz.

A $25 million network of 28 sites will now service rural communities the length of New Zealand.

Users installing a box and antenna from US wireless technology company Airspan can bypass Telecom's unreliable copper line network to receive download speeds enjoyed by city-dwellers.

The question is whether rural New Zealand will stump up the $1500 for the equipment and installation, excluding monthly subscriptions.

Telecom's rate card for Xtra Wireless has a plan starting at $110 a month for a 256kbps (kilobits per second) connection with a 1Gb (gigabyte) download cap. A faster 512kbps connection with a 2Gb cap sells at the other end of the range for $160 a month. Installation and equipment combined come in at $1475 but subscribers signing up for three years pay $495 for the equipment plus installation.

Ihug's general manager Martin Wylie said ihug, which has experience in the regions selling its Ultra satellite internet service, would be unable to match the "massive subsidisation" of equipment and special deals Telecom is offering for Fonterra farmers signing up to long-term contracts.

"It could be fought on pricing but the cost of [the Airspan equipment] means it's a big ask."

He expected "slow burning" subscription. Despite signing on to sell wireless services, ihug did not share Telecom's view that the proliferation of wireless providers removed the urgency to unbundle its local loop.

"I don't see it as any answer to unbundling. Not at $1500 it isn't."

Iconz's monthly subscription deals are $5 cheaper and equipment and installation is $1400.

At that price, Iconz general manager Sean Weekes said the service would not make any "significant margin" for the internet provider, which plans to appeal to anti-Telecom sentiment in the backblocks to win business.

Iconz was planning to woo rural dwellers with its own web portal, which Weekes declined to elaborate on but said would be "slightly left-field" of Fencepost.com.

Telecom remains the most enthusiastic partner as it begins a mass mail-out to Fonterra farmers in a bid to win subscribers. Chief executive Theresa Gattung said the telco had sought out a deal with BCL because it could not serve rural New Zealand over its own network.

Iconz