Higher speeds - but higher costs too

Telecom's Matt Crockett says prices will reflect the fact that fast broadband is a premium product. Photo / Brett Phibbs

Broadband users in the main cities can expect juiced-up internet speeds later this year - but they will come at a price.

Telecom Wholesale - responsible for selling the company's network capacity to other telcos including its own retail arm - are installing high-speed (VDSL2) broadband technology to boost speeds over the copper network.

Four wholesale customers are trying broadband through VDSL2 equipment - WorldXchange, PlaNet, MaxNet and Telecom Retail - delivering average download speeds of 42 megabits per second and upload speeds of 16 megabits per second to end users.

The technology, once installed in exchanges and roadside cabinets, delivers significant speed improvements to customers on copper lines less than 1.5km from an exchange or cabinet.

Beyond that distance VDSL2 performance can be worse than ADSL2+ - the next step down in broadband technology.

The high-speed broadband technology makes interactive gaming and high-definition television possible.

By the end of September Telecom Wholesale hopes to have a commercial product available in the main centres - Auckland, Hamilton, Wellington, Christchurch and Dunedin - roughly equating to 50 per cent of connections.

Telecom Wholesale chief executive Matt Crockett said: "What that will mean is that customers will have a choice of taking up a VDSL service in quite a broad footprint." By default customers in those areas will receive broadband via ADSL2+ technology, however those within 1km to 1.5km of an exchange or cabinet will have the option to upgrade to VDSL2.

Telecom Wholesale aims to have systems in place to tell customers whether they would benefit from connecting to a VDSL2 service.

While the price of the top end ADSL2+ wholesale service is regulated by the Commerce Commission, Telecom Wholesale will charge a premium for VDSL2.

"We do believe it's a premium product. We've endeavoured to price it such that it will still have a high end consumer and [small business] end user appeal at the kind of price points our customers should be able to get to," said Crockett. "In due course the pricing of that will flow down and there'll be whatever the hell comes after VDSL2."

Telecom Wholesale would not say what it would be charging for the product, citing commercial sensitivity, but TelstraClear customers taking up the "Warp Speed" service offered via cable in Christchurch pay $230 a month for speeds of up to 25 megabits per second.

Orcon and Vodafone are also testing the VDSL2 technology on their own networks.

Both are holding back on committing to a widespread installation in exchanges until the Commerce Commission reveals the price Chorus - Telecom's network arm - can charge for access to its new roadside cabinets.

The new cabinets - in effect mini-telephone exchanges - cut the distance broadband travels over copper. But with fewer customers served off a cabinet compared with an exchange, the economics of installing expensive broadband equipment can be challenging for smaller telcos.

COPPER ON STEROIDS
* ADSL: Typical speeds of less than 5Mbps* up to 2.5km from an exchange. Watch video clips, stream music and podcasts, have VoIP conversations.
* ADSL2+: Speeds of 8 to 15Mbps up to 1.5km from an exchange. Stream high-definition video, watch DVD-quality movies, high-quality video conferencing.
* VDSL2: 50Mbps up to 1km from an exchange. Stream multiple high-definition broadcasts, interactive gaming.
* Average download speeds at present are 3.8 megabits per second in Auckland.

Mbps = megabits per second