Ihug gets ready for unbundled market

Internet service provider ihug yesterday launched a campaign to ready itself for new laws that will open up Telecom's local network to competitors.

Ihug - which has been put up for sale by its Australian parent iiNet - will distribute Telecom's fixed-line service, allowing customers to cut ties with the national carrier.

It hopes to build a critical mass of customers around individual phone exchanges before taking advantage of the new legislation and switching customers onto its own network.

"To take full advantage of the opportunities LLU [local loop unbundling] presents, it is essential to build scale and offer a full suite of services," said ihug chief executive Mark Rushworth.

"Ihug's home phone ... and [calling plans] is designed to appeal to the mass market."

The legislation forcing Telecom to open its network of lines to rivals is due to come into effect next year.

Ihug hopes to entice customers to the service with a package of cut-price home phone and internet access plans. The key feature of these plans is a series of flat-rate, all-inclusive national and international calling plans ranging from $15 to $40.

Meanwhile, internet service providers warn that Telecom's proposed pricing for its full-speed broadband products will create a price squeeze.

Internet Service Providers Association of New Zealand director Graham Walmsley said that, as an example, Telecom was "cynically" offering consumers an entry level product at $29.95 which ISPs had to buy from Telecom at $31.55.