ISPs fear technicality could dash hopes of cheap, fast net

Internet service providers have given a warning that a technicality could scuttle hopes for faster and cheaper internet services.

The Commerce Commission issued a consultation document on Wednesday that would lower wholesale prices and remove speed throttles Telecom imposes on resellers, thus clearing the way for better product differentiation and true competition.

But the ISPs say a key detail of the proposed ruling, issued in response to an application for better wholesale terms by TelstraClear, is fundamentally flawed because of the way it will handle heavy internet usage.

The speed at which users connect to the internet is governed by several factors, chief of which is the number of other users online at any given time - the more there are, the slower the connection for everyone.

Telecom's present network set-up allows for 50 users to share a single pipeline, which the ISPs say is far from ideal but manageable. But under the terms of the proposal, the new set-up would be changed to include a larger overall average of users. At peak usage times, this could slow even the fastest connections down to worse than dial-up.

"The product is unmarketable. We wouldn't offer it to our customers on this basis as it will simply drive customer frustration and complaints at peak times," said Slingshot founder Annette Presley.

The commission's final determination, which industry observers expect by the end of the year, will apply only to TelstraClear.

David DiProse, president of the Internet Service Providers Association and general manager regulatory for iHug, said the ISPs would ask Telecom for a similar commercial offering, except that it would be based on the present 50-to-one network set-up or better.

If Telecom does not offer those terms, DiProse expects to get the commission to force them to, since such provisions have been made in its consultation statement.