KEY POINTS:
Internet and phone company Orcon has stepped into Telecom's stronghold - the home phone market - with a new residential phone offering.
The company's service, Orcon Homeline, allows consumers to get all their home phone services - internet, phone and tolls - from Orcon without losing their existing phone number.
"It doesn't matter if you're in Fiordland or Eketahuna through to Ponsonby, everyone can get this service, including the rural community," said general manager of operations Scott Bartlett.
He said the company, which began 10 years ago as a traditional internet service provider, moved into the long distance calling and toll call market 18 months ago.
"For us it has been a natural evolution to get into the fixed-line market," he said.
Orcon will use wholesale fixed-line services purchased from other suppliers in order to sign-up as many customers as it can before Telecom is required to open its network to competitors (known as local loop unbundling).
Bartlett said Orcon have committed $30 million to building its own network and mini-exchanges using VDSL (Very High Speed DSL) technology which will go in after local loop unbundling.
"It means you can move away from paying $40 for your phone line and get it for $10 because it's all voice over IP, which to be honest, is not really happening in New Zealand at the moment because companies like us can't get in to build this network," he said.
Bartlett said the company is "chomping at the bit" to introduce the new technology and is waiting for the Commerce Commission decision on unbundling.
IDC telecommunications analyst Darian Bird said the companies competing with Telecom's home phone services, which include ihug and CallPlus as well as Orcon, are only making a few per cent margin on their offerings.
He said their strategy is to move from being an internet service provider to a full telecommunication operator, offering calling, mobile calling and content services like IPTV (Internet Protocol Television).
"They've launched now knowing they won't make any money off it, but the idea being that once the local loop unbundles they can hopefully get a bit of infrastructure in there and make some extra margin on it immediately because they will have a large enough customer base," said Bird
He said Orcon's offering will appeal to consumers who want one bill for internet and home phone but feel dissatisfied with Telecom's service.
"It won't be a profitable exercise at the moment, but it does position them for the future."
Telecom's general manager of consumer marketing Kevin Bowler said: "It is a competitive homeline market and this is another example of the wide range of services that customers can choose from."
He said Telecom have recently announced a new range fixed price toll call packages aimed at residential customers.
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HOW THEY COMPARE:
Orcon Homeline - $44.95 (includes connection, wiring and maintenance insurance).
ihug Home Phone - $40.00 + $2.25 wiring and maintenance insurance.
Telecom Homeline - $43.60 (or $36 in Wellington and Christchurch) + $2.53 wiring and maintenance insurance + $48.99 or more for connection (one off cost).
Orcon Homeline Plus - $59.95 (includes connection, wiring, maintenance insurance, call waiting, call minder and caller ID).
ihug Home Phone - $40.00 + $12 for voicemail, call waiting and caller display + $2.25 wiring and maintenance insurance
Telecom Homeline - $43.60 + $3.95 call waiting + $9.95 call minder + $3.95 caller ID + $2.53 wiring and maintenance insurance + $48.99 or more for connection (one off cost).
