Telcos jostling for position

A day after the Government's bombshell decision to break Telecom's internet and phone monopoly, rival telcos were plotting their assault on the company's market share - with several already accelerating their investment plans.

Telecom's biggest competitor, number two internet service provider TelstraClear, yesterday indicated it would be stepping up investment.

"Telstra's track record in New Zealand is that given half a chance it will spend money, and quite considerably spend money," spokesman Mathew Bolland said.

"New Zealand is now a much more attractive place to invest and timing becomes much more paramount," he added, declining to provide specifics.

Ihug, the largest reseller of Telecom's copper wire-based broadband services and number three ISP, has brought the first phase of its investment plan up to two years from three.

The company in November announced it would spend $20 million on new ADSL2+ technology over three years. It had planned to provide 100,000 customers in North Island towns and cities with download speeds up to 24 megabits per second.

Chief executive Mark Rushworth said yesterday that plan would now be sped up to two years, given that the Government has gone further than expected in its action.

Communications Minister David Cunliffe on Wednesday announced the Government would open Telecom's phone exchanges, allowing competitors to install their own equipment and set their own broadband speeds and prices. The Government will also force accounting separation on the company, and require it to offer an unconstrained internet service.

Telecom will also have to offer separate phone and broadband services in a process known as "Naked DSL". Rivals will be able to sell customers one without the other, and will for the first time be able to sell phone services.

"People will finally see competition for the home phone and cheaper prices for their home phone," Rushworth said. "There's many different ways and bundles that competitors can come up with."

Rushworth was unable to provide specific price examples because ISPs are still awaiting details on the Government's plans. Cunliffe said on Wednesday that the Government would regulate the prices Telecom will be able to charge under unbundling, Naked DSL and unconstrained services. These will determine what services can be offered and at what prices, Rushworth said.

Number four ISP CallPlus said it had committed between $200 million and $300 million for investment. Most of that had been earmarked for the rollout of a wireless broadband network but that plan may change, said Annette Presley, chief executive of the company's Slingshot internet division.

"Whether that [investment is] in WiMax or in unbundling, we do not know because the landscape is changing. Until we get some details, we don't know. What we do know is that because this has occurred, we are a serious player in New Zealand."

Number-five ISP Orcon said it too would be investing in unbundling, although the company declined to provide details.

Scott Bartlett, the company's general manager of regulatory affairs, said Orcon would be able to offer a bundled phone and broadband service for about $50 within two years.

Bartlett also said Orcon plans significant investment in rural New Zealand.

"I imagine we'll go into places that ihug and CallPlus will never dream of. All this stuff about how [unbundling] means no one's going to invest in the countryside is a load of bull."