Telecom sets new goal for broadband use

By PETER GRIFFIN telecoms writer

Telecom has set itself the target of having 100,000 New Zealand households signed up to its high-speed internet services by the end of next year, but its critics have written off the goal as too little, too late.

About 36,000 households are using its Jetstream internet products and Telecom is under pressure to increase broadband penetration as a joint venture of Walker Wireless and Vodafone picks up Government subsidy to provide services in rural areas.

By mid-year, Telecom says, it will be offering a more flexible range of broadband packages to "cater for people who are heavy downloaders or are keen gamers, or only access New Zealand content".

No commitments have been made to price reductions.

"We're working out how to deliver a lower-priced product to the market," said chief operating operator Simon Moutter.

Telecom's focus had until now been on building a broadband network that reached 84 per cent of its customers. The next task was to "fill it with people".

But Telecommunications Users Association chief executive Ernie Newman said Telecom had to get realistic about dropping prices and removing data download caps.

He said Telecom's failure to win Project Probe tenders in Southland, Wairarapa and Northland was a wake-up call for the company.

"[The target] has got to be seen in light of the dramatic announcements that three of the projects associated with Project Probe have gone to companies other than Telecom."

Sydney-based industry commentator Paul Budde, a vocal critic of Telecom and Telstra, labelled the target a "disgrace". He estimated that achieving the target would increase the country's broadband penetration to just 9 per cent - from a level now of about 3 per cent.

"New Zealand will by 2004 be running much further behind the rest of the world [in broadband penetration]. My estimate, below 50th position on the world ranking," said Budde.

The target was revealed as Telecom launched new services that integrated Telecom Mobile and internet provider Xtra more closely.

Xtra Instant Messenger will allow Telecom customers to message each other from their mobile phones and participate in group chat sessions - much in the same way as thousands of email users message each other using Microsoft's MSN Messenger.

Messages will cost about the same as a text message to send and initially be available only to Telecom Xtra customers, another point drawing the ire of Tuanz.

"We're concerned about any trend that restricts services to customers of the same vendor," said Newman.

He pointed out that a few years ago Vodafone had dragged the chain on making technology changes to allow text messages to be sent to and from Telecom's network as it tried to corner the text messaging market for itself.

Moutter accepted that compelling mobile services had been slow to come to market, but he said building the infrastructure to support the new services had taken time.

"It has been a while coming. But it took 10 years to build a great internet business ... and it took four years and hundreds of millions of dollars to build a next generation mobile network."