Woosh puts on brave face after broadband change

Woosh Wireless isn't fazed by the Government's major overhaul of telecommunications regulation, but some analysts think the breakup of Telecom's monopoly is the final nail in the company's coffin.

"We've anticipated something along these lines," said Woosh chief executive Bob Smith of the sweeping regulation that will open Telecom's network to other internet service providers.

"Our strategy has always been that we're out there doing it today. We've been building another highway, not sharing the same highway."

The Government on Wednesday announced it was unbundling Telecom's copper wire network, which means that competitors such as TelstraClear and ihug will be able to offer their own broadband and phone services. A number of other actions, including accounting separation of Telecom, were also announced, and competition between internet services providers is expected to take off. As a result, internet speeds are expected to increase and prices should go down.

Analysts had already been sour on Woosh before the announcement, and now say the company's wireless technology won't be able to match the speeds the wired services will start to offer, likely early next year.

Smith said effects of the legislation on wired broadband players won't be felt for another few years, and in the meantime Woosh will be increasing its speeds up to the technology's maximum of 14 megabits per second.

Woosh cancelled its initial public offering last year amid doubts it had not sufficiently developed its business to warrant a flotation on the share market. The company also had to lay off about a dozen staff earlier this year.

The outlook for the company is dour, analysts say.

"It weakens the economics," said an analyst who asked not to be named. "They've had four years to get the model right and to get a customer base and they've done neither. They just don't have a competitive product in terms of cost to customer that will face up to these other technologies."

Woosh's technology completely circumvents Telecom's network, and the company offers broadband and phone services to about 20,000 customers across the country. This week, Woosh raised the top download speed of its broadband to about one megabit a second.

But another analyst said that wouldn't be enough.

"It's looked bad for them ever since speed became the focus." Wired broadband always has an advantage over wireless, and the new regulation will accelerate that edge, he said.