Cost rules download volumes

Prime Minister Helen Clark's call this week to lift internet download limits will not be possible without costs going down elsewhere, service providers say.

"It's one of the downsides of living in New Zealand, our isolation does incur costs," said David Diprose, general manager of regulatory affairs for ihug. "Just like it's more expensive to fly here ... it costs to get data to New Zealand."

Clark took some shots at Telecom's broadband provision on Tuesday, pointing out that New Zealand was one of the few countries where restrictive data limits were the norm.

These download limitations were one of the factors affecting broadband uptake, which Clark vowed to improve.

Telecom on Monday unveiled a number of new broadband services, all with data caps.

The basic plan at $29.95 a month has a limit of 200 megabytes, while the top-end plan for $149.95 a month grants 40 gigabytes.

Most plans charge 2c a megabyte after the limit is reached, while others ratchet users back down to dial-up speed.

Telecom is offering similar plans to other ISPs, including ihug, Slingshot and Orcon, on a wholesale basis.

The average broadband user downloads between 4 and 10 gigabytes a month, depending on service provider.

That means it's easy to rack up extra charges and makes the Government's stated goal of fast, $1-a-day broadband impossible, Diprose says.

"As long as there is negligible data usage [it's possible], but it's impossible if there's significant data usage. You can very easily get $30 of data usage [on top of the monthly access fee]."

Southern Cross Cables, which is 50 per cent owned by Telecom, provides all the data pipelines on which internet traffic gets into and out of New Zealand.

Southern Cross sells this bandwidth to Telecom and to multinational providers such as Sprint and McI, who in turn resell it to local ISPs for about $1 a gigabyte.

ISPs also must pay for domestic bandwidth which makes capacity the second-largest cost the ISPs face.

Telecom could not be reached for comment.