KEY POINTS:
Customers have plenty of choice with new cut-price landline and broadband offers which include free monthly internet.
In what's described as the technological equivalent of a "land grab", rival telcos are offering new cut-price landline and broadband deals to Kiwi customers.
Some of the latest offers, known as "all you can eat" deals, include no-pay landline fees and free monthly internet.
Yesterday, hours after Government-backed Orcon announced it was offering customers 20GB of broadband, plus free line rental and unlimited national toll calls for $79.95 a month, more than 1200 people had signed up.
Tomorrow, Vodafone will launch its new Broadband1 deal. Customers signing up for the offer will pay $41 for a monthly line rental, and with unlimited national toll calls for $20 will receive 1GB free broadband for that month.
Orcon chief executive officer Scott Bartlett said its deal was aimed at middle New Zealand. "The main reason New Zealand hasn't taken up broadband as quickly as overseas is that people really hate paying $45 every month just to have a phone."
Orcon was "definitely" losing money on it, but had an ulterior motive - it planned to use the success of the weekend's sign-up to lobby the Commission to speed up the unbundling process.
"The roll out is too slow. At the moment they're doing 15 exchanges every three months. If we can show New Zealanders are screaming out for decent broadband then that can only be a good thing."
While the initial deal was limited to 5000 customers, it was likely to be extended, "possibly in the next couple of days", Bartlett said.
Commentators believe the latest moves signal a new broadband war after the loop unbundling in which Telecom was forced to open its exchanges and lines to allow a more open market. Under unbundling regulations, wholesale line charges will drop from $37 to $16.49 from next year.
"Obviously, that has pushed this along. Now we're seeing competition in the broadband market and that's great," Consumers' Institute chief executive Sue Chetwin said.
Guy Hallwright, telco analyst at Forsyth Barr, said bundled or "all you can eat" deals were the way of the future. "It's all about pricing and marketing and how you can encourage people to sign up. If you look at Australia, you'll find companies over there offering the same sort of thing."
One, Optus, offered a package at around $100 a month that included international tolls, local and mobile calls, line rental and broadband. A home phone and 2GB broadband, similar to the Orcon deal, cost $69 a month.
"The evidence from places like that where unbundling is a bit more established, and generally around the world, is that people are moving to those "all you can eat" kind of packages where there's a certain amount of broadband and no marginal costs for calls."
People signing up for any new package should be wary of the broadband allowances, he said. 1GB was only sufficient for basic email. If people wanted to use the internet for more than that there would be additional costs.
Vodafone's Paul Brislen expected the competition to heat up over the next few months as rival telcos waded in to the "land grab" in an attempt to get customers to switch companies.
