Peter Griffin: Telecom claims gloss over broadband facts

COMMENT

With the memory of a $232 million quarterly profit still lingering, Telecom last week decided to push its "everything is all right in the world of broadband" message a bit further, managing to make itself look smug and disingenuous in the process.

Telecom was searching for endorsement of its belated move to get serious, as the country's main telecoms infrastructure owner, about shaking up the broadband market. It thought it had found that endorsement in a couple of reports from the OECD.

We've all come to place a lot of weight on the reports that issue from the OECD. That's because we've bashed Telecom over the head with previous research that makes our pitiful progress in broadband take-up all too obvious.

On the face of it one of the reports, compiled last September, released in March but only seized upon now, has us looking quite good in terms of broadband pricing.

We are nestled in between Deutsche Telecom and Swisscom as having the sixth cheapest incumbent DSL provider in the OECD, at around US$37 ($61) a month.

Among the 30 companies benchmarked, Telstra came in around US$50 a month, while British Telecom was just over US$40 a month and Turkish Telecom was US$120 a month, in a survey that strangely dwelt only on incumbent operators, as though they would have the most competitively priced offerings.

It was that message that Telecom chose to broadcast last week.

"Sixth out of 30 countries means that customers are getting a very good deal for their money," said chief executive Theresa Gattung in the press release. "So quit your moaning!" I could almost hear her add.

On the back of Telecom's claim it is signing up 2000 new broadband customers a week and with its new goal of reaching 250,000 broadband subscribers by the end of next year, the telco appeared to be riding as much mileage as possible out of its latest broadband push and trying to win some political points in the process.

But the fact once again is that the figures paint only half of the picture.

Ernie Newman, chief executive of the Telecommunications Users Association, summed up Telecom's methodology when he said the telco was comparing "appetisers with banquets".

He was sitting in the Paris office of the OECD's telecoms number cruncher when Telecom put out its release. Subsequently Tuanz has pointed out a few things that blow Telecom's claim out of the water.

Most of the other countries benchmarked have much higher data caps or operate flat-rate unmetered services that are much faster than Telecom's.

The OECD's graph makes no account for this in ranking the incumbent telcos from cheapest to most expensive, which makes Telecom's attractive price ranking in the OECD true up until its customers hit the one gigagbyte download limit.

Contrary to Tuanz's claim, the OECD figures did not include Telecom's 128Kbps "Jetstart" service, which is generally not even considered to be broadband. The OECD has dispensed with that deal.

However, the survey covers only monopoly operators, presumably because the OECD did not have the time or resources to survey all providers and their services.

As the OECD boffins themselves point out: "One caveat to note is the offers with low data transfer allowances such as Telecom New Zealand's 2 [Mbps] service with a 500 megabyte transfer allowance. To compare this service with unlimited offers or offers with much higher allowances, it would be necessary to make appropriate provision for the metered charge."

Do that, and Telecom's No 6 ranking is pulled out from under it, because it charges 5c a megabyte for excess data charges on many of its services.

Sure, Japanese provider NTT East's customers are paying around US$3 more a month for DSL, but those customers are getting a 1.5Mbps link for their small premium.

If you look at the rankings on a dollar per kilobit basis for even moderate internet users, the picture deteriorates further.

Belgacom, for instance, is benchmarked at just over US$40 a month, but is delivering a 3.3Mbps service, which according to its website, comes with a 10GB cap.

The ball is rolling as far as broadband is concerned at Telecom, which began its real pitch this year, with the March price-drop the real beginning.

We shouldn't be under any illusions as to why this has happened now. It has only been the arrival of competition in the form of Woosh Wireless and the threat of unbundling that has finally kick-started Telecom's broadband efforts after years of sitting in cruise control.

I'm one of the thousands who in the last few weeks migrated to an entry-level Jetstream account. Technically it's great and the waived sign-up fee means the barrier to entry has been low.

Telecom, as another OECD report shows, has also done well on extending Jetstream's reach to around 92 per cent of the population.

So Telecom gets a couple of ticks, and the subsequent pricing cut after the research period will improve things. But competitive pressures are moving prices down everywhere.

How much value you get from Jetstream will depend on what you use it for. But among our OECD peers, we're still being mistreated.

Telecom's attempts to paint a rosy picture of a situation that's been bleak for some time is disingenuous. We're not suckers you know. Well we are, but only if we're sucking bandwidth.

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