Telecom steals rural march

By PETER GRIFFIN telecoms writer

Telecom is making a pre-emptive push into rural New Zealand, rolling out high-speed wireless internet services ahead of a Government project that aims to do exactly the same thing.

The telco will use the tower network of Broadcast Communications Ltd (BCL) to get high-speed internet access to areas beyond the reach of its copper-wire-based technology.

And farmers are expected to form a large chunk of its rural customer base. Telecom and BCL will trial the technology for Fonterra's 17,000 dairy farmers over the next few months to gauge interest.

Most farmers now access the internet on dial-up modems, which are slow and often connect through old, poor-quality lines that are susceptible to interference from electric fences.

Telecom's general manager of corporate sales, Mark O'Donnell, said new services offered to farmers would likely come through Fonterra's Fencepost.com web portal which gives farmers access to milk yield statistics, weather reports and farming advice.

High-speed internet access would allow Fencepost to offer more sophisticated features - in theory giving farmers information allowing them to become more productive.

But Telecom's head of network investment, Rhoda Holmes, is adamant that Telecom's wireless internet push into the backblocks will not undermine the Government's $30 million Probe project - in which the country's telecoms providers compete for Government money to provide broadband access to rural communities.

Holmes said Telecom would still participate in the region-by-region tendering for Probe and its future business might come from a mix of subsidised Probe wins and purely commercial deals.

"Our view is that in regional New Zealand there is a market need now. Customer demand is there."

But some in the industry see Telecom's move as a lack of faith in the Probe tendering process, which has already handed a tender for the Southland region to a Vodafone/Walker Wireless alliance.

Decisions on which companies will become the preferred suppliers for the Far North and Wairarapa are expected soon.

Fonterra appears keen to keep the Government in the picture, planning a meeting with several ministers next week to outline its network plan.

Last January details emerged of a Fonterra-led plan to itself build a rural broadband service, going out to open tender and potentially competing against Telecom for rural subscribers.

Some telecoms providers were eager to get involved, but the project stalled as Telecom negotiated its way into Fonterra's plans.

It reportedly used the lure of large discounts.

Telecom moves further into the backblocks as broadband penetration nationally creeps past 3 per cent - extremely low by international standards. But Telecom claims that penetration is around 10 per cent for small businesses and 50 per cent for medium businesses. Farms could fall into either category.

Fonterra said surveys of its farmers showed that 75 per cent of them were using the internet to transact business with the dairy company and access information.

If there is sufficient enthusiasm from farmers, a national rollout will likely go ahead. But early indications are that the cost of the technology delivering the service may make the retail packages too expensive for many farmers.

The Airspan wireless equipment BCL is known to favour is selling for up to US$1500 ($2740) in the United States.

Then there are monthly subscription costs to consider.