Wireless undercuts Telecom

By PETER GRIFFIN

Competition is well and truly on the way in the country's sluggish broadband market: Walker Wireless, successful trials completed, is poised to undercut Telecom with high-speed internet services priced from $58.

The company is offering the 400 participants of its recently completed Auckland trials deals at three speed levels - an entry level "Ultamo One" 128kbps (kilobit per second) service for $58 a month with a 5GB (gigabyte) data cap, a 256kbps service with a 1GB data cap for $75 a month ($129 for 4GB of data) and a 384kbps service for $175 a month with a 2GB cap.

The portable IP Wireless modems that give customers the option of taking their broadband connections with them as they roam around the Walker Wireless network area are being sold for $299.

An installation service will set customers back $99, but most customers are expected to be able to install the modems and software themselves.

Walker Wireless managing director Bob Smith said the prices for the trialists was indicative of what Aucklanders and eventually all internet users would be offered.

Of course Walker Wireless' modems are portable, as opposed to Telecom's fixed-line DSL services. Walker Wireless also claims it will deliver higher speeds than rival Telecom services for similar prices.

"Jetstart's speed is rate-limited to 128kbps and most people are getting dial-up speeds. We can do it on average three times faster," said Smith.

The company has ordered the equipment to begin expanding coverage in the Auckland region, with the aim of covering 75 per cent of the city within a year.

Meanwhile, Walker Wireless engineers are planning the network build for Southland as part of the Government's Probe project. Walker Wireless and Vodafone successfully tendered for the contract to supply its services to Southland and will receive a chunk of Government funding to build its network.

"We haven't put up a cellsite yet, but we've had our people travelling all over the region network planning, including Stewart Island," said Smith.

Telecom, watching the progress of Walker Wireless closely, has a big start with a broadband network covering much of the country and the clout to slash prices to fend off competitors.

Questioned by the Herald last week after Telecom's announcement of a $155 million profit for the quarter ended December 31, chief executive Theresa Gattung would not say whether Telecom would match the Vodafone/Walker Wireless broadband offerings, once they came on the market.

Those Auckland trialists will be able to sign up to a service rivalling Telecom's 128kbps Jetstart for $58 a month - $7 a month cheaper than Telecom - though generally Walker Wireless will slap far more restrictive data download caps on its customers.

Gattung is reluctant to accept that price competition for broadband services will weigh more on customers' buying decisions as rivals enter the market with comparative deals.

"I would say price is part of it, but it's not just price in an absolute sense, it's about pricing flexibility. What customers want is flexibility - they want to take this amount of bandwidth and this amount of managed services and they want to control it themselves," she said.

While Telecom still has the lead on Walker Wireless, the latter's high-profile backers have enough faith in the company's chances of success to dig into their pockets yet again.

Late last year, entrepreneurs Stephen Tindall and Craig Heatley, Todd Corporation and California-based venture capital group Clarity Partners all followed through on their promises of topping-up their investments.

Initially the syndicate of investors, along with Vodafone, put $20 million into Walker Wireless to fund the trials and early deployment of the network.

Smith would not divulge how much more money had been invested, but in the original deal Clarity invested $5 million, with an agreement to increase that to $15 million if the trials proved a success.

The local investors increased their stakes by $12 million last year, also agreeing to raise their stakes after the trials.

Eventually a total of $60 million will have been raised to fund Walker Wireless' broadband venture, some of which will involve Vodafone taking an equity stake in Walker Wireless.

Vodafone has not committed itself publicly to a deal with Walker Wireless. But experts drawn from Vodafone's overseas operations are understood to be wrapping up final evaluations of the technology.

"We'll make a decision later this month or in early March whether we're going ahead in partnership and what shape it will take," said spokeswoman Sarah Williams.