New Zealand broadband uptake: good or bad?

Stuart Corner
Sunday, 06 November 2005 13:43

IT Industry - Deals

Telecom New Zealand, in its Q1 results announcement has bragged about achieving its goal of 250,000 residential broadband customers two months ahead of schedule "with nearly half the growth in residential customers for the quarter coming from wholesale." However, its biggest wholesale customer, TelstraClear is not happy.

Telecom had 244,086 residential broadband customers at 30 September 2005, an increase of 19 percent on the previous quarter with 38,159 new connections over the period. The 250,000 target was surpassed during October.

Telecom claims that around 45 percent of total residential broadband growth for the quarter came from competitors' customers, under Unbundled Bitstream Service (UBS) and wholesale broadband plans, up from 34 percent in the quarter to June 2005, and 23 percent in the quarter to March 2005.

"The surging growth in wholesale connections and market share is evidence of the success of the wholesale market in New Zealand. "Wholesale providers are now getting a substantially larger share of the market attracting 30 percent of the growth in new connections since the introduction of UBS in November 2004. This has been assisted by Telecom Wholesale promotions such as free connection and free modem offers – and an above the line generic broadband advertising campaign launched in recent weeks."

However, according to TelstraClear, "Today's announcement that the residential wholesale broadband target is unlikely to be reached reflects the poor state of the wholesale market and a lacklustre UBS product."

TelstraClear industry and regulatory affairs manager, Grant Forsyth, said the numbers "show the UBS service made available to challenger telecommunications companies has failed to excite the industry or consumers.

"Late last year, TelstraClear found the UBS service was not commercially viable and did not meet regulatory requirements. Others pushed ahead anyway and lost money while we were kept out of the market as we sought a regulatory outcome that would enable us to provide a more compelling service," said Forsyth.

"One year later there is little satisfaction in being right. The [Commerce] Commission's initial findings prove the UBS service falls well short of what was required and today's results are as depressing as expected."

Forsyth claimed the target was not overly ambitions. "Achieving 83,000 wholesale residential broadband customers by December 31 was a low hurdle to aim for, but one New Zealand looks unlikely to meet given today's announcement of 47,000 customers at September 30. In the meantime, recent OECD reports show our broadband ranking continues to lag the world."