Fudged broadband numbers fail to ruffle officials

Fudged broadband numbers fail to ruffle officials

New Zealand telecommunications commissioner Douglas Webb is neither surprised nor moved by Telecom New Zealand Ltd.’s apparent exaggeration of residential broadband uptake.

Webb was responding to the revelation last week that Telecom’s claim of 48,000 home broadband users includes 35,000 who, by its own definition, are non-broadband JetStream Starter customers. The figures are significant as the commissioner invites submissions on the issue of local loop unbundling (LLU), which he has recommended in a report released last month that the government impose on Telecom.

Webb’s LLU team had discovered for itself that Telecom’s figures included JetStream Starter customers, whose connections are rated at 128Kbps, half the 256Kbps minimum to qualify as broadband.

Webb concedes, however, that New Zealand’s residential broadband uptake rate is low.

“Now we haven’t tried to answer that question because that wasn’t quite the question we were asked.” Webb says the LLU report looks closely at the two broadband markets, business and residential, and concludes that business customers stand to benefit more from unbundling than do residential customers.

“We have to be cautious about assuming that we’ll see significantly increased residential uptake even after prices fall to levels significantly lower than today’s prices.”

Webb says residential customers put less value on faster connections.

“For most residential customers using dial-up, they’re getting a pretty good level of service to meet their needs, and their low inclination to value their time highly suggests that even with significantly lower pricing they won’t see the value in shifting (to broadband).”

Webb believes that telcos and Internet Service Providers (ISPs) offering a residential broadband solution have to offer more than mere speed increases to coax Internet users away from dial-up connections. He believes a model such as Fonterra is building for its dairy farmer suppliers is a good one.

“Even with lower prices and more competition it may well still have limited impact on the market. There has to be a product with added attraction for the residential user, something with extra value.”

Webb believes New Zealand is similar to most other OECD countries in this regard.

“Once you strip out the unique factors there is a consistent pattern in broadband uptake and New Zealand fits right into that pattern.”

Communications minister Paul Swain won’t comment directly on Telecom’s broadband uptake numbers but does believe New Zealand is on the right track by promoting broadband.

“I have absolutely no doubt that broadband will be one of the technologies that drives economic performance over the next decade.”

“I think the numbers today aren’t going to be as important as the numbers we’ll see at the end of 2004. They’ll be the really telling figures, when we find out how it’s all going.”

Swain says work being done by government at a regional level, through such initiatives as Project Probe, will provide the impetus many need to make the leap to broadband.

“In Southland they’re beating the toll barrier by making local calls on the network. That kind of service changes everything.”Telecom has set itself a target of 100,000 broadband residential customers by the end of next year, which will be much harder to reach if JetStream Starter customers aren’t included.