Telecom NZ gets some broadband competition

Vector Ltd. has finally shown its hand in the broadband business market with an aggressive offering designed to steal customers from the incumbents.

The new product, Infinite Broadband, offers higher speeds than Telecom JetStream at a lower price. It specifies a 2Mbps download speed and 1Mbps upload with unlimited national traffic for NZ$329 (US$240) per month. International bandwidth is rate-limited to 256kbps after 20GB of international traffic.

The service is now available in central Auckland and initially is limited to those buildings that are already on Vector’s network, but Telecommunications Users Association chief executive Ernie Newman hopes national telcos will be forced to respond both in Auckland and in other centres.

“It shows the impact the lack of competition has on speed and prices and I believe the businesses of Auckland will welcome it with open arms,” he says.

Newman says it’s disappointing that broadband competition like this isn’t widely available throughout the country. “It certainly shows the sort of thing that other countries are being exposed to with a competitive broadband market, where prices can suddenly drop like a stone.”

Telecom’s equivalent JetStream product, based on copper lines, offers up to 2Mbps downstream, up to 600kbps up and has a limit of 20GB for all traffic — but it costs N$1,617.80, almost five times’ Vector’s pricing, and has an excess traffic usage after 20GB of national and international traffic of nine cents per megabyte.

Vector product development manager Mark Bailey says the company is “comfortable” with its pricing policy.

“It’s pricing that works for Vector, works for our channel partners and we hope works for our customers.” Vector doesn’t offer the Infinite service directly to business customers but partners with Auckland ISPs Maxnet and Orcon to deliver the end product. Maxnet general manager Brett Herkt says he’s delighted with the product.

“Telecom and TelstraClear aren’t in the business of reselling their fibre so this is great for us, it gives us a real boost in the business market.” Herkt says the price point and traffic limits mean the ISP can offer a real broadband service that fits between DSL and the company’s dedicated circuit business.

Bailey says the service is available to those CBD buildings that are already lit by Vector’s fibre loop, but that the company is always keen to hear from companies that aren’t connected but wish to be.

“We’re expanding all the time. Our network is very much driven by demand and if someone came to us with a request to be added of course we’d look at it.”

Libby Wilson, another Vector development manager, says the company is targeting small to medium sized businesses with the product.

“Our research shows companies are fed up with broadband. It’s usually too expensive and doesn’t deliver what they’re expecting. They also talked a lot about ‘bill shock’ and so we’ve built a product that hopefully will address those issues.”

Vector has increased its network’s footprint by around 50 per cent since buying United Networks in late 2002, and now has “in the low thousands” of buildings covered around Auckland. The company has been trialling its Infinite Broadband service for some months and has received positive feedback from its customers.

One potential customer, Computer Forensics, is “ecstatic” with the offer. Managing director Brian Eardley-Wilmot says he was about to sign up with another ISP for substantially more money.

“What I don’t understand is why this kind of service has taken so long to come to market. Broadband in New Zealand is priced atrociously. It’s time the people rise up and demand better service.”

Wellington-based CityLink also offers services on its own fibre loop and has a 4Mbps symmetrical service that is retailing from several Wellington ISPs. Sales and marketing manager Damien Fahey says the entry level product on the market costs N$200 for 5GB of international traffic with unlimited national traffic. CityLink also has a toehold in the Auckland CBD.

TelstraClear resells Telecom’s DSL offer for business customers but also sells service on its own cable network in Wellington and parts of Christchurch with a 2Mbps download and 256kbps upload service, priced N$499 per month.

Despite regular interest from broadband proponents, Vector has traditionally kept its communications business low-key. The company’s latest financial report makes little mention of its communications business or any future investment in its fibre network. The Infinite Broadband product was launched without public statement from the company.