Broadband speeds improve, but cabinet questions linger

Telecom's investment in roadside cabinets has brought relief to communities plagued by poor internet speeds, but has created unease about a cut in competition.

Pt Chevalier lawyer Henry Chellew, who represents the Pt Chevalier Business in Service of Community group, said the end-user experience of Telecom's investment had varied.

"Some people are very happy. Some people are not that impressed and others have concerns about the cabinetisation really leaving Telecom in a position of superiority in terms of delivering services against competitors," said Chellew.

Two years ago, Pt Chevalier became a flashpoint for Telecom customers fed up with woeful internet service.

Since then the community became one of the first to benefit from Telecom's investment in upgraded roadside cabinets.

Telecom's network arm, Chorus, is on track to install 3600 cabinets by the end of 2011 - roughly 25 a week - with the aim of cutting the distance broadband signals travel over copper and thereby boosting internet speeds.

Alex Woodley runs a research company based in her home at the end of the Pt Chevalier peninsula - 5km from the Mt Albert exchange that provides her phone and internet service.

Woodley regularly experiences speeds of 8 megabits per second - a far cry from when she was required to rent office space in the central city in order to send and receive data files.

She estimated the economic impact on her business was in the tens of thousands.

Woodley said improvements were immediate, but required her to change computer settings, internet plans and upgrade her modem.

"We went from being uncompetitive to back in the game," she said.

The Commerce Commission is setting the price and commercial terms for internet service companies to install their own equipment in the roadside cabinets.

To date only Telecom's wholesale arm is serving customers from the cabinets, with Vodafone and Orcon running technical trials in advance of receiving a commission decision on pricing.

Sticking points in the commission's discussions between internet companies and Chorus have been the space available to alternative operators and the way the access price will be set.

Vodafone's David Diprose describes upgrading the cabinets as the worst thing that has happened in the past year from a competitor's point of view.

He said placing Vodafone equipment in a cabinet would never be as viable as local loop unbundling because the cost per customer was higher.

Diprose said the wholesale option reduced margins and the opportunity to innovate.

"We can price it how we like and add frills how we like but basically it's still Telecom's product," said Diprose.

Telecom shares closed at $2.54 on Friday. In the past 12 months they have traded as high as $4.02 and as low as $2.20.