Faster, cheaper broadband due for NZ by October

Theresa Gattung

Faster and cheaper broadband should be on the market by October at the latest, with the Commerce Commission expected to order Telecom to offer the fastest internet speed it can to its competitors.

"[A ruling] next week is my understanding," a source close to the situation said on Friday.

New Zealand's number three and four internet service providers, CallPlus and ihug, filed an application with the commission in March seeking access to unconstrained broadband service from Telecom.

The application mirrored a ruling TelstraClear received in December that forced Telecom to offer the highest speeds its network was possible of delivering, which the commission found to be 7.6 megabits per second.

The commission found the service should be offered on a retail-minus basis, meaning the wholesale price would be based on the average retail price minus a suitable profit margin for the reseller.

In the TelstraClear ruling, the wholesale cost was found to be $27.87 per user, but CallPlus and ihug have suggested in their applications that the price should be lower because retail prices have since gone down. The new price should be $20.47, the ISPs said, which would clear the way for retail fast broadband at $30 or less a month.

The TelstraClear ruling also called for an 18-week implementation period, which is also what CallPlus and ihug have asked for. If the CallPlus and ihug determinations are finalised in the next week or two, unconstrained services would be available in early October.

Telecom threatened a legal challenge to the TelstraClear ruling and, rather than risk being left out of the market longer, the two companies signed a deal for watered-down terms in January. TelstraClear has yet to roll out any services, but spokesman Mathew Bolland said they were "weeks, not months away".

The commission's rulings are applicable only to the applying party, so other ISPs were not able to take advantage of the TelstraClear determination. However, Telecom has in the past said it would apply any rulings to all of its wholesale customers.

Bolland could not say how that might affect TelstraClear's deal with Telecom, but he did say the agreement was for only a year.

ihug chief executive Mark Rushworth said he expected the commission to skip the normal draft determination phase and go straight to a final ruling. "We are hopeful it will be in the next week or two," he said. "That should be plenty of time."

A commission spokeswoman could not comment on the determinations. The commission is in meetings on Wednesday and Thursday, so any rulings on those days are unlikely.

All eyes will be on Telecom. Chief executive Theresa Gattung last week made pledges at a telecommunications conference that Telecom would no longer be obstructive. But when asked by CallPlus founder Malcolm Dick if Telecom would continue challenging his company's application for unconstrained broadband, Gattung said she had not been briefed and would not comment further.

Telecom spokesman John Goulter said it was too early to comment on the pending determinations, but reiterated Gattung's position. "I wouldn't jump the gun," he said. "Theresa did mean those comments that she made."