ISPs hail Telecom broadband deal

Telecom and ihug are hailing an 11th-hour agreement that will see internet providers able to sell Telecom's fastest internet access plans early in the New Year.

Telecom had said it was unable to offer the one and two megabits per second plans to wholesale customers until March next year.

However, Auckland-based ISP ihug and TelstraClear complained to the Commerce Commission, which was due to release its draft determination on the matter today.

Instead, a deal has been struck that will allow ihug and other providers to sell the service under a resale agreement from January.

Ihug general manager David Diprose said the agreement was a win for the consumer.

"It means we'll be able to offer a competitive deal and drive broadband uptake," he said.

Diprose said the company had withdrawn its request for a determination. "I know the commission put in a lot of hours and were ready to release the draft determination so on the surface it looks like it's all come to nothing," he said. "But when we started this, Telecom didn't even have a launch date for the 2mbps plans and now we've got it earlier than we'd hoped. "

Telecom's general manager for government relations, Bruce Parkes, said the compromise deal meant all ISPs could sell the service from January instead of waiting for the full wholesale service in March.

"Basically, it's our resale agreement that was always available but with a few changes," he said.

Originally, Telecom had tied the resale of the faster plans in with the line rental itself.

An ISP that wanted to sell the plans had to also take on the management of the line rental for customers and many ISPs baulked at that.

Parkes said: "It means a customer will be able to get their line rental from one company, broadband from another and tolls from a third if they want."

Telecom said ISPs could begin selling the service and attracting customers and then move them to the wholesale version of the service when it launched in March.

Telecom has been selling the faster services to its own customers for some time but said it did not have the technical capability to offer it to its competitors at a wholesale rate. In its submission to the commission, Telecom said introducing the wholesale version - known as "unbundled bitstream service" - before March would be technically difficult and would mean diverting resources away from the existing UBS service.

Ihug is still concerned that Telecom's plan has a faster upload speed than the impending UBS plan. Telecom offers a 192 kilobits per second connection speed but the Telecommunications Act asks for a maximum upload speed of 128kbps.

Diprose said he would like the commission to consider lifting that, particularly since Telecom's retail plan offered that speed.

TelstraClear has not withdrawn its application for regulation and the commission will continue to investigate. Its application went further than ihug's, seeking a determination on several other issues as well as access to the faster plans.

The action

* June - Telecom announced its wholesale 256kbps service to launch in September.

* September - Telecom launched 1mbps and 2mbps retail plans without a wholesale equivalent.

* November 5 - TelstraClear and Ihug complained about lack of access to faster plans.

* November 26 - The Commerce Commission announces probe.

* December - Telecom and Ihug reach agreement on plans.