KEY POINTS:
Internet and phone company Orcon plans to attack Sky Television's customer base by delivering programmes over the internet via super-fast broadband to television sets once Telecom opens its network to competitors next year.
Orcon regulatory manager Scott Bartlett said it was pitching to a market segment who were
"not necessarily totally nuts about watching the rugby live" but still wanted high-definition quality television delivered by broadband - known as IPTV.
It has secured rights for a range of movies and 52 channels including comedy, sci-fi, music, weather, news and Korean and Japanese foreign language, which will be sent to an IPTV box connected to customers' televisions.
Orcon planned to price movies at about $1 each and television packages would be split between 25 channels a month for $25 and 52 channels for $30, compared to Sky's satellite entry-level packages of about $15 a week.
The Government's legislation to break open Telecom's network was expected to be finalised by early next year and competitors who used Telecom's network were hoping to place equipment in Telecom's network in June.
Orcon, which uses Telecom's copper network, planned to go further than Telecom by installing VDSL2+, the second generation broadband service capable of "blistering" download speeds up to 100 megabits.
Telecom uses broadband ADSL2+ with maximum download speeds of up to 8 megabits.
"If we left this to the big telcos we wouldn't get VDSL2+ for 5-10 years. We don't have an existing legacy framework that limits us, so we can leap-frog them in terms of technology," said Bartlett.
Orcon - which has about 100,000 customers - is investing $30 million with Siemens in the network.
Sky Television chief executive John Fellet said it would like to partner with Orcon and deliver its channels over Orcon's service, but if that did not happen, was looking forward to competition heating up.
"Compete with us, that is fine. If you want to take our core product and add options yourself, that is an option as well," he said.
"We don't believe we have a monopoly and every channel known to man, we just think we have the ones that are important to New Zealanders."
Sky had contracts to deliver IPTV with Telecom, Telstra and Woosh and said it would go over "any platform".
"We have rights to rugby and movies, so whenever companies start seriously looking at it, they will look upon us as more of a supplier than a competitor."
Sky planned to release its IPTV box in the first quarter of 2007, which would deliver TV and movies over the internet to television sets.
"For the foreseeable future, until the infrastructure improves, the satellite is the best way to deliver live rugby but if you wanted to see a game that has been played, the internet is the best way to do that, by streaming."