Price war looms in net trade

By JUHA SAARINEN

A broadband price war could be as close as June as Telecom prepares to give competitors access to wholesale high-speed internet services that may undercut the Jetstream deals it unveiled last week.

According to information the Herald has received, Telecom is assuming that in May, Communications Minister Paul Swain will accept the recommendations made by Telecommunications Commissioner Douglas Webb and reject full unbundling of Telecom's local loop in favour of the currently proposed bitstream wholesaling for Jetstream-type services.

After amendments to the Telecommunications Act, the "unbundled bitstream service", as Telecom has dubbed it, may be available as early as June.

The asymmetric digital subscriber line (ADSL) service would fit the speed parameters Webb suggested in his report recommending limited bitstream access instead of full unbundling or line-sharing - 256Kbps for downloading data, 128Kbps for uploading.

The service will be restricted to prevent "real-time" applications such as voice over IP (internet protocol) and virtual private networking.

Telecom's head of Government and industry relations, Bruce Parkes, said his company wanted to sort out the "nitty-gritty" details after the Commerce Commission "set out the high-level parameters".

But giving itself a sizeable head start over other internet providers, Telecom will, from next month, start selling its just-announced Jetstream Surf plans, which are similar to the unbundled bitstream ones.

The plans are also available for other internet providers to resell, but for small margins.

In comparison, unbundled bitstream could prove to be a lifeline for internet providers because they would be able to handle all internet traffic themselves, negotiating better pricing with Telecom's competitors, especially for international data.

Customers would be billed by the internet provider for the broadband service, without a Telecom component as per the existing plans.

Pricing for ADSL broadband service under unbundled bitstream is not known yet, but Parkes said it would be based on existing business and residential prices minus the costs for Telecom to provide helpdesk support and international bandwidth.

Jetstream customers considering switching over to the new Telecom Xtra plans next month may be better off waiting a few months to see what competing providers can come up with. Currently, the Jetstream Surf plans include a penalty rate of $10 a month for customers who do not put their toll calls through Telecom.

Albany-based internet provider Orcon has already announced it is negotiating with Telecom over unbundled bitstream for itself and the 40 or so downstream providers it supplies.

Managing director Seeby Woodhouse said Orcon hoped to provide an ADSL service with flat-rate pricing for domestic traffic, but with differing downstream international traffic data caps.

Telecom's Jetstream Surf plans currently charge the same for domestic and international data, even though the former is much cheaper than the latter.

The wholesale ADSL offering is set to be released simultaneously with Unbundled Partial Circuits (UPC), a service Telecom pitched to Webb at a late stage in submissions on unbundling.

The service, which convinced Webb not to unbundle parts of the public data network, is aimed at the business market and allows providers to connect to Telecom at 155Mbps interfaces and at lower commercial rates than now available.