Telco vows to lead fibre race

TelstraClear has fired a fresh salvo at the Government's planned $1.5 billion high-speed broadband spend-up, saying it intends, where possible, to compete aggressively against the state-funded fibre-optic network.

The country's third-largest telecommunications company said yesterday it was spending $10 million upgrading its fibre-based networks in Wellington and Christchurch so that by next year they would have the capacity to provide broadband connections to customers at up to 100 megabits per second (Mbps).

Subscribers to standard DSL broadband services run over copper phone lines typically experience speeds of between 1Mbps and 4Mbps.

TelstraClear chief executive Allan Freeth said 100Mbps was the speed targeted by the Government in its 10-year plan to provide super-fast broadband to three-quarters of the country's homes.

Given that TelstraClear had an existing network that would soon be capable of providing the Government's desired speed, it did not make sense for taxpayer money to be spent "overbuilding" a service that was already available in Wellington and Christchurch, he said.

"Where we have this network we won't be a customer on a publicly funded network, we'll be competing against it, and we will compete aggressively against anyone who tries to enter that market, particularly with public money," Freeth said.

Communications and Information Technology Minister Steven Joyce has said he plans to release more details on the Government's fibre network investment plans next month. He has said the money would be spent through a Crown-owned investment company and that the Government expects its $1.5 billion contribution to be at least matched by private sector investment.

Freeth yesterday repeated his earlier criticism that the Government investment plan was too complex and confusing.

"We've thought carefully about making this [TelstraClear's latest $10 million] investment, given the risk of overbuild and given the risk of being competed against by people who don't have the same type of return on investment criteria that we have," he said.

"But at the end of the day we have so much money invested in this network, and we now have well over 50 per cent of the market [in Wellington and Christchurch homes within reach of TelstraClear's cables]. We've got to give this to our customers."

From today, TelstraClear's Wellington customers will be able to sign up for a 25Mbps connection, which the company says is the fastest commercial speed available in the country. TelstraClear already offers a 25Mbps plan in Christchurch which comes with a hefty price tag. In both cities the service costs $230 a month.

Freeth admitted the 25Mbps plan had not been a big seller in Christchurch, so far attracting less than 20 customers. He said the lack of consumer interest in super-fast internet plans demonstrated the Government's strategy of pushing to build a nationwide fibre network was flawed.

He said lack of interest in paying top rates for super-fast broadband meant that even though it would soon have the ability to offer 100Mbps speeds in Wellington and Christchurch, TelstraClear would hold off doing so until it believed there was sufficient customer demand.

"We won't be providing 100Mbps packages from day one because no one wants them, nor do they want to pay for them at the moment.

"But what [the $10 million upgrade] does is it puts that capacity in place and it's simply a matter of if there's demand for it from businesses or from customers, then we can provide it."

He said TelstraClear did not, however, plan to build a fibre-based cable in Auckland to match the broadband infrastructure it had in Wellington and Christchurch because it did not believe it could achieve a suitable return on investment.

Instead its focus in Auckland was on local-loop unbundling: putting its own equipment into Telecom exchanges and then selling super-fast DSL connections that were not constrained by Telecom's network.

WARPSPEED BROADBAND
* TelstraClear's top-end broadband service (branded WarpSpeed) is available only to customers on its Wellington and Christchurch hybrid fibre coaxial networks.
* For $230 a month customers can download up to 120 gigabytes of data at up to 25 megabits per second.
* The company plans to spend $10 million upgrading the two networks so they are capable of delivering up to 100Mbps.
* It says it will compete aggressively against any Government-funded "overbuild" of its networks.