Telecom's net plans unpopular

By PAUL BRISLEN

Internet providers are crying foul over Telecom's proposed wholesale high-speed internet plan before it is even launched, saying they cannot make a profit from it.

Telecom has begun seeking comment from internet providers on the terms of its new wholesale product. The final service will be offered to the public from September.

One provider, who did not wish to be named, said the new service would have to attract "thousands of customers" to be profitable.

"On the basic plan we'd see a profit of about $14 per customer per month. Out of that we have to pay for backhaul, help-desk services, international traffic, any extras we want to offer like anti-spam filtering and so on. It's just not worth it."

Providers are also concerned about Telecom's decision to impose a transfer fee of $150 for every Telecom customer who moves to a competitor, with one network operator describing it as a "tax on competition".

"It's got to be anti-competitive. Surely everyone will see that," said the operator, who also did not wish to be named.

Internet provider Iconz would most likely pass the fee on to end users, said managing director Sean Weekes.

"It's not really much of an incentive to deliver thousands of customers."

Telecom spokesman Martin Butler said the plans were designed to increase the overall number of broadband users.

"We've publicly said we want to reach 250,000 users by the end of next year and that around 30 per cent of those would come from our wholesale product.

"We are looking for new customers not a realignment of the existing customer base."

Butler said the onus was on internet providers to use the basic service to differentiate themselves from one another and target niche markets.

"If they want to offer free national traffic or set up game servers to offer a gaming service then they can."

One of the country's largest internet providers, ihug, said the wholesale programme would offer only minimal encouragement to providers to offer new services to customers.

"It's only wholesale for the one product," said general manager Guy Nelson.

"There's not enough money to make it worth our while and Telecom's already got a headstart on the customers that do want such a service because they're already signing them up today."

TelstraClear will discuss the offer with Telecom next week and would not comment until then.

Auckland's Orcon Internet, the first company to sign up with Telecom's wholesale agreement, was generally positive about the offer, said chief executive Seeby Woodhouse.

"Telecom should be commended for going beyond what the Telecommunications Commissioner recommended to the Government. They've handed control of the customer to the provider instead of keeping it to themselves, which they could have done."

But Woodhouse said he was unhappy about the $150 transfer fee, which would inhibit the delivery of broadband services by smaller providers.

"There's probably a capital expenditure of around $250,000 to get going in this business and really you need to aggressively target customers from day one.

"Having to pay a $150 fee upfront is going to limit the providers in that respect."