Broadband boom not plain sailing

Broadband boom not plain sailing

ANALYSTS predict there will be a broadband boom this year but one warns it won’t all be clear skies.

Paul Budde, an Australian-based adviser to the telco industry on both sides of the Tasman, says New Zealand is lagging behind the rest of the world and there’s little that can be done.

He says that Telecom is proving to be too large to regulate, which is having a disastrous effect on competition and innovation, while the Commerce Commission is underfunded and underpowered.

“There’s been a limited amount of investment which isn’t stimulating innovation. The thing is, it should be to Telecom’s advantage to be generating competition and money,” he says.

Budde predicts the telco market will grow by 5% from $8.1 billion last year to $8.5 billion in 2005, and says the focus is shifting to broadband.

He says that while ISPs TelstraClear, Wave Internet, Ihug and ICONZ are playing, Tele-com’s Xtra continues to dominate the field because the others are merely reselling Tele-com’s ADSL service.

In comparison, Budde says wireless broadband is steadily growing but still remains a niche market with less than 15,000 users, 10,000 of those belonging to Whoosh Wireless.

By the end of last year the number of internet users reached 2.45 million. Only 165,000 of those had broadband, but with prices becoming more competitive, subscribers are increasingly switching to broadband.

Budde points out that Telecom has lost the mobile battle to Vodafone New Zealand, despite the launch of its T3G service last year.

“It’s one of the few cases in the world that the incumbent has been beaten by a newbie. If they’re going to try to win market share back then Telecom has left it very late.”

On the other hand, IDC senior analyst telecommunications Chris Loh says it’s inaccurate to say Telecom is losing the battle as mobile services still show strong revenue growth.

“Telecom is in a very strong position in terms of offering integrated fixed-line and mobile services, as opposed to Vodafone’s one-sided argument,” he says.

Loh points to Telecom’s target of having 250,000 broadband users by the end of 2005 - on track with 119,000 connections in October 2004 - and its 30% wholesale broadband target.

“Heavy competitive activity from ISPs and tier-two telecommunications providers can be anticipated on the back of the empowerment afforded by Telecom’s broadband wholesaling of the faster 1 and 2Mbit/s services,” he says.

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