Free broadband kicks off new telco fight

Vodafone is shaking up the broadband internet market with the launch tomorrow of free broadband services.

The freebie, offering maximum speed broadband and a 1GB data cap, will be for customers switching their landline phone rental to Vodafone subsidiary ihug and buying a $20 a month toll call package. Similar broadband services currently sell for about $30 a month.

Ihug CEO Mark Rushworth said the aim was to give the competition a jolt. "Customers are demanding cheaper broadband and free is as about as cheap as you can get."

Vodafone's deal will have a 12-month term, by which time the company hopes local loop unbundling will be a reality. LLU will allow companies such as ihug to put their own equipment in Telecom's exchanges and offer competitive services direct to customers.

Vodafone spokesman Paul Brislen said the free offer was effectively a "land grab" to attract customers in preparation for the LLU services becoming available. "I should think it will really put the cat among the pigeons," he said.

The deal does not include the cost of a modem, usually $99, but Brislen said many people already had modems for their existing broadband service and the hardware could be simply reconfigured to use the ihug network.

As details emerged on Friday of Vodafone's offer, described by one telco insider as "the worst kept secret in the industry", a flurry of special offers followed suit.

Telecom announced a package of extras for its internet customers, including a personalised home page, photo storage and free anti-virus software.

Minutes later Orcon announced a year's free home phone line to anyone signing up for an $80-amonth broadband deal this week. The offer is limited to 5000 lines and closes this Friday.

Mathew Bolland, a TelstraClear spokesman, wouldn't comment whether TelstraClear would change its pricing in response. "We'll lead rather than follow Vodafone," he said.

- © Fairfax NZ News