One in 10 could get 'superfast' broadband

Telecom Wholesale says it may be the middle of the year before it launches a superfast broadband service based on the latest copper-line technology VDSL2.

The technology could roughly triple average download speeds for customers living close to phone exchanges and roadside cabinets.

General manager of marketing Nick Clarke says he is happy with the speeds observed during a trial that has been running since September, but is still assessing how the technology should be marketed.

"It is not just about sticking a technology in the market; it has got to do what people want it to do. We are working closely with our customers to see what businesses want out of it - do they want speed, diversity, reliability - and the same with consumers."

He expects VDSL2 will be reasonably widely available. Equipment has been installed in 80 of Telecom's 700 phone exchanges and in roadside cabinets in those exchange areas. Telecom expects to be in a position to provide a service to 10 per cent of broadband customers by June. "I am trying to work out 'what' to launch, I am not in the mindset of 'whether' to launch," says Mr Clarke.

Even if the company put equipment in all its exchanges and cabinets, it would have limited reach, as its performance degrades over long copper phone lines.

"That is the challenge with VDSL2. It would be the first product we took to the mass market that would not have 80 per cent-plus coverage."

In the future, VDSL2 might be used by broadcasters to stream television to homes, but in the short term it might be a product better suited to being marketed door-to- door to businesses, he says.

Telecommunications commissioner Ross Patterson wrote to Telecom in September to say his preliminary view was that Telecom Wholesale should not be able to charge customers a premium for VDSL2. Telecom Wholesale had touted a possible premium of about $20 a month per connection.

Mr Clarke hopes for a change of heart. "If the service is just unbundled bitstream that may be the right assessment, but if it is quite a different service I do think the commission and the market will understand and support [a premium]."

He says there might be more acceptance of a price premium if Telecom launched VDSL2 as a highly reliable service aimed at businesses. "Good regulatory practice says you don't just take any product and suck it into the lowest common denominator, because you end up with a dysfunctional market at that point."

Internet Service Providers Association president Jamie Cairns believes there is a market for both a VDSL2 service aimed at consumers and a premium service for businesses. "Everyone wants faster, bigger, cheaper."

Members were divided on whether Telecom Wholesale should be able to charge more for VDSL2. Regulation appeared to rule that out, but some believed an extra charge might be appropriate for businesses.

- © Fairfax NZ News