Telecom to set up new ISP for businesses

Online accounting firm Xero Live may get a leg up from Telecom, which plans to set up a new internet service provider aimed at small businesses within the next two months offering software for rent over the Web.

Telecom business marketing head Victoria Crone says the service - which will be separate from YahooXtra - will also offer businesses different broadband plans, improved support and better modems.

A web portal will provide third party software applications for rent online.

"The vision for the service is that we create a place that enables businesses to do accounting, payroll, human resources, business planning and so on," says Ms Crone.

Telecom hopes to name some software partners within the next few weeks. Ms Crone says one could be NZX-listed accounting software firm Xero Live, founded in Wellington by technology entrepreneur Rod Drury last April.

"Clearly there is a lot of movement in that part of the market, such as Xero with their accounting software, and we are working through what the `software-as-a-service' proposition should look like and who are the best people to partner with," Ms Crone says.

Telecom has not yet decided whether it will host competing online software applications, or one for each category.

Ms Crone says Telecom has been researching businesses' use of the Internet for the past year and has put together a 12-18 month programme to address their needs through the new service.

"The business market is quite a different space from the consumer market and often they are treated similarly by providers."

The business Internet service will register domain names for customers and offer to develop and host their websites. It will also provide managed e-mail services suitable for businesses and online backup.

Ms Crone says the service will be aimed mainly at firms with fewer than 10 employees.

Business broadband plans will be "slightly differently priced" and the services they encompass will also be different, she says. "There will be some guarantees about helpdesk and support." Small businesses will be able to continue to use YahooXtra if they prefer.

Offering different modems for commercial customers will be a key attraction, she says. "At the moment you have got one modem for businesses and consumers predominantly, but businesses often have four or five computers. In the future, your modem is going to need to do your Internet voice service as well, so you need ports for that as well."

Telecom is evaluating modems that can allow for remote access to files via a web logon and that can control which users access different websites.

Ms Crone says that, in the longer term, Telecom doesn't see it as its role to pick which online software applications will be winners. "That is where you work through the independent software vendor market place. People would put in applications, you would get businesses rating them and you would decide `this one is going to fly' and we would host it."

Many technology firms tried to profit from supplying software as an online service at the turn of the century, when vendors were labelled "application service providers", but most failed to convert customers with services that were often rushed to market.

"It is important to note that it has been tried before," says Ms Crone. "But the big difference we see is that with 60 per cent business broadband penetration we have got a much bigger base, and the portal we have built has the ability to support multiple partnerships.

"There is a huge education job to be done educating businesses as to the benefits of doing this online. This is a journey and we are not going to be launching all of this at once."

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