At its basic level the Paradise fast internet product -- offered as an option in parts of Wellington and Christchurch -- isn't any cheaper than Telecom's JetStream and can look on the surface to be more expensive. I did a bit of number crunching and the internet service alone does come out slightly cheaper than JetStream depending a great deal on how much local traffic you use, but even that's telling. The other two players touted as being the competition to Telecom are also similar in their pricing -- Woosh and BCL's services are both within spitting distance of Telecom's JetStream without any sign of moving south.
I know, BCL is a wholesale service and prices on its service are set by its retailers, but you have to ask why these companies aren't getting stuck in and seriously competing. Slash the prices and the market will react. The Irish incumbent Eire Telecom has done just that, reducing prices dramatically to attract new users. Telecom here has rejected that idea in the past, saying new products and services are what's needed, not lower prices.
But say that's not true: why aren't the competition chopping the legs out from under it? Woosh and BCL are, of course, wireless services and they're still in network rollout mode for the most part. BCL is building its network in the remote and rural regions rather than the city centres. Woosh is building furiously in Auckland and trying to move into Wellington and Christchurch CBDs any time soon, as well as building its network in those Project Probe regions where it's the preferred vendor. But that all takes time, and as we know, if you've got a wireless service in growth mode you don't want too many users because that makes life difficult for you. You want a widely spread network rather than a high concentration in one area.
Perhaps this is why Telecom is so keen on competitors using their own networks. Could it be that Telecom's copper network is already bought and paid for, rolled out and up and running?
Also, Telecom is still the front runner when it comes to a national network. Woosh isn't going to reach that level any time soon, and while BCL might, its target audience is the rural sector so it's not even going to bother with the suburban landscape in the foreseeable future. Telecom's proven in the past that it can be aggressive in picking off regional developments one by one. TelstraClear's ancestor Saturn complained bitterly about Telecom matching its pricing street by street and the Commerce Commission turned a blind eye. It really brings home just how hopeless the Telecommunications Share Obligation is when Telecom can take advantage of its national structure on the one hand but require assistance from the rest of the industry on the other.
There is one alternative provider that's trying out new models, and that's Wired Country in South Auckland. Currently, users of the service will find they're receiving 10 times the speed they're paying for, which has to be nice. I wonder how many will be happy to drop back when the promotion is finished?
Meanwhile, Telecom swears black and blue it will reach 100,000 broadband customers by the end of the year and won't cheat and include the JetStream Starter figures. Short of offering a full upgrade to 256kbit/s for all those users, I don't see how Telecom will pull that one off, but I'd be delighted if it did.