IP traffic begins to migrate out of the telephone network

The launch of new access plans by Xtra and Voyager could herald a major shift of IP traffic away from the public switched telephone network towards Telecom's dedicated ATM-based IP infrastructure. Xtra last week announced NZPlan, a new nationwide single-rate scheme which will see all its customers dial a single 0873 number. This was followed within hours by Voyager, which indicated some annoyance that the Telecom-owned Xtra had been able to launch first. IPNet collects telephone calls and routes them into a purpose-built platform, which uses network access servers to concentrate the calls on to an ATM pipe and into Telecom's ATM switches. It was first mooted about 18 months ago, when an Internet-driven boom in demand for digital services created a crisis at Auckland's Mayoral Drive exchange.

The launch of new access plans by Xtra and Voyager could herald a major shift of IP traffic away from the public switched telephone network towards Telecom’s dedicated ATM-based IP infrastructure.

Xtra last week announced NZPlan, a new nationwide single-rate scheme which will see all its customers dial a single 0873 number. This was followed within hours by Voyager, which indicated some annoyance that the Telecom-owned Xtra had been able to launch first.

Both companies are using Telecom’s new IPNet service, and a number of other ISPs have been in trials since November. One, Ellcon, has already begun providing Internet services in support of the Ellcon Web set-top box it sells through retail outlets.

IPNet collects telephone calls and routes them into a purpose-built platform, which uses network access servers to concentrate the calls on to an ATM pipe and into Telecom’s ATM switches. It was first mooted about 18 months ago, when an Internet-driven boom in demand for digital services created a crisis at Auckland’s Mayoral Drive exchange.

Like telcos the world over, Telecom has bemoaned the unsuitability of the PSTN for IP traffic. It is also presumably keen to avoid being caught short by sudden shifts in technology.

3Com, through its acquisition of US Robotics, recently won the contract to provide the first batch of network access equipment for IPNet , but is unlikely to have the project to itself.

Telecom Computer Communications Group solution manager Paul Barrett says Telecom is trying to build IPNet as a -technology-independent platform. “The ATM functionality gives us all that scalability, and interoperability options are coming through our ATM services.”

Telecom has indicated it regards ATM and ADSL as complementary technologies, and IPNet could conceivably serve as an ADSL platform, but Barrett will only concede that “anything’s possible”.

Tim Wood, director of the Internet Group (Ihug), the country’s third-largest ISP, agrees that IPNet is partly intended by Telecom as a way of easing the load on the existing telephone infrastructure — including that in Christchurch, which Wood describes as a nightmare.

“IPNet is something Telecom wanted to bring out to circumvent the exchange issues, but unless it brings out an across-the-board pricing structure that’s going to suit everybody — including the flat-rate providers — it’s really not going to be able to convince people to move.”

Wood says his company has been discussing use of IPNet with Telecom. “We’ve been looking at fixed-port pricing, so we can offer a flat rate, but I haven’t heard back. We might offer a similar service [to Xtra’s], using IPNet. It’s not really a big one for us — we’re not really offering services to the rural areas anyway.”

Rural customers will benefit, but small regional ISPs seem certain to feel the squeeze from Xtra’s new pricing plan — which eradicates the former $4.95 per hour 0800 rate and fixes access charges at $2.50 an hour anywhere in the country.

Research company IDC said late last year that the higher 0800 rates charged by nationwide ISPs such as Xtra and Voyager had allowed smaller ISPs in rural areas to compete — and prevented an expected cull of small ISPs. Now that they have to match Xtra’s city rate, the independent ISPs may struggle to survive.

Xtra marketing manager Ian Scherger maintains that “the same questions were asked when we first came into the market”. “There were 33 ISPs then, and there are more than 50 now, and I think there’ll always be a place for the smaller companies.”

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