NZ subsidiary shows up Telstra in broadband wars

Telstra's cable residential broadband plans may have sparked a price war but a Gartner analyst has pointed out that it still compares poorly with offers made by one of its own subsidiaries.

Geoff Johnson, vice-president of research into networking and telecommunications at Gartner Asia-Pacific, said Telstra was 'massively under-achieving' in the Australian broadband market.

Meanwhile, TelstraClear -- a wholly-owned subsidiary of Telstra Australia -- announced new cable internet plans 1 March that showed up Telstra's poor performance here, he said.

'TelstraClear operates a small aerial copper cable and co-axial pay TV network around Wellington and the Hutt Valley. Just look at the speeds, caps and prices!' Johnson said.
 
The NZ subsidiary's cheapest plan is dubbed Paradise High Speed 1G. Home users pay NZ$39.95 a month for 2Mb/s downstream and 512Kb/s upstream, with traffic capped at 1GB a month.

Next level is NZ$59.95 a month for 2Mb/s downstream and 512Kb/s upstream and 5 GB monthly traffic. Users can pay NZ$139.95 a month for 10Mb/s downstream and 1024kb/s upstream, capped at 10GB a month.

'That's a lot better than Telstra's,' Johnson said.

On Telstra's website at the time of writing, BigPond cable broadband's $29.95 offer -- including unlimited downloads -- was capped at 200MB a month and just 128Kb/s upload.

The next cheapest plan offered similar upload and download rates and up to 500MB for $49.95 a month. Unlimited cable offers the same speeds for $59.95 with the caveat that speeds may be slowed to a 64Kb/s crawl when a user hits 10GB.

Telstra was asked why it had not offered deals more similar to those of TelstraClear and why its installations costs were higher -- TelstraClear has claimed to be able to connect customers for NZ$0 to NZ$149, while Telstra's cheapest rates – for self-installation of a single-port modem – are advertised as A$189 for ADSL and A$259 for cable.

Craig Middleton, a spokesperson for Telstra, said Telstra's plans were 'excellent value'.

'All we can say is that you cannot compare the plans offered by separate companies, in different countries with different regulatory environments and completely different networks,' Middleton said.

Telstra set up Telstra NZ in 1996, which itself swallowed NZ telecommunications provider Saturn Communications in 1999, creating TelstraSaturn.

TelstraSaturn bought Clear Communications in December 2001 to form NZ's second-largest telco TelstraClear, which claims to provide 'seamless services' to trans-Tasman customers.

TelstraClear connects its residential customers using co-axial and copper cabling to its costly fibre optic network infrastructure.

'When Telstra deploys fibre optic to the home, kerb or user, it will not come under today's regulatory constraints because it will be a new separate network which will not have to be shared by competitors,' Gartner's Johnson added.

'And we think that their goal of one million [broadband] customers is about half what it should be,' Johnson said.

Telstra is listed on the Australian and New Zealand Stock Exchanges and is 49.9 percent publicly-owned, with 50.1 percent of shares held by Australia's Government.

The TelstraClear offers are only available in the lower North Island areas surrounding Kapiti and Wellington, and near Christchurch in the South Island. ADSL is not yet offered, according to TelstraClear's website.

Telstra does offer ADSL but the plans and pricing is similar to its cable offer -- but at slower 256Kb/s download and 64Kb/s upload rates. For Telstra ADSL, the highest speed possible in any plan upstream was 256 Kb/s.