Telecom launches UFB fibre plans - key points

Key points: 

• Entry-level home/small business plans more expensive than rivals, but more generous/realistic data allowances
• No TelstraClear-style T-Box for cable TV, or other value-added extras
• Chorus UFB areas only
• Billing system not finished for "months"; unlimited data for $95/month in meantime
• Copper lines will still be used for voice calls

LATEST: Telecom UFB looking like a rush job; third of customers facing high install costs

Telecom has unveiled its first residential fibre fibre plans, which go live tomorrow.

It's cheapest plan is more expensive than competitors'.

A 30Mbit/s Ultra Fibre account will cost $95 per month on a 12 month contract.

The better news: the $95 account has a more realistic data allowance for fibre (50GB) than those offered by rival Orcon and CallPlus. (Orcon offers 30GB at its $75 entry level price; its 60GB plan costs $89 a month; Slingshot offers 20GB with its cheapest plan, for $72 a month, with some throttlng. NBR considers that level of data cap more appropriate to copper. Slingshot charges $97 a month for 50GB on an unthrottled plan.

NBR would like to see UFB plans start with a 100GB cap - realistic if you download a lot of films and TV from a commercial service, or do a lot of cloud computing. Telecom boosts data allowance to 150GB if you pay $109 a month (scroll to end of story for more plans).

A homeline is included, as with all UFB plans. Beyond that, there are no value-added extras on offer along the lines of TelstraClear's T-Box for its hybrid cable customers. Telecom Retail CEO Chris Quin says the company is still open to options in this area - but echoed CEO Simon Moutter's earlier comments to NBR by noting that people more and more access video content online, without using a traditional set-top box.

Telecommunications Users Association head Paul Brislen agrees set-top boxes might be passe. But nevertheless he believes it willl be extras like hundreds of bundled TV channels delivered via broadband, that will attract people to fibre rather than price or speed.

The cheapest full-speed (100Mbit/s) Telecom fibre plan is $125.

No data cap to begin with on $95 plan
Telecom Retail CEO Chris Quin says all UFB plans will be uncapped to begin with. People can start on the $95 plan with unlimited data. Billing on data caps will be added later. People will get 30 days notice before data caps charges kick in. The limit-less period will allow people to get a feel for how much data they use with fibre, Mr Quin says.

Telecom head of home marketing Chris Thompson said there was no data cap initially for the simple reason that Telecom hadn't finished building the billing software yet.

However, it happily played into marketing, and would provide a useful period to gauge people's usuge. He did not expect the billing software to be ready for months.

Voice calls over copper
Whereas Orcon, Slingshot, Snap and other early UFB providers have gone with a VOIP (voice calls over internet) homeline bundled with their fibre, Telecom will keep calls running over a home's old copper line.

Telecom says it is still working on a voice-over-fibre product, which will be released later this year.

Free installation
Installation is free (as with other retailers), as is a fibre modem and other fibre equipment. Mr Quin says from Telecom's trials, people should allow a day for installation.

Small Business plans start at $167, with full speed and a 200GB data cap at that price - again, the price is higher than rivals (Orcon starts at $129/month with a 30GB cap) but with more realistic data.

School plans start from $129 a month uncapped.

Chorus areas only
The first plans are offered in UFB areas services by Chorus, responsible for around 70% of the UFB rollout. Telecom is still in trials with the other three UFB wholesalers. No time frame was offered for the areas covered by those providers (which include Whangarei, Hamilton, Christchurch and Tauranga).

Presumably the Chorus-areas-only provision is tied to the fact Telecom has no voice-over-fibre product yet, which complicates negotiations in the 30% of the rollout not covered by the Telecom spin-off.

Full plans will be placed on Telecom's website tomorrow (scroll to end of article for RAW DATA: Telecom's press release for a few more pricing details).

See Crown Fibre Holdings' Broadband Finder for when its coming to your street.

Telecom shares [NZX:TEL] were up 2.92% to $2.29 in late trading (they have a 52-week range of $2.14-$2.87).

The UFB launch is allowed for under existing FY2013 capex, the company says.

The other major player in the market, Vodafone/TelstraClear, has get to announce a UFB plan.

ISP market share

Telecom: 49%
Vodafone-TelstraClear: 29% (TelstraClear today: 16%; Vodafone: 13%)
CallPlus (incl Slingshot): 9%
Orcon: 5%
Others: 8%

Source: Commerce Commission 2012 telecommunications market report

Preview: Telecom residential fibre launch today

Telecom will finally unveil its residential fibre plans today, almost a year after Chorus and other wholesalers began their rollout under government-backed Ultrafast Broadband (UFB) scheme.

Retail division CEO Chris Quin will announce the carrier's first UFB plans at midday.

On the face of things, you'd expect Telecom to announce home fibre plans starting at the same $72/$75 make already established by Orcon, CallPlus/Slingshot and other early entrants.

Yet the new Telecom regime has also shown a taste for bold moves (its shock-and-awe flat rate Australian roaming play, the transtasman cable joint venture and, yes, big job cuts) so don't rule out a surprise move on pricing or bundled services.

On the latter, Mr Quin has formerly hinted that value-added services will be a big part of Telecom's UFB play – and possibly involving video (Telecom is a Sky TV partners, so could potentially provide a fibre-connectable clone MySky box along similar lines to Vodafone-Telstraclear's T-Box).

But any pending announcement in that department may not come today. In an earlier interview with NBR ONLINE, CEO Simon Moutter was distinctly cold on the concept of a Telecom set-top box, although he stressed all options were still on the table.

It will be interesting to see whether Telecom pushes hard to pursuade people of the benefits of fibre (greater speed; more reliable speed; speed that doesn't degrade with distance from exchange or cabinet; much, much faster upload speeds; far, far less contention/congestion at peak times; much faster guaranteed minimum speeds), and how these directly apply in an age of cloud computing, remote working and data thirsty consumer services like video downloads, and upload-hungry photo-sharing, videosharing and online backup services.

Or whether it takes a more softly, softly approach, with one eye on its existing copper business, including those cash-cow separate home lines (every UFB account comes with a home line included). NBR hopes it'll look to the future. Notably, unlike most rivals, Telecom has not offered a VDSL service (VDSL being the fastest form of copper connection).

No harm done waiting
We do know that Telecom hasn't lost any ground by waiting a year to launch UFB plans.

Chorus and other UFB operators have now rolled fibre passed 134,000 premises and counting.

But customer uptake remains modest at just 3806 accounts according to a report released by ICT Minister Amy Adams in February – even after the government leaned on Chorus to chip in $20 million of its own money to ensure free curb-to-home connections until 2015 (other UFB partners are also offering free connections; Chorus is handling around 70% of the rollout).

In part, that's simply because Telecom holds roughly half of the retail market, and Telecom+Vodafone+TelstraClear around three-quarters (see table above), so most people have had no retail ISP offering them fibre, even if it happens to have been rolled down their street by Chorus or another partner.

But even allowing for that, it's been tough yards.

Last month, CallPlus/Slingshot boss Mark Callander told NBR his company has just 200 active fibre connections, but would go on a big customer drive during March.

This morning Mr Callander updated: "We have had some issues with our home gateway which should be resolved in the next couple of weeks. We did not want to launch until these issues were resolved, so expect a push in the next few weeks."

Orcon said it had 1000, with another 10,000 on a wait-list for when the UFB rollout reached their neighbourhood (and for a majority of New Zealand households, fibre is years away; see Crown Fibre Holdings' Broadband Finder for when its coming to your street. Some areas have no firm date yet for when the 10-year rollout will reach them).

Telecom's launch leaves Vodafone (now including TelstraClear) the only one of the major ISPs yet to launch UFB.

Back in September, as smaller ISPs launched UFB plans, Vodafone CEO Russell Stanners told NBR the Crown fibre experience was far from ready for prime time, especially around installation.

But testing a trial Vodafone UFB connection in Auckland's Grey Lynn during December, NBR found the fibre experience pleasantly invigorating.

Follow @ChrisKeall

ckeall@nbr.co.nz

Other links: Orcon UFB pricing | Slingshot UFB pricing | Snap UFB pricing
 

RAW DATA: Telecom press release

Residential Plans:

UltraFibre 30

From $95 p/m on a 12 month contract (speeds of up to 30Mbps download/up to 10Mbps upload)

Data cap options:

•  50GB ($95)
• 150GB ($109)
• 500GB ($129)
   

UltraFibre 100

From $125 p/m on a 12 month contract (speeds of up to 100Mbps download/up to 50Mbps upload).

• 50GB ($125)                               
• 150GB* ($139)
• 500GB* ($159)

12 month contracts for both plans include:·        

• Landline rental
• Free installation    
• Free Ultra Fibre modem (RRP $129) or optional BYO modem·        
• Early termination fees apply ($299). For terms and conditions visit www.telecom.co.nz

*At launch (28th March, 2013), data caps won’t apply; therefore customers who sign up for 150GB or 500GB plans will be credited back to the 50GB plan price until caps are applied. [Telecom says this is because its billing system isn't finished it; it won't be for a few months. See main story for more. CK]
 

Small Business Plans:

Business Broadband Ultra Fibre 100

$167.29 p/m plus GST for 200GB of data on a 24 month plan (speeds of up to 100Mbps download/up to 50Mbps upload).

24 month plan includes:

• Free business grade wireless gateway (RRP$299).

Total Office (Landline and Ultra Fibre Broadband package)

Starting from $207 p/m plus GST with 200GB of data (speeds of up to 100Mbps download/up to 50Mbps upload). Plus $199 plus GST for standard installation costs.

24 month plan includes:

• Free landline

• Free business grade wireless gateway (RRP$299).

• Normally additional data is $1/GB however no data caps for a limited time.

For more terms and conditions visit www.telecom.co.nz/fibreforbusiness

School Plans:

Education Broadband Ultra Fibre 30 (speeds of up to 30Mbps download/up to 30Mbps upload).

$129 plus GST p/m with uncapped data on a 12 month term.
 

Education Broadband Ultra Fibre 50 (speeds of up to 50Mbps download/up to 50Mbps upload). $159 plus GST p/m with uncapped data on a 12 month term.

The plans include:

• Free installation.
• Free business grade wireless gateway (RRP $299).
• Schools must be within Chorus UFB footprint and have fixed voice with Telecom.

For terms and conditions visit www.telecom.co.nz/fibreforbusiness