May 7th, 2012
There has been a certain amount of media debate around Ultra-Fast Broadband following a CommerceCommissionissuespaperonUFBdemand released in February. “Business not keen to pay for fast broadband extras” wrote Dominion Post Infotech editor Tom Pullar-Strecker. “Price may dissuade consumers from Ultra-Fast Broadband” said TVNZ’s website.
Grim news for the Government’s $1.5 billion UFB roll-out?
Not at all, says Quentin Reade, Head of Brand and Communications for Orcon. The ISP, the first to release nationwide UFB pricing plans, is very positive about UFB demand, and reckons SMEs will be a key market. The Commerce Commission’s SME survey asked whether existing broadband customers would be prepared to pay more for UFB. It found only 10% of SMEs willing to pay more than 20% extra for a high speed broadband service. Just over 25% were willing to pay 10%-20% more, and 34% would pay up to 10% more. 35% were not prepared to pay any extra.
Quentin thinks the Commerce Commission’s findings reveal more about the lack of understanding of UFB among SMEs than they do about future uptake of the service. He reckons once UFB cables are laid, small businesses will jump at the chance. “It’s the great unknown still. So many SMEs don’t know the benefits of fibre, so it is hard for them to make an informed judgement. If you asked someone: ‘Would you pay more for petrol?’ of course people wouldn’t. But if you asked them: ‘Would you pay more for rocket fuel?’ it’s a no-brainer. People have to understand the concepts to answer that question. The differences between ordinary broadband and UFB are staggering.”
Orcon’s UFB business plans, released in March, range from $169 a month plus GST for a standard speed plan with a 30GB data cap, to $449 plus GST for a top-of-the-range plan (100Mb/sec download, 50Mb/sec upload and a 1000GB cap). Quentin says by the end of March, with only Albany and Whangarei actually live, the company already had 3000 pre-registrations.
“These plans have been really well received. People are very excited about UFB.”
Quentin reckons taken in the context of a small or medium-sized company’s whole telecommunications spend, getting UFB does not need to be more expensive.
“When UFB comes past your street you need to look at your entire telecommunications bill and talk to your ISP about how you can save money using UFB. Every business should be asking themselves: ‘How can I take advantage of the not-insignificant money [$1.5 billion] the Government is investing?’”
When electricity first arrived companies might initially have wondered why they should replace their gas lamps, Quentin says.
“There should be no debate. When it comes down your street, you should get it. You are future-proofing your business.”
You can check out the papers from the Commerce Commission’s February conference TheFuturewithHighSpeedBroadband: OpportunitiesforNewZealand, and the commission’s final report from its study will be published at the end of May.