Most small businesses want a telecommunications set-up that includes a reliable voice and messaging service, free internet calling where possible and a fast internet data connection serving different areas of the business.

Traditionally, this has meant investing in a mix of phone and computer devices – cordless phones, mobile phones, computer headsets, laptops, wireless routers and smart phones – and a range of telecommunications services including those for fixed line, satellite, radio wireless and cellular (mobile phone) networks.

At some point, those in charge of paying the bills have to sit down with information from a number of telecommunications providers and internet service providers and try to figure out the best deal and the total telecommunications cost for the business over the next financial period.

As you probably know, it all gets rather confusing, rather quickly. How many long distance calls should you make via the internet using a Skype subscription and how many over a traditional phone line - and why? Which phone, mobile and computer devices are most needed in the business and who should have access to them? How will you manage and pay your mobile phone bills? Do you need mobile data plans and data cards, and how fast should your fixed line internet access be?

Believe it or not, most ISPs and telco’s and their respective business partners will take all the time needed to sit down with a small business to figure out the answers to these questions – they may even do it with panache. However, deciding who to start with creates new confusion – do you start with Telecom, TelstraClear or Vodafone? What about CallPlus? Is there any advantage to using a small niche telco selling Telecom fixed line services? Is Woosh an option, and what is its ‘Broadband in a Box’ all about? Perhaps most confusing, why do some telcos want you to ditch your landlines and others say you should hang onto them?

Once you iron all this out (and we’re going to help you do that) you will find the telcos have the answers to your small business telecommunications needs. So one by one then, what do our largest telcos have to offer small businesses in 2007?

Vodafone: on a roll
Traditionally a mobile services specialist, Vodafone has set itself the ambitious goal of being New Zealand’s premier full service telecommunications company within the next five years. The British-owned telco is fast moving towards that goal as a result of Government ‘local loop unbundling’ (LLU) regulation. (In case you’ve been living on the moon or trekking in the Himalayas for two years, LLU means that Telecom competitors can install their own equipment in Telecom exchanges and Telecom is required to provide more extensive wholesale services to its competitors.)

All this takes time, however. Because the finer details of LLU are still being worked out, Vodafone last month popped out and purchased the formerly Australian owned ISP iHug for $41 million in order to speed things up. Vodafone now has a ready-made fixed line services and ISP company to complement its own mobile strengths. Or, as one commentator put it: “Vodafone has gone out and bought itself an Xtra.”

In September, Vodafone’s future became even clearer when the Commerce Commission released a determination that allowed Vodafone to seek a local interconnection agreement with Telecom. What this means is that a Vodafone mobile phone can be assigned a local phone number such as 09 123 4567. “This determination on local service, along with our new 3G broadband service, will allow us to [grow]. Right now, we are the leaders in mobile, but we only have 20 per cent share of the total telecommunications market,” says Tom Chignell, general manager commercial development for Vodafone.

So how does Vodafone plan to steal your business away from other fixed line providers? Chignell says Vodafone will offer competitive pricing and new bundled mobile and fixed line services via iHug and will soon offer a plan that charges one rate for any calls made on a mobile phone within a home environment and a higher rate for calls made outside that environment.

For business premises, Vodafone offers a range of ‘talkZone’ plans based on the total number of minutes used by all mobiles in the business, and businesses can nominate Frequently Called Numbers (FCNs) which are charged at a flat per minute rate or for free depending on who the call is to. Low international calling rates with no “on-peak” premiums for calling during business hours are also up for grabs, and Vodafone says calling overseas on a mobile can now cost less than calling from a desk phone, particularly if the call is to Australia, the UK, the USA, Canada or Ireland.

Chignell says mobile phones are also more personalised than desk phones or cordless phones connected to a fixed line service.

“It’s easier to have contact lists on mobile phones and those then synchronise with contact lists on computers. Different people in [the business] have different contact lists,” he says.

On the data front, Vodafone recently ramped up the speed of its mobile data network, calling it Mobile Broadband and marketing a modem device called a ‘Vodem’ which allows easy connection of PCs and laptops to the Mobile Broadband network. This can be convenient for laptop and business home users who have other family members ‘hanging off ’ a fixed line connection and slowing down the home wireless network. As far as internet voice calling goes, Chignell doesn’t have a view on what Vodafone can offer at this stage, but says Vodafone accepts “voice over IP is happening”.

Telecom tussles
Telecom did not get to be the size it is by letting its competitors walk all over it. However, it is widely acknowledged the Government threw Telecom a ‘curve ball’ with the LLU regulation and sharemarket analysts predict Telecom shares could fall by another $2 billion if the Commerce Commission recommends further regulation as a result of its current investigation into competition in the mobile services market. So what is Telecom planning for 2007?

Kevin Bowler, Telecom general manager consumer marketing, says Telecom constantly reviews and “innovates” fixed mobile and broadband services for business and has an ongoing goal to offer customers the best value from the technology and services they choose.

“As a true full service provider we believe Telecom is best placed to provide customers with the choices they will need – and to bring them the benefits of converged services and applications in the future,” says Bowler. Telecom’s most popular small business plan is probably the BusinessTime range, which includes business line rental and calling caps and is designed to make calling costs predictable. Capped rates apply to national calls and to Australian landlines and Telecom 027 mobile phone numbers, and low perminute rates to other international destinations.

Interestingly, Telecom recently decided it will launch its own Skype-type IP calling service for 2007 for a subscription of about $15 per month. Details are not available yet, but Telecom-sanctioned and monitored IP calling is likely to be well received by small businesses. In 2007 Telecom will also roll out its long-awaited DSL upgrade, meaning businesses can start to run new applications across fixed line connections that offer speeds of around 25 megabits per second. Telecom is also laying more national fibre to support ‘next generation’ internet services.

On the device front, Telecom recently released a fixed line video phone, the Ojo, for $750 per handset or $1400 for two. This device is seriously interesting - with its seven inch screen it would work well as a videoconferencing unit for small businesses except that it doesn’t work across a business LAN. However, businesses can attach an Ojo phone to a normal broadband fixed line service and for a monthly service fee of $US15 make national and international video calls to other Ojo owners. It’s also possible to leave a pre-recorded video greeting.

As more homes and businesses buy Ojo’s, small businesses will no doubt think up clever marketing initiatives around the use of these devices. On the mobile front, Telecom says it is confident of giving Vodafone a run for its money.

“Telecom’s mobile broadband network covers over 70 per cent of New Zealanders and fixed line [broadband] over 90 per cent. This means customers have the flexibility, capability and coverage to access broadband from wherever they wish and they can do it on a variety of different devices,” says Bowler.

Like Vodafone, Telecom has ramped up the performance of its mobile broadband network and is promising average download speeds of around 800Kpbs to 1Mpbs and average upload speeds of 300Kbps by the end of the year (maximum speeds are higher.) Services such as the Telecom Connection Manager allow customers to have seamless transitions between different connection technologies, says Bowler, and Telecom will also deliver bundled pricing for combinations of its products and services.

“A good example of this is Telecom BusinessTime Advantage which is a bundled offer to small businesses that includes fixed, mobile and data services and gives customers the benefit of cost certainty through capped pricing structures,” says Bowler.

TelstraClear
Businesses in Christchurch and Wellington will be aware that TelstraClear already delivers lightning-fast broadband services over fibre, meaning those customers have had ‘next generation’ internet services for some time. However, TelstraClear’s fibre reach has historically been limited to those areas and the on-selling of constrained Telecom services elsewhere; that’s all about to change with the unbundling decision.

TelstraClear is on the move in the mobile space, announcing a $50 million investment in its own 3G mobile broadband network (using the same mobile technology platform as Vodafone) and starting in Tauranga. It is also about to repackage and relaunch products and services to the business market as a credible nationwide full service provider, says Steve Jackson, head of consumer markets for TelstraClear.

“Vodafone is trying to get landline to mobile substitutions and our vision over time is that people will potentially use one handset, however it’s a big leap of faith to expect people to drop their [fixed] line straight away. They’ll only do that when they see the benefits in action,” says Jackson. He says TelstraClear plans to entice customers via “no big surprise” bills based on its new ‘PDQ’ broadband plans (which stand for ‘pretty darn quick’). PDQ lets customers tailor their broadband speed to meet specific requirements.

“Unlike some other providers’ plans, there’s no throttle, and far less chance of bill shock,” says Jackson. He says the ‘hand’ that TelstraClear will play in 2007 does not include a [national] mobile offering but does include an “innovative bundle” of broadband data and voice services for homes and businesses. TelstraClear is also expecting a larger swing towards internet voice calling and will look at offering voice over IP services in the near future, says Jackson. However, he says while services like Skype are “great” for international calls, using Skype for a local call is more expensive than current fixed line local calling.

Cor, it’s Callplus
And Woosh, and Econet...and others. CallPlus, which owns the ISP Slingshot, has been particularly proactive in New Zealand, developing a WiMax wireless trial in Whangarei and consolidating its position as an important smaller player in the fixed line and wireless services market.

Through Slingshot, CallPlus recently announced Whangarei customers could have unlimited national calls to landlines for $19.95 a month, heavily discounted international calls, and a second fixed home line for $14.95 via its WiMax wireless technology service. WiMax, by the way, is a wide area wireless network that uses different technologies to the cellular mobile networks of Telecom, Vodafone and TelstraClear and is capable of delivering broadband data speeds of up to 10Mbps within a restricted area – usually tens of kilometres. Callplus presently on-sells Telecom fixed line services, but in the words of CEO Martin Wylie has decided it “can’t sit around and wait for [LLU] to happen.” Wylie says as there are currently no viable alternatives to providing a true fixed line replacement service for residential customers, WiMax technology puts CallPlus “in control of our future.”

Woosh, which has battled away for years offering an alternative fast wireless telecommunications service in parts of the country, recently announced its intention to also sell a fixed line broadband service called “Broadband in a Box”. This delivers a wired broadband connection over a Telecom line for six months for no contract and no ongoing costs. After the first six months users can “recharge” the account with extra months. Woosh has also launched new wired and wireless and broadband plans, giving it the chance to compete nationwide. Marketing manager Nick Clarke says Woosh broadband and phone packages cost around the same price as an ordinary phone line connection and Woosh wireless customers get toll call rates of only 10 cents per minute to anywhere in New Zealand and 47 other countries.

Next year should certainly be interesting – expect business telecommunications services to get wider, faster, and more affordable.

For more information about these solution providers and Mobility visit the Mobile Business Research Pavilion

February 2007

By Vikki Bland