It¹s probably time to swap your dial up business Internet access for a broadband connection. Apart from the convenience of having a fasåter, Œalways on¹ Internet connection and accessing the Internet while making a phone or fax call on the same line, it¹s usually cheaper to move from dial-up to broadband.

³Small businesses have this perception that it is cheaper to use dial up.

But dial up services incur higher line charges,² says Taryn Hamilton, manager business division for ISP (Internet Service Provider) ihug.

³Businesses are starting to realise that moving to broadband is actually cheaper than dial up,² says Chris Thompson, head of internet and online marketing for the Telecom-owned ISP Xtra.

Although it is usually cheaper to move from a dial-up to a broadband connection, this does depend on what you use your Internet connection for.

If you are a home business with a home phone account and stick with dial-up you won¹t be charged for each local call you make to your ISP. In this case while broadband may be desirable (web surfing will be smoother, online banking transactions faster and email Œalways on¹) it may not be cheaper than dial-up. However, as soon as you start paying for a business phone line the chances of dial up remaining cheaper than broadband are low.

Take me. I use a dial-up service because there is no broadband where I work.

I check my email several times a day which costs between $5 and $15 a month through the ISP Watchdog. I also use Xtra to surf the web daily, and casual surfing without web downloads costs around $20 a month. Where it all falls apart is in the line charges. If I check my email 16 times a day I am charged for 16 calls to the ISPs on top of the voice calls I make.

Similarly, if I connect to the Microsoft Windows update site to download patches to my operating system and wait an hour for the download (normal on a dial up connection) I am charged for an hour-long call. In the meantime my phone line has been tied up for an hour and no-one has been able to get through.

To misquote a politician, if broadband was available in my area tomorrow, my dial up status would be gone by lunchtime.

Speeds and fees

If broadband access works out cheaper than a dial up service for a business, that¹s good news broadband can deliver download data transfer speeds of hundreds of megabytes per second (Mbps) compared to dial-up¹s measly 50 kilobits per second (Kbps) or so. However, lightening-fast broadband speeds such as those available over fibre optic cable are area-restricted in New Zealand so most ISPs offer broadband services that offer 128Kbps upload speed (when you send something) and around 256Kbps for downloading (when you receive something - like email or files).

You can get much faster download speeds depending on which broadband plan you have purchased, which ISP you are using, and what kind of broadband service it is. But quite a number of smaller businesses with basic Internet access needs find slower plans adequate.

Broadband charging can be confusing for the uninitiated. Usually you pay the ISP a broadband connection fee which may include the cost of a broadband modem or router and then a flat monthly rate for a wired or wireless broadband service. Where it gets interesting is that different providers often compete through the amount of data you can download in any one month for the flat fee as well as through Œspecials¹ in which equipment or set up fees can be waived.

But be careful. If you grab an attractive set-up deal and seemingly cheap monthly flat rate you may find the deal has a stingy data ³cap². The cap is the amount of data you can download in any one month within your flat rate fee. If you exceed the cap, the ISP will normally charge you by the megabyte for the extra data you download over the month. With some providers you can choose to have your service reduced to dial-up speed when you hit the cap rather than pay extra. Either way, most businesses download a lot more data than they realise and so the bigger the cap on each broadband plan, the better.

Broadband in New Zealand

The most common business broadband service in New Zealand is the digital subscriber line (DSL) service over the national phone network. Obviously, Telecom owns that network so it lets Xtra and telecommunications competitor¹s on-sell DSL services with Telecom-imposed performance limits.

For example, currently only Telecom or Xtra can sell plans with DSL download speeds of more than 2Mbps. These limits make Telecom very unpopular because competitors say they cannot properly compete with Telecom as a result. While many corporate customers agree, smaller businesses generally don¹t have the time to follow the ruckus. At the time this article went to press, some of Telecom¹s competitors were waiting for a ruling from the Commerce Commission which they hope will help provide them with a better deal (see side box.) With DSL, the popularity of the service is not due to its performance (which can drop markedly the further the business is from a telephone exchange) but its ubiquity. Because DSL operates over the national phone network, it is available in all the major cities and, to a lesser extent, most minor towns and provinces. Having said this, remote rural areas or Œquirky¹ spots such as the valley my house is in, may not be able to access a DSL service with the result that some farms and businesses muddle along with dial-up access despite using the Internet for online banking, trading, and industry services.

What is there besides DSL?

A small number of telecommunications and electricity companies have managed to develop alternative broadband network services either because they have laid their own wired broadband network (like TelstraClear and Vector have with fibre optic cable) or they have found a way to offer a wireless broadband service (like Woosh Wireless, Wired Country and others.) Happy is the small business that operates in an area served by a fibre optic network, whoever laid it! It can use a slower DSL service if it wants to, but at least it has the option of a faster, more reliable fibre optic service right at the doorstep.

Unfortunately, establishing an entirely new network is expensive, so new broadband networks are currently available only in certain areas.

And how expensive is it to use fibre?

Murray Judd, product manager for ClearNet and Phil Bodis, product manager business Internet for TelstraClear, say monthly costs and set up costs are completely specific to customer needs.

³We service very large customers, but we also have a small car yard company connected to just one branch car yard over a fibre connection. When we work out costs we have to look at things like does the customer want to be able to run voice over the connection but we are confident fibre is cost-competitive and it certainly adds value in terms of quality of service,² says Judd.

Ihug, which offers a fibre optic service in some areas through utilities company Vector, says its average fibre set up fee is around $500 and plans cost from $500 per month up, depending on the exact plan and the business need.

Will wireless work?

Unfortunately, whether it is a WiFi Œhot spot¹, cellular mobile data service, or customised digital radio service like Woosh provides, wireless broadband can be unreliable, insecure, expensive for businesses and sometimes all three. It really depends on where your business is located, what kind of wireless network it is, and how you need your wireless broadband connection to perform. If your business broadband needs are basic, a wireless connection will probably work well; if they¹re complex, it may not.

³Wireless struggles against fixed networks and the fact that there is already this huge fixed Telecom network that covers the whole of New Zealand,² says ihug¹s Hamilton.

However, Xtra¹s Thompson says wireless broadband services have potential and Woosh offers a robust wireless service.

³Getting WiFi and cellular mobile networks to work seamlessly would also be well received by businesses with a large mobile workforce,² he says.

TelstraClear¹s Bodis says while wireless ³loops² are provided to larger TelstraClear business customers, wireless broadband performance slows up with mass volume and wireless is not prioritised as a broadband solution by TelstraClear.

Stephen Duder, marketing manager for the ISP Actrix, says the jury is still out as to which wireless technologies are best.

³There is lots of [wireless radio] spectrum available, but questions around return on investment versus the cost of DSL start up,² says Duder.

Finally, it is possible to get broadband Internet access through a third generation (3G) Telecom and Vodafone cellular mobile phone connection.

However the cost of downloading data over these connections is prohibitive so businesses tend to use them mainly when they are mobile and need to transfer small files, check email or access an office network remotely.

Vikki Bland is an Auckland-based IT

specialist writer.

What small businesses want from broadband

Case study 1: West Auckland business with ten staff.

³We use a DSL service from Xtra and it¹s fine and cheap. It runs along at download speeds of about two Megs a second and there¹s not much free data with the flat rate but I think Œokay, whatever¹.

I haven¹t got time to think about what the other broadband options are, but I do think there should be more choice.

I spend more time thinking about the security of my VPN [a secure Internet access between a remote computer and the office network of a business] than about broadband and I get furious if I can¹t get access to my email server through the VPN.

I want to know where the WiFi hot spots are, where to store my backed up data, where to get the best hosting rate for my website and how to get rid of all the spam coming in over my email. I¹ll look at any broadband provider that can address these needs!² Quote provided by director.

Case study 2: hangit.co.nz and freelance adventures.co.nz ³I need to supply clients with high-resolution photos so they can get a decent feel for the finished product. With broadband, I can take the photo and send it via email to as many people as I need to instead of having to print and send hard copies. I can keep an eye on my emails, or check something on the Internet, while I¹m talking on the phone. Before, there was always the risk of missing calls.

Broadband is making us more productive. I¹m starting to use my mobile phone to check my Xtra inbox when I¹m on the road, or between appointments, and we use mobile broadband on our laptops to check in on business.² Quote from small business owner Brenton Harrison.

Is Telecom cheating?

The competitive fight explained

According to the latest OECD rankings, New Zealand is placed 22nd when it comes to national broadband adoption. Why?

The ISPs ClearNet, IHug, Actrix, Slingshot and others blame Telecom for this.

Their consensus is that by placing restrictions on the DSL services its competitors can sell, Telecom has hamstrung the country¹s rate of broadband adoption and is putting small ISPs out of business.

³For those who took the ball and ran with Telecom¹s [conditional] service, it has been rough,² says Allan Freeth, the new CEO for TelstraClear (which owns the ISP companies ClearNet and Paradise), at a recent Telecommunications Users Association of NZ (TUANZ) meeting.

³At the moment our [Telecom-sourced] broadband services are capped at speeds of two megabits per second; in comparison our Australian parent company can offer 20 Mbps,² says Taryn Hamilton, business manager for IHug.

³The industry barriers imposed by Telecom are designed to keep legacy systems in place and prices high. The business community is not getting a fair deal,² says Stephen Duder, marketing manager for ISP Actrix.

At the time of going to press these providers were waiting for a Commerce Commission judiciary decision that might help them gain access to a wider range and better performance of DSL broadband services in the future.

³We are very competitive where we have our own network. Where we don¹t we are asking the commission for real flexibility,² says Matthew Bolland, public affairs manager for TelstraClear.

As you would expect, Telecom disagrees with its competitors¹ claims. But what does it say about that OECD broadband ranking?

³In New Zealand there is pretty good quality, cheap dial up Internet access so broadband is the thing you get after you get dial up. Other countries [in the OECD list] have had broadband Internet access from the outset,² says Chris Thompson, head of Internet and online marketing for Telecom.

Thompson says the move to broadband is often industry specific for businesses and some, like those in digital video editing, need to move such large amounts of data that no broadband connection can beat the cost of couriering a CD-ROM across town.

He says unique small business realities like these affect broadband adoption in New Zealand.

³Most small businesses have really simple Internet access needs. But we do think broadband adoption is important because businesses can do more on the Internet with a broadband connection,² says Thompson.

So, competition and politics aside, at least each provider agrees on one thing: broadband is best.