Small ISPs challenged as leaders invest

The quality of broadband services provided by smaller ISPs in New Zealand is flat or in decline, according to a new monitoring report (pdf) released by the Commerce Commission Tuesday.

While the performance of the major providers has improved since the last quarterly report, largely as a result of network investment, the aggregated performance of smaller ISPs is not showing the same improvement, the report says.

"A challenge for smaller ISPs is the inability to match the scale of investment, caching or international capacity provisioning undertaken by the top five carriers," the report says. "Wellington ISP Actrix installed its own equipment in a phone exchange in Central Wellington in September, and has plans to extend beyond this. However it has not yet begun connecting customers."

An overall steady performance by individual ISPs was pulled down by one or two weaker results, the report, prepared by analyst firms Epitiro and IDC, says.

The "other" group of smaller ISPs includes results from WorldxChange (11 sites); Snap (1 site), Actrix (1 site), Compass (2 sites), MaxNet (2 sites) and Inspire (3 sites) and Woosh DSL (4 Sites). The report did not break out their individual performance measures, but says as a group they underperformed the market average with a 6% improvement. there was also a considerable variation between service providers.

"Many of these smaller ISPs are positioning themselves as specialist or regional providers, rather than mass-market players, and will capitalise on new wholesale services as they become available," the report says.

Other key findings were that while New Zealand is ranked as one of the world's fastest-growing broadband markets and is now virtually on a par with the OECD average in terms of penetration, the rate of broadband adoption shows signs of moderating.

New Zealand's largest ISPs -- Telecom, Vodafone, TelstraClear (TCL), Orcon and Slingshot - all posted increases of between 12% and 39% in their city scores with strongest performances in the main city centres.