While we were among the leaders in the early days of broadband, this soon leveled off with our slackening performance showing up in 2003 with growth less than half the average rate achieved by other similar OECD countries.

A clear indication of just how far behind we are came in August when the US announced it had reached 51 per cent broadband penetration and Australia had rocketed up to 34 per cent.

Mark Ottaway managing director of Neilson NetRating says New Zealand has done well to move up from 4.7 per cent a year ago to 10.9 per cent of all Internet connected homes but still has a long way to go.

According to the Ministry of Economic Development (MED) 75 per cent of us are regular Internet users. The majority however, have 56kbit/sec dial up or less and the bulk of higher speed users are still on 128kbit/sec DSL.

However Telecom is shifting its entry level up to 256kbit.sec. It recently announced a series of packages extending the data cap out to 10Gb on some accounts but more tightly managing the throughput to specific parameters. That includes plans to retire the ‘full speed’ 600Mb capped account which has ranged between 2- 8Mbit/sec, effectively scaling down top speeds to 1-2Mbit/sec.

Entry level accounts for 128-256kbit/sec range between $40-$50 with 500kbit/sec-2Mbit/sec offerings going for up to $80 per month, depending on use.

Telecom currently has about 120,000 JetStream customers, claiming it’ll have 100,000 on a minimum of 256kbit/sec speeds by the end of the year. Its goal is 250,000 on broadband by the end of 2005.

All digital subscriber line (DSL) offerings originate from Telecom, resulting in little competition in pricing, effectively capping the speed of rollout and access. Other carriers and ISPs purchase at wholesale rates but have initially been constrained to lower speeds than Telecom itself. Most say the margins aren’t enough for them to make a fair go of it.

A more reasonable ‘bitstream unbundling’ option was supposed to be available to competing carriers by mid-2004 but kept slipping out. Progress is being monitored by the Government which wants to see greater competition in the market by early 2005 or it may take a harder line.

Internet Society executive director Peter Macaulay blames Telecom for clouding the issues around broadband. He reckons its time to stop using the term broadband to describe ‘neutered’ 256kbit/sec technology and make it a minimum 2 Mbit/sec to the subscriber and 500kbit/sec from the consumer to the network.

"Telecom’s got a three year window with DSL but by the time they start delivering the real product to everyone it’ll be obsolete like dial up is today," says Mr Macaulay.

Meanwhile there’s renewed talk about a New Zealand Digital Strategy, enabling us to become world leaders in information and technology. The official Government goal is to move 85 per cent of residential and small business customers up to 10Mbit/sec and beyond - possibly to speeds of 50/100Mbit/sec - by 2010. That kind of access is necessary for video on demand and other multimedia and entertainment business to become successful here.