Those figures for the second quarter of 2004 are up 2.7 per cent on the same period for 2003, confirming our reputation as being among the top most connected nations in the world. Not so encouraging however is the realization that about 90 per cent are dial-up connections.

Mark Ottaway, managing director of Nielson NetRatings says it appears market growth is slowing with 61.3 per cent of New Zealand homes having Internet access, up from 58.4 per cent last year.

Xtra remains king of the castle with 49.7 per cent of home users, TelstraClear and its ISP Paradise.net have a 23.3 per cent share and Ihug has 7.9 per cent. The remaining 10 per cent is shared by about 120 regional ISPs including niche or small town players who service fewer customers or specialise in areas like on-line gaming.

Mr Ottaway says high speed Internet access is ‘really lagging’. Only about 50 ISPs so far offer a solution- the majority resell Telecom’s digital subscriber line (DSL). Telecom through its Xtra ISP has a target of 100,000 broadband households by the end of the year and claims to be adding customers at a rate of 2000 per month.

Wireless ‘broadband’ is also offered by players like Woosh or Wired Country and this is an area that is growing rapidly. There’s an increasing number of people using cellphones or PDAs to gain access to the internet but the number is too small to gauge currently.

 Cecil Alexander, director of sales and marketing with WorldxChange is a relative newcomer to the Internet provider market, having traditionally been involved in tolls. The company is bundling its newly launched Xnet service to its 50,000 tolls customers as well as the wider market.

"The vast majority of New Zealanders will probably remain happy with dial-up until such time as access costs to broadband are low enough. While broadband is important to the county your grandmother doesn’t really care."

WorldxChange is offering an all-you-can-eat dial up service with five email addresses, 100Mb of email storage, 5Mb of personal web storage and antivirus and spam filtering for $20.

Mr Alexander says Xnet is a purpose built ISP with state of the art equipment giving users easy access to change passwords and a helpdesk geared to help those who are not technically literate.

"We’re ready to move into the broadband market but there too many unknowns at the moment. Telecom is getting very active promoting their stuff heavily before the rest of us get a shot at it."

Meanwhile Orcon Internet which has been in the business since 1997 has become one of the top players in the market, largely through its acquisition of 21 companies ranging from complimentary or related services such as security or hosting. It provides dial up and broadband to its domestic customers and a range of higher end services to business and corporates.

Orcon says its telecommunications buying rates are so good it can pass on competitive fees to clients. The company agrees having actual helpdesk people available 24 hours a day is an important factor in keeping customers satisfied.