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Turning phone boxes into Wi-Fi hotspots is a smart disruptive move by Telecom NZ. It gives the company something to offer customers that rivals can't easily match. It also stops phone boxes - useful in emergencies - from becoming white elephants.

The company says 700 hotspots will be live by October 7. By the middle of next year there will 2000 hotspots around the company.

At the moment the service is free to all-comers. Starting on October 7 the service will stay free for many, but not all, Telecom NZ mobile customers. They will be able to download 1 GB of data per day - that's a generous limit considering most mobile data plans only offer 1 or 2 GB of data a month.

Everyone else will have to pay $10 a month to use the service. Telecom says there will be other price plans.

Wi-Fi stretches mobile data

Telecom Retail chief executive Chris Quin says the network will help to make customers’ mobile data go further. It also means customers are less likely to defect from Telecom NZ to a rival phone carrier. In some cases the deal will be enough to woo customers away from rivals.

The Telecom NZ phone box Wi-Fi network began operation last summer when the company established hot-spots in holiday locations around New Zealand. I found one in a small waterside village while driving from Picton to Havelock North.

Telecom's Digital Ventures is behind the project. The business unit has been charged with developing innovative ideas and creating new opportunities.

Good in practice

To use the service you need to register. Smartphones automatically connect when it range of a hot-spot if their Wi-Fi is switched on. I've registered smartphones and an iPad and use the service often as a way of stretching my pre-paid mobile data allowance.

It's particularly handy when I'm at my local cafe which is just 30 metres or so from the neighbourhood phone box. Sadly there appear to be few hot-spots close to decent cafes in the Auckland CBD - although many good cafes have their own networks so this is not a problem for my work. I'd dearly love to find hotel or motel accommodation in other centres in easy reach of the hot-spots so I can avoid the ridiculous gouging on internet access.

Overall I find performance comparable with home Wi-Fi, in my local neighbourhood I rarely have to share the bandwidth with other users. Connections tend to be stable. Even in town I've found it works fine for straightforward applications like mail and web browsing.

Competitive edge

The service is good enough and will shortly be widespread enough for it to be a major drawcard helping Telecom NZ entice a certain class of user away from rival networks. While Vodafone currently has the edge on Telecom with its faster 4G mobile network, the truth is that for many users New Zealand's relatively small mobile data caps are a bigger barrier to mobile productivity than network speed.

By making it available to customers of rival carriers, Telecom NZ does two smart things. First, it has an opportunity to market its products and services to people who currently shop elsewhere for communications services. It also sends a clever message, that its service includes $10 a month of value that you can't buy elsewhere.

It's hard to see how rivals can compete using their own resources. On the other hand they could cut deals with the Tomizone network to offer a similar service. Eventually when the UFB fibre network is established it may be economic for Telecom NZ's rivals to install their own small, low-cost Wi-Fi hotspots. But for now, the service gives Telecom NZ a useful market differentiator.

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