Telecom's wholesale customers say they will lose money under the company's new retail price regime for unconstrained broadband use.
Telecom will today announce prices for Xtra broadband that effectively undercut competitors which use its network.
Telecom general manager of consumer marketing Kevin Bowler said customers would be automatically upgraded to new packages with maximum download speeds as fast as their line would allow and in some cases more, with increased data limits.
Telecom's prices range from an entry-level package of $29.95 for 200MB/month of data to the most advanced package of $149.95 for 40GB/month.
Telecom has given its competitors two options: to buy the packages at the unbundled bit stream price (UBS) of $28.04 determined by the Commerce Commission or resell Telecom's packages with a 16 per cent discount.
Competitors say the margin between the UBS wholesale price and the resale prices is too small because they also need to pay to provide increased data limits and meet their expenses.
Callplus chief executive Martin Wylie said Telecom was stifling competition and was not interested in acting as a separated wholesale and retail company.
"This was announced by Telecom without any clarification or reference to wholesale customers."
Telecom would try to sweep up as much of the broadband market as possible before regulatory action to make it appear as if it was fulfilling the Government's aims, he said.
Ihug chief executive Mark Rushworth said it would have to subsidise its broadband sector from its tolls business.
Telecom head of wholesale Matt Crockett said ihug had low priced plans in place before Telecom announced its latest plans.