New Xtra broadband plan upsets competitors

Telecom has launched its new Xtra broadband retail plans, amid fears the company is squeezing other internet service providers.

Telecom general manager of consumer marketing Kevin Bowler said the new plans had two main points.

All now would have maximum download speeds -- as fast as customers' lines would allow -- rather than speeds being restricted as was the case previously, he said.

Secondly a Go Large plan was being introduced, which would be just $10 more than the most popular $39.95-a-month Go plan.

Go Large will provide an unlimited amount of data, subject to a fair use policy, compared to Go which provides 1 gigabit, after which downloading is slowed to dial-up speed.

The new plans will be available from October 26, with existing customers moved to the new plans progressively from that date.

Telecommunications Users' Association of New Zealand chief executive Ernie Newman said that while his organisation was pleased to see improved services, it was feared Telecom's new plans could seriously disadvantage the wholesale market.

He had talked to several wholesalers -- who offered their own retail services over Telecom's lines -- about their concerns they would be squeezed by the new Xtra plans.

"The net result of this, if they (Telecom) don't do anything about it, would seem to be to drive business away from their competitors and back to Telecom's own retail operation," Mr Newman said.

"Which is exactly the kind of exploitation of market dominance that we don't want to see."

The new plan seemed to offer short term gains for users, but that would be too high a price to pay if the wholesale market was set back.

In the long term that could mean prices that were higher than they would be with more competition. Also it was the smaller internet service providers who were creating the innovation in the market.

But Mr Bowler said the new plans were not principally aimed at picking up users from other ISPs. While the $29.95 entry level Basic plan would now have faster connection speeds, it had been in the market for six months.

"All we're really doing is putting more value against each of the plans and introducing this (Go Large) unlimited plan."

Telecom Wholesale spokeswoman Melanie Marshall said that as she understood it, the wholesalers main point of contention was with the entry level $29.95 Basic package.

The division was working with its wholesale customers on their concerns, she said.

"We understand that (Telecom) Retail have come up with a competitive line-up, and competition is increasing across the board, and we're trying help them as best we can, respond to the new more competitive environment."

- NZPA