ClearNet joins rivals with flat fee for limitless time

By KEITH NEWMAN


ClearNet has matched market rivals Xtra and Ihug with a flat monthly fee of $40 for "all you can eat" Internet access, making it difficult to tell the difference between the top three access providers.

While Clear's move is likely to stabilise prices, it also boosts flat-rate charging - leaving service, bundling, branding and bandwidth as key advantages to exploit in the highly competitive ISP (Internet service providers) market.

Spokesman Ross Ingles said ClearNet did not want to enter into a price war, preferring to give the market more choice.

Its $40 monthly fee for endless Internet starts today, although if too many people try to dial in at once it will bump off "inactive" customers after an unspecified time. New customers until July 8 get the first month free.

Until today Clear's equivalent offering was a monthly fee of $35 plus $2.25 to $2.95 an hour online.

ClearNet claims 90,000 Internet users at present and believes its flat-rate fee will attract about 10,000 new users and the same number from existing accounts.

For heavy users, ClearNet will next week announce a flat-rate annual fee for those who want to "lock in their spending".

Its existing Select Plan accounts are being revised to fit with the new flat-rate offering.

But ClearNet also has some catching up to do. Telecom's Xtra's $40 flat fee, announced on May 27 - with the right to knock users offline after 12 continuous hours - has already claimed 8800 customers, although many had moved across from existing Xtra accounts.

A record number of new accounts have also opened and by the end of this month Xtra expects to be well clear of the 200,000 mark for total customers.

Xtra's move was quickly matched by Ihug, until recently the only ISP offering flat-rate access. Ihug allows continuous connection unless lines are overloaded, in which case it will bump users off after three hours.

Ihug director Tim Wood does not believe the market will move much below $40.

He said the company was looking at aggressive bundling deals for Ihug subscribers with the services of its new 30 per cent shareholder, Sky TV.

Mr Wood said the price change had not noticeably increased the number of sign-ups to Ihug. People were more likely to make decisions on brand, level of support and access.

Ihug would in future reposition itself to focus on high-speed Internet and promote the value of its own pay-TV offering.

Smaller ISPs are also moving to flat rate. Late last week Meridian undercut the big three with a $35 rate and franchise operator Quik Internet dropped its 50-hour limit on its $40 account, which is now $39, and placed a potential 8-hour cap on continual use "to stop people hogging the lines."

"We've been wanting to go flat rate since we started but didn't want to do it in isolation," said the Quik Internet New Zealand manager, Geoff Oliff.

He would not disclose customer numbers beyond saying that there were several thousand and the numbers were ahead of plan for the two franchises now operating in Auckland East and Wellington Central.

Quik had a further 16 franchises to offer - four are expected to go online before September.

Meanwhile, the No 4 ISP, Voyager, has yet to make its move, as has No 5, the Internet Company of New Zealand (Iconz), which only recently adjusted its pricing.

"We're not going to be rushed," said Iconz general manager Hugh McKellar. "We've always sold more on value than price." At present it offers 50 hours online for $35.

Xtra access business manager Andy Miller has rubbished claims that users have been getting slower lines since the flat-rate announcement.

"The system is humming. We were ready for this - we got a hell of a hit but we've managed very well."