Brave New Broadband

From April, Xtra customers will have seven new plans, starting with 256/128kbit/s and 200MB per month for $29.95 including GST and a 2c per MB excess usage charge. The fastest plans will be three new 3.5Mbit/s/512kbit/s ones, with 10, 20, 40 GB limits, costing $79.95, $99.95 and $149.95 respectively. A 2c per MB excess usage charge applies once the monthly data limit is reached. Customers who do not put their toll calls through Telecom pay a $10 per month penalty.

For wholesale customers, Telecom offers only the Wholesale Bitstream Service (WBS) resale option with low margins and data caps, with seven plans equivalent to the Xtra retail ones. For example, the top-end 3.5Mbit/s/512kbit/s WBS Pro Ultra plan with 40GB monthly data allowance costs ISPs $129.15 in Zone 1, where Telecom has no competition, and $112.67 in Zone 2 where there is competition, with excess data charged at 1.6711 and 1.4578 cents respectively, plus GST.

On top of the cost of the plan, ISPs also have to factor in a port charge of $2 plus GST. In Zone 1, this would mean the 3.5Mbit/s/512kbit/s 40GB plan costs $131.15 plus GST; Xtra retails the same plan for $133.29 plus GST, leaving ISPs with a $2.14 margin a month.

A key change with the new retail and WBS plans is that full-rate DSL, which can provide up to 7.6Mbit/s downstream and 700kbit/s upstream speeds will no longer be available. Many businesses requiring faster upstream use the full-rate plans, even though they are the most expensive in the OECD by a huge margin. Telecom will move customers on on these plans, which with caps of 10GB or more cost thousands a month, to the cheaper but slower 3.5Mbit/s/512kbit/s service options.