Forum: the strange world of backward competition

TelstraClear price hike a knock for broadband customers

TelstraClear has upped its internet service charges. Fortunately this has coincided with its service being favourably rated by Epitiro, the independent UK-based rating company.

Epitiro puts both TelstraClear’s cable and DSL services, in Auckland, Wellington and Christchurch, well ahead of the rest of the bunch. However, it doesn’t take price into account.

TelstraClear customers congratulating themselves on having made a good choice of provider were knocked back slightly recently when the company announced surprise tariff rises of between $5 and $10 per month.

This rise sits somewhat uneasily in a market that is supposedly becoming competitively fierce as a result of regulatory reform and unbundling. However, one reason TelstraClear is in the lead, according to Epitiro, is because it has its own infrastructure in the larger cities. Its rivals, to a large extent, are merely piggy-backing off Telecom’s unbundled links.

Meanwhile, Telecom itself is making noises about the strain of having to support rivals on its network. If the leading company is feeling the pressure this might lead TelstraClear customers to wonder whether it’s worth shifting as Telecom might well be lining up an increase too.

TelstraClear has, presumably, done its customer surveys and reckoned a $5-10 rise won’t lose it significant market share. Its cable users in particular (I’m one) are something of a captive market. Once you’ve gone to the bother of getting hooked up to dedicated infrastructure, it doesn’t seem sensible to then have that cable disconnected, and pile into the melee that is Telecom’s DSL, just to save a few bucks. You might well find yourself having to shift your phone line too (trusting to number portability) or have to put up with two bills — I’ll come back to this later. It’s much less bother to stick with the status quo.

But it makes you wonder: are internet services in danger of entering that strange reverse-competition world that afflicts petrol and air-fares? You know the way it works: one “competitor” sticks its nose a little ahead in the price stakes and if it doesn’t encounter an appreciable loss of market share it holds its position. Then, once its rivals realise they have a little more headroom, their prices drift upwards too.

Early on in the competitive telecoms and internet era, I decided to hedge my bets. I plumped for a Clear phone service and what was then known as Saturn for my internet service. That’s another aspect of backward competition: finding that your two providers have become one, and knowing that you’re helping pay their merger costs.

But at least my household gets Sky TV via TelstraClear, so hearing the company plead Sky costs as one reason for the price rise doesn’t rankle quite as much as it might for a customer on free-to-air TV or Freeview.

My gripe with TelstraClear is that in the seven years since the merger I’ve never persuaded them to combine my old TelstraSaturn and Clear accounts. I still get two bills every month, under different account numbers. But, last month, I finally got a response. “And by the way,” said the helpful staffer, “while we’re merging your accounts I noticed you’re not on the best phone plan for your usage pattern, would you like to change?”

Now I’m hoping to claw back on my phone account to compensate for the hike in internet costs. I have the feeling that this is not the way reform was supposed to work.

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Tags broadbandtelecomTelstraClearNetworking & Telecomms IDepitiro

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