Ihug has responded swiftly to Xtra's new flat-rate plan by dropping its rate to match Xtra's $39.95 and promising added valued from bundled packages including digital TV access.
The announcement comes less than two working days after Ihug director Tim Wood suggested his company might wait until Clear Net announces its flat-rate price on June 8 to consider any price cut.
Ihug's 12% price drop may not hurt quite as much as it seems. The company raised the price of its monthly flat-rate Diamond account from an original $40 early last year to cover the then-plummeting New Zealand dollar, explaining it had to pay for much of its bandwidth and services in US$. The kiwi has not come back to the parity with the US$ it saw in 1997 but it has recovered somewhat from last year's trough.
Rural customers who connect with Ihug's NZWide service via the Telecom IPNet dial-up network will be particularly pleased with Ihug's announcements – having had their monthly hours online curtailed last year, they have now been brought onto the flat rate on the same basis as other users.
The company last week also doubled the monthly limit under its $30 Sapphire account to 60 hours and cut its registration fee by $20 to $39.95.
"Ihug also intends to focus its efforts in providing better access and pricing to its high speed service around the country, with more announcements to come," says Tim Wood.
"Ihug will also be looking to value add its new pricing with a variety of bundled packages, including digital TV access. Innovation is more than simply dropping prices it's about offering the customer usable and enjoyable new products. Ihug prides itself on its commitment to R&D."