ISPs' not-so-flat rate may breach trading act trading act

Internet service providers (ISPs) offering flat-rate, unlimited access accounts will have to have to deliver on that promise or they could be in breach of the Fair Trading Act, the Commerce Commission says. 'It depends on the representations made before people sign the contract, but if it says unlimited access then those people should get unlimited access,' says fair trading manager Rachel Leamy. She says burying limits in the fine print isn't acceptable.

Internet service providers (ISPs) which offer flat-rate, unlimited access accounts will have to have to deliver on that promise or they could be in breach of the Fair Trading Act, the Commerce Commission says.

"It depends on the representations made before people sign the contract, but if it says unlimited access then those people should get unlimited access," says fair trading manager Rachel Leamy. She says burying limits in the fine print isn't acceptable.

"If they're told it is unlimited access even though it's in the contract somewhere that it's not, that would still be a breach of the Fair Trading Act."

A number of ISPs around the country offer flat-rate access for heavy users.

The helpdesk at national ISP Meridian says its users have completely unrestricted access. "There are no limits placed on their surfing whatsoever, so long as they don't stay online for more than three hours," says one helpdesk operator.

Limits of two or three hours are regularly imposed by ISPs, with users being automatically removed from the system and forced to log back on.

"I have no problem with being kicked off the system if my connection is inactive, but to throw me off after three hours of solid activity is totally ridiculous," says Paul Lupton, who uses Ihug. He was told that he hadn't signed up for an unlimited access account at all, but that there were simply no time charges on his account. Nobody pointed out the three-hour maximum at the time, he says. Another user was less polite — the hacker who destroyed thousands of Ihug Web sites claimed to do so because his girlfriend's access was cut off. Ihug didn't respond to calls by press time.

Jim Tucker, chairman of the Internet Society of New Zealand (ISCONZ), agrees that such limits should be stressed to customers from the start. "Those sorts of things really should be up front. I don't have a problem with ISPs doing it, but they should tell customers."

ISCONZ is currently working on a code of conduct for ISPs that would point out such difficulties. "You have to know what you're buying up front."

But Nick Wood, managing director of Ihug, disagrees. "We supply everyone with a brochure or a CD which explains all our terms and conditions and they have to agree to those before their account is opened. If they don't read them that's their problem."

NZNet has stopped offering a flat-rate account. "We're re-considering our position, but basically it was too much trouble for both us and the customers," says NZNet manager Brian Dillon. Dillon worked out the costs involved with these larger users and decided that it was uneconomic to offer such a service.

"We buy bandwidth from wholesalers and it can cost up to $33,000 per megabyte a month. In Australia it's only about $17,000 and in the US we hear it's down to around $5000." Dillon knows of one ISP paying $180,000 a month just for bandwidth. Having one user tie up so much bandwidth meant either offering a lesser service or buying more space — a cost-prohibitive measure.

"At best case you'll run nine or so clients on each line, but I know some of the ISPs are running up to 40. The quality of service just isn't there for them."

Chris Parkinson, managing director of national ISP NetGate, tries to offer a more personalised service. "We're small enough that I know most of my customers individually, and I can assess just what they're up to and try to make their lives, and mine, easier."

Parkinson offers the example of users downloading service patches. "If they're after something huge like that, it's much easier for them to go to, say, Microsoft, and get a CD or I'll help them out with it. There's no need for them to try to download it."

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