Telecom cuts digital data service pricing by up to 30%

Broad-ranging changes in the pricing of Telecom's digital data services, announced yesterday, look like more than anything like an enticement for existing customers to sharply increase their bandwidth use.

Broad-ranging changes in the pricing of Telecom's digital data services, announced yesterday, look like more than anything like an enticement for existing customers to sharply increase their bandwidth use.

Alongside cuts of up to 30% in transmission step prices and reductions in most access prices, Telecom Connectivity is offering free or half-price upgrades on frame relay services, and a new "non-linear" pricing scale for high-speed DDS, which effectively means the more bandwidth customers buy (within a six-band pricing structure) the cheaper they get it.

It would be surprising if if the new initiatives, which apply from May 1, were to satisfy everyone, but they will result in some significant savings. Most pleased, perhaps, will be customers in Hamilton and Palmerston North, which have been added to the "major CBD" list, meaning substantially lower costs.

Competitive pressures must be playing a part, but Telecom is at pains to depict the new moves as an "initiative", and an extension of the changes in pricing and packaging introduced with the launch of the Telecom Connectivity brand last year.

"Competition always focuses the mind, no matter where you are, and Telecom also has a policy of matching competitive price, wherever that might happen and wherever necessary," says Telecom corporate manager Peter Thompson. "This particular rollout is not specfically a competitive response. It is an initiative. And obviously what we hope for is that it will continue to stimulate demand from our customers."

The most intriguing competition to Telecom's services is coming from the proliferation of cheap wireless solutions being deployed in inner Auckland in particular, with Telstra's base in the Sky Tower likely to accelerate the trend.

Computer Communications manager Graham Rowe says "that same [wireless] technology is available to us on our network. But the issue for us is how to provide the best possible level of service and how to meet customer requirements. The technology we choose is chosen on the basis of that benefit to customers, rather than some arbitrary price adjustment."

Telecom could offer a wireless service "if it was the most economic way to provide service into a site where we maybe do not have some form of infrastructure."

Such an event would tally with what Rowe is depicting as a more flexible attitude from the telco, which has been notoriously hard to do business with in the past. It seems specific deals - such as the KC Internet Services' new dual-billing arrangement for stacked wideband DDS - can now be worked out without being enshrined as policy.

"We're moving to a regime where we're able to be a bit more flexible with specific customer requirements," says Rowe. "We've set up a more solutions-oriented focus within the company, and that gives us a bit more freedom to try and find ways of structuring technology, price and how we work with other partners to meet specific customers' business issues. That's the way we will approach these problems where we can't quite get the standard service to do what we want it to do.

"ISPs are an interesting market and a challenge because of the growth of their experience and where they've come from, and I think Telecom needs to be a lot more flexible in meeting their requirements."

Thompson says meeting the increased demand for digital services "has been a big challenge for Telecom, but it's one I'm confident we will continue to meet."

Rowe says his feeling is that the demand for bandwidth "will grow a lot, but my crystal ball's as foggy as anyone else's. I think the killer application for bandwidth has already arrived and it's called the Internet.

"If we look to the US, I read somewhere that the bandwidth from East Coast to West Coast is doubling every four or five months. So it's happening and we're seeing it here. The Internet is a hot button in my arena because it is generating growth. At the moment it is generating infrastructure growth and it will also generate growth in our customers' businesses."

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