NZ ISPs discover merit of flat-rate charging

The goalposts are shifting in consumer Internet access in New Zealand. The movement is away from volume charging, toward flat-rate and time-based schemes.

Six months ago, there was no flat-rate Internet access available at a retail level. Then Auckland ISP The Internet Group (Ihug) leveraged its international bandwidth deal with SITA to offer a "Diamond Account" at $39 plus GST a month. Competitors claimed that it would be impossible to sustain such a rate - especially for ISPs which still dealt with NZGate or its successor, NZIX.

Now, the ISP which most loudly proclaimed the folly of flat-rate - Iconz - has introduced its "Freedom Account", which offers 50 hours of access a month for $50 plus GST, and additional hours at $2.40 (the base rate is $55 for Iconz customers in Tauranga, Rotorua, Napier/Hastings, Palmerston North, Wellington and Nelson). Along the way, the company has lost general manager Logan Muller, who published a "white paper" on Iconz' website declaring flat-rate "the worst of all worlds".

A few nerves obviously remain. Iconz' notes on the new account say it is not intended for those who wish to remain online on a semi-permanent basis, or for those using high-bandwidth video and audio applications.

Iconz follows Hamilton-based provider Wave, which offers a $60 a month (GST inclusive) flat rate, and Otago's Efficient Software, which is launching a trial flat-rate service for 200 users. Efficient, which buys its Internet feed from Ihug, is charging on an annual basis for its trial - $540 for private users and $720 for commercial users, both figures including GST. Christchurch is now the only main centre without access to flat-rate Internet.

Ihug, meanwhile, now has around 3500 customers, and has flushed away the last vestiges of volume charging from its regime. Its new schedule starts with the $10 a month Bronze account (in Auckland only), which offers 10 hours before a $2 an hour charge applies.

Other accounts reflect a significant pricing differential between Auckland and the rest of the country, suggesting that internal bandwidth is beginning to rival international bandwidth as a cost. Ihug now has a 1Mbit international link through SITA, but still routes some dial-up traffic through NZIX.

Ihug spokesman Nick Wood says recent peak-time access troubles should be eased by a lowering of the company's Auckland modem ratio to one for every eight subscribers and the belated enforcement of an existing rule limiting peak hours online time to three hours.

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