Or at least, it would be if it weren't for Telecom's Link!
I was reading Paul Brislen's (from IDG)
account (along with Bruce Simpson's from Aardvark
and somebody's from Xtra - sorry, no link could be found ;) of Telecom's latest
256kbit offerings today with very mixed feelings - When i read the first few
lines I was almost jumping with joy - although once again, further investigation
into the new deals makes me even more furious at TELECOM
(perhaps an acronym for The Excessively Large Evil COmmunications Monopoly).
The rage settled down a wee while ago, and after a long think, i've come to
realise that the implications of the new plans could potentially be the most
devastating stab in our backs we've ever seen. Let me explain.
Sure, on paper the new plans sound great - not so much the entry and mid-level,
but the high-end plan with large 10gb cap and convenient traffic shaping after
you've used up your quite generous share. Telecom have even aligned themselves
with the rest of the world when it comes to ADSL - more specifically the Asymmetric
part - they've capped the upstream of their new plans at 128kbit (which is quite
inconvenient for me as I tend to upload quite a lot of data, but I suppose downstream
is more important.. and latency for that matter but we've already been denied
that one with the deporting of the Nokia hardware).
One can't help but find the new plan attractive - its a huge step in the right
direction for Telecom (and Xtra - here's a big clue in what I'm thinking!),
and It is absolutely sure to attract scores of customers to both the new ADSL
"JetStream" plans, and of course Telecom toll calling, because lets
face it - their residential toll deals aren't too bad.
Wonderfully for Telecom, X marks the spot (X being Xtra, of course) - and lo
behold, just as one would expect from our favorite monopoly, as quoted from
their website (http://www.telecom-media.co.nz/releases_detail.asp?id=3006&page=1&pagesize=10
- ooh i'll have to turn to some formatting to make this oh-so much more apparent):
"Telecom will launch a new range of residential Xtra JetStream plans next month, including a flat-rate broadband plan"...
...“Customers have told us they want greater price certainty on their Xtra Jetstream account each month, and the new flat-rate plan has been designed to provide this"...
..."All existing Xtra JetStream customers will be contacted shortly"...
..."RETAIL (Xtra JetStream)"...
Now correct me if i'm wrong, but aren't Telecom supposed to support all ISP's equally? Wasn't there some dispute about Telecom not being fair to other ISP's a few years back? Telecom are once again endlessly promoting their ISP, Xtra, through their own website... surely this is some sort of abuse of monopolistic power?
On a quick side note - isn't Mr Thompson (Chris Thompson as mentioned in Telecom's media release) the head of Internet and Online Marketing for Xtra? or am I just dreaming things up here?
Anyway, back to my point - Telecom's new plans are attractive, so attractive that most consumers on JetStream Starter (I'll be T.C. err.. P.C. by calling it JSS as opposed to JetStart) will consider strongly moving to the new plans, fulfilling Telecom's dream of 100,000 residential broadband customers.. or if not fulfilling then making slightly more realistic. This all seems happy and well, until you read on further from that same page mentioned above - i won't quote directly:
RETAIL (Xtra JetStream): High-End (10gb cap, shaped after cap, 256/128 downstream/upstream):
$69.95/month if user has Telecom tolls
or $79.95/month if they do not.
RESALE (that's anybodyelse JetStream - yes, that was for effect): High-End (10gb cap, shaped after cap, 256/128 downstream/upstream):
$59.95/month if user has Telecom tolls
or $69.95/month if they do not.
I'm not entirely sure if the average Paradise.net user would notice from reading that article, but I certainly did - $69.95 - $59.95 = $10.00. TEN MEASLEY DOLLARS?! I looked around a few ISP's and found out that their JetStream Fast monthly charges (JetStream Fast being any plan who's data caps are enforced by Telecom as opposed to the ISP) are almost always around $20.00/month. Simple math tells us that ISP's are going to have to reduce their profits by SIGNIFICANT margins (that's halving their profits for JetStream accounts!) to keep prices competitive with Telecom's own Xtra, charge $10/month more than Xtra for the same product and concentrate on some sort of advanced marketing strategy conning people into paying the extra money and sticking with their "better" ISP (thus losing profits while they devise this plan), or simply lose profits and customers by not marketing the new plans at all.
It's anybody's guess as to where these customers will go, of course - with only one ISP in bed with Telecom (that being Xtra). </sarcasm>
Think about the implications of that - last count there were 73,000 ADSL customers in the country - 60,000 or so being on JetStream Starter, if I remember rightly? - if we work on the assumption that 1/2 of those users are Xtra customers, 30,000, while the other half belong to other ISP's, if say.. half of the non-xtra JSS base (it doesn't really matter if they are Xtra customers and change plans) move to the new plans with Xtra, and move their toll calls to Telecom, that gives a whooooole heap of money to Telecom/Xtra to play with ($10.8mil/year based on those numbers), AND because ISP's are forced to either lose profits and customers (I'm betting that there will be at least one ISP who goes out of business or reduces their product line-up because of the new plans), the most sensible choice for affordable "broadband" is the Telecom/Xtra combo, which puts us right back to square 1.
IF these new plans attract the sort of numbers that i'm guessing they might - probably more than half the JetStream Starter customer base, the Telecom/Xtra bandwagon could effectively put a lock on any further price drops, technology injections and further broadband development in New Zealand. Because the government aren't recommending Telecom unbundle the local loop anymore, and as far as I can see by Telecom's moves, there is no legislation against bullying "competifriends" (my word for your competitors who buy your services...) and pushing the telco's own ISP, Telecom/Xtra could have total market control.
Paradise.net, Orcon, ihug, slingshot, Radio.Net, MaxNet - they would all be forced to lose huge profit margins - (from the $30.00/month they get from JetStream Starter to $10/month from the new plans), or lose a WHOLE lot of customers. And of course, only ISP's who have deep pockets could realistically afford such a loss in profits without effecting them majorly (perhaps.. orcon and paradise.net only - probably not even them seeing as they don't readily market the 256kbit/s plan - i'll come to that in a second), which means that there will be only a couple of ISP's who will actually offer the new plans readily at the same price point as Xtra, lowering competition.
That puts Telecom/Xtra in a pretty damned good position, if you ask me - market leader in price, most convenient billing (its all on your TCNZ account), and a whole lot of other things that make them so much more attractive as an ISP vs. the competifriends, such a powerful position could freeze broadband development in new zealand in its tracks - which is exactly what I think Telecom want to do - its what they've wanted to do all along.
Thinking further into it (it seems a bit far-fetched but its possible) - Telecom's 256kbit/s plans were absolutely pathetic - everybody, including TelstraClear agreed on this - that was the hang-out-to-dry, leaving already tired and ill-patient customers so frustrated that they'd do almost anything to get their hands on decent priced 256kbit/s "broadband". Telecom did always tell us that we were too quick to slag their new plans back then if you remember... - and now, what do we have - a dream come true. But it's not really a dream come true is it? - It's only a dream come true because Telecom's last plans were an absolute abomination... Telecom gets an influx of angry-come-happy customers to Xtra, and takes control of broadband to new heights.
Ah well, I'm going to stick with 128kbit/s - its more flexible, I like my ISP (paradise.net) - and I don't want to support the possible demise of New Zealand broadband. I hope that you all see the good in this move, and do the same.