June 16, 2008

TelstraClear Defends Price Rises


TELSTRACLEAR'S move to raise its cable broadband prices as its competitors drop theirs has puzzled one analyst.

The monthly increases of $5 for its High Speed and $10 for its Light Speed plans will affect customers on Wellington, Kapiti Coast and Christchurch networks from July 1. They come during a fierce struggle for customers by telecommunications companies after Telecom was forced by the Government to open up its exchanges to competitors late last year.

Last month, Vodafone announced its third package to include a "free" broadband component, and Telecom launched a $16.95-a- month broadband offer designed to move customers from dial- up.

Rosalie Nelson, a telecommunications analyst for research consultancy IDC, said TelstraClear had stated it would not be dragged into a price war with its competitors, but she said the price rise was an "interesting" move, when most of its rivals were competing on price.

She said the company had a large investment in its networks and now had to expand the business to justify that investment.

Owning its own fixed-line networks and being able to add Sky Television to its packages had set TelstraClear apart in the market, she said. But how it now positioned itself in the market to attract and retain customers would be a precise balancing act, she said.

The cable broadband price rise is the first increase in three years, according to TelstraClear.

The Commerce Commission's March quarter report on the state of New Zealand's telecommunications sector, issued this week, found TelstraClear's plans were the cheapest in the OECD's low and mid- price brackets.

TelstraClear was also recently voted best Internet service provider at the NetGuide 2008 People's Choice Web Awards.

TelstraClear is also raising its monthly price for Sky digital by $1.49 and for Sky analogue by $3.

TelstraClear spokesman Chris Mirams said the changes were a case of passing on increases imposed by Sky TV, inflationary pressures and the cost of network upgrading.

TelstraClear started a broadband service with 24 megabits a second in Christchurch in April and has one scheduled for Wellington by the middle of this year.

It is also increasing its line rentals after Telecom raised the line access fees it charges telecommunications companies to use its lines by 3 per cent. Vodafone has also announced line rental increases.

In Wellington, the Kapiti Coast and Christchurch, where TelstraClear operates networks, Telecom charges $37.05 a month. TelstraClear's price will be $35.95. In other areas, Telecom charges $44.85.

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