Orcon, Callplus & ihug have joined hands in a new bid to pressurize Telecom New Zealand to curb its wholesale Internet tariffs.
Callplus, Orcon & ihug have asked govt. to intervene to slash wholesale broadband tariffs. Three firms said that the present wholesale tariff of US$ 27.77 excluding Goods & Services Tax (GST) by Commerce Commission were too high, and complained that they would lose US$ 17 per month for every customer as it would require them to slash their tariffs for competing with Xtra service from Telecom New Zealand which is priced very low.
The firms claimed the gap between wholesale tariff, which they need to pay to Telecom, and the price for Telecom's Xtra service was very low.
Commerce Commission recently reduced the wholesale tariffs from US$ 28.04 to US$ 27.76. The firms have approached Commerce Commission for issuing a 'cease & desist' order for a ruling against Telecom New Zealand, forcing it for negotiating a fair tariff.
They rated the present scenario as 'incredible' and said that on one hand, Telecom New Zealand was attempting to show its sincerity to industry & govt. about making a competitive scenario, while, on the other hand, it was continuously abusing its market dominance.
Callplus & Slingshot, Chief Executive, Martin Wylie said that with present wholesale price, it would be practically impossible to compete against Telecom New Zealand, unless firms were ready to sustain losses in longer term or establish exclusive networks.
"If we see, these firms are right to some extent. The margin for profit is indeed very less. As wholesale tariffs & Xtra service tariffs are nearly the same, these firms have to price their individual Internet service more than the Xtra service, which is reducing their profits & subscribers," said an analyst at RNCOS.
As per Theresa Gattung, Telecom New Zealand's chief executive, Telecom is indeed competing but is doing this fairly. David Diprose, Association president, has blamed Telecom that it could curb wholesale tariffs if it wants to do so.
Telecom New Zealand estimates a Million business and residential broadband subscribers by 2010.
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