Xtra cuts internet charge by 40pc

By CHRIS BARTON

Telecom internet provider Xtra has rocked the market by slashing the price of flat-rate access to $24.95 a month.

General manager Graham Mitchell said the 40 per cent cut - which will automatically apply to existing flat-rate customers paying $39.95 a month - was aimed at getting users to spend more time online.

Only 15 to 20 per cent of Xtra's 291,000 customers have unlimited-use accounts. The rest use time-based accounts - at either $2.50 an hour, $10 for 10 hours or $20 for 20 hours a month.

Mr Mitchell said the new rates brought flat-rate access in line with prices in the United States - reflecting the proportion of the family income that customers were prepared to pay.

Customers of the world's largest internet provider, America Online, for example, paid $US21.95 a month for unlimited access.

"The exchange rate isn't relevant with internet access," he said.

But at an average of 21 hours a month, Xtra customers are lagging behind America Online users, who hook up to the web 32 hours on average.

America Online also has 90 per cent of its customers on a flat rate.

Mr Mitchell said that while Xtra research showed 42 per cent of the household population now had internet access and that 60 per cent of homes had PCs, we were a long way behind the United States in terms of online transaction and advertising revenue.

Ihug managing director Nick Wood said Xtra's move would put the squeeze on many smaller internet providers.

Ihug, which is the second-largest provider with about 90,000 customer accounts, each providing an average of $32 a month in revenue, would analyse the Xtra offering over the next few days, he said.

If the other internet providers follow with reduced prices, it will be the second time Xtra has lead the market in a new direction. In May last year, Xtra introduced its first flat-rate access account at $39.95 a month - about $5 less than Ihug's.

Within a few weeks all other providers had matched the offering.