Slingshot slashes call costs

Slingshot is raising the stakes in the battle over phone rates, with a "destructive" price cut in its internet telephone service that aims to take business away from Telecom.

The company is cutting the national rates on its iTalk internet telephony service to 5c a minute, from 9c. Calls to mobile phones are dropping to 30c a minute, from 40c.

Slingshot is also cutting and simplifying its international rates by grouping certain countries.

Calls to more than 40 destinations, including Australia, China and the US, are 5c a minute; 30 destinations, including Indonesia, Russia and South Africa are 10c, and 20 destinations, including Mexico and Ukraine, 15c. Previously, international rates differed depending on the country.

As well, calls to other iTalk users anywhere are free. The iTalk service also offers users a second home-phone line bundled with advanced features such as call minder, call forward and call waiting for $9.95 a month.

Seemingly in response, Telecom yesterday announced it was adding international calls to its Anytime plan. Anytime users could call more than 200 countries and pay only off-peak rates, 24 hours a day.

Telecom's rates are 14c to 18c a minute for national calls, depending on the package. Calls to mobile numbers are between 39c and 55c a minute. Calls to Australia are 47c a minute; 49c to the US and UK; and 89c to Western Europe and the top five Asian destinations, including China and Hong Kong. Extra phone services, such as call waiting and caller display, are $2.50 each, Telecom said. An extra phone line costs $29.95.

Slingshot's rate cuts come in conjunction with a deal with Dick Smith Electronics. The chain on Friday started selling an internet-ready phone for $98, which any broadband user can simply plug in and use without any extra software.

Slingshot founder Annette Presley said iTalk had 1000 users in New Zealand, but the service "has potential to take away [Telecom's] major revenue stream".

She said the quality of the service - often called into question by critics - was improving.

Calls placed on iTalk sounded better than mobile calls, but not as good as traditional land lines. "We're hoping the quality will continue [to improve] with volume."

Telecom seemed to be caught flat-footed by the rate cuts. A spokesman defended the company's "best-value" Anytime service, saying it was about "quality and integration", with no echo or dropped calls.

The spokesman also said Telecom had other packages "to meet our different customers' needs".

Telecom has begun testing a voice over internet protocol (VoiP) service, which it expects to release late next year.

Presley said she was unimpressed. "Oh, really? That's what our official thoughts are. We'd love to see the product, we'd love to see the rollout plans. We welcome that because the moment they validate VoiP is the moment that our market becomes a mass market."