Telstra Withdraws Flat Rate Web Service


The consumer Internet service provider arm of
Telstra, Australia’s largest telecommunications carrier, withdrew its
flat rate pricing model for its Internet connectivity service ahead of
schedule, raising concerns that network congestion has forced it to
re-think its overall Internet strategy.

Called Telstra Big Pond Home, the division had been trialing a “Flat Rate
Plan Network,” a move seen as preparation for the imminent entry
of America Online into Australia. It also threatened to undercut
Telstra’s wholesale ISP customers, however. The trial was due to end on Sept. 1, after which the Plan would be “re-examined.” Telstra confirmed it would not continue after that

Karen Barrett, manager of corporate relations for Telstra, could not give
any figures on the performance of the trial, but said that the company
would review the results with a view to reintroducing the pricing model at
a later date.

“For us, it was just a trial, to see how customers would respond. . . we’ll
be assessing the results and possibly basing new products on them,” she

Dial-in lines for the Flat Rate Network had only been opened in Sydney,
Melbourne and Brisbane, supporting 56kbps modems speeds on the K56flex and
v.90 protocols. The company had admitted from the start in documentation for the service
that the “capacity of the Flat Rate Plan network is limited and if the
network becomes overly congested, it may be necessary to suspend further
subscriptions to the plan.”

It is understood that Flat Rate users had to tolerate long waiting periods
for modem lines of many hours, as demand from new users stretched the
network’s frugal resources past comfortable levels.

The end of the Telstra trial turns the spotlight on OzEmail, Australia’s largest independent ISP, which started a similar flat rate service earlier
this year called MegaSaver, costing $AUS44.95 per month ($US31).
OzEmail and Big Pond are the largest ISPs in Australia, so it was big news
when both tried out unlimited account models this year.

These were seen as a move against AOL Australia, a joint venture between
America Online and German company Bertelsmann AG, which is due to launch
later this year.

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