Telecom cuts price of key web services

By TOM PULLAR-STRECKER and CLAIRE McENTEE - The Dominion Post | Monday, 08 September 2008

Telecom has slashed its prices for registering, designing and hosting websites through a series of partnerships that may entice more small businesses online, but which threaten to put a squeeze on the web services market.

The telco at the same introduced broadband plans for companies that provide dedicated phone support, "business grade" wireless modems and much-reduced charges for exceeding data traffic caps.

Telecom says its research shows only about half of small businesses have a website.

It hopes to rectify this by offering to register, design and host a "medium-sized" website with a shopping cart that firms can use to sell online for an all-inclusive $38 a month.

Business marketing head Victoria Crone says the company has teamed up with Verio, a subsidiary of Japanese telco NTT, which will host customers' websites on Telecom's behalf in the United States.

Verio's systems have been integrated with those of Telecom to provide a "seamless experience" and customers would get the benefits of its scale, says Ms Crone.

The arrangement will see Telecom offer to host relatively substantial websites with 5 gigabytes of web content that generate up to 200 gigabytes of web traffic per month for a monthly charge of $15, through to 40 gigabyte sites that generate a terabyte of traffic for $90.

Telecom has partnered with Australian-listed Melbourne IT to offer New Zealand website addresses for $40 a year, and with four year-old Auckland firm Sentient Software, which will design websites for customers.

A basic nine-page website with information about a business and up to two images per page costs $1000 to set up.

Ms Crone says the philosophy behind Telecom's business hub, through which the services are being offered, recognises Telecom is not an expert web or application developer. Telecom may sign up more partnerships "as the demand is there", she says.

Joy Cottle, managing director of Wellington web hosting company iServe, concedes Telecom's new hosting plans are "extremely well priced", but believes they are "feature poor" and warns that hosting sites in the US would increase the country's reliance on the Southern Cross cable.

Businesses' customers whose Internet service providers were trying to economise on international bandwidth might find sites hosted in the US loaded slowly, she says.

"Traditionally, Telecom's domain name pricing has been high compared to the rest of the market. Their revised pricing is more in line, although towards the higher-end."

Brett Wright, service manager for web hosting company Webfarm, says Telecom's new hosting and domain plans are "a lot more in line with market standards".

There is a danger Telecom could oversell its webhosting packages, and the service could suffer if every customer uses 5Gb of web content, he says.

"The service depends on how many sites you're putting on servers and your support levels."

Telecom's new business broadband plans provide monthly data caps of 3Gb, 15Gb and 30Gb for $53, $80 and $98 a month plus gst, making them about 15 per cent more expensive than its consumer plans, but provide a business broadband helpdesk for support calls.

The business modems - also used by BT, Telstra and AT&T - let businesses restrict what websites staff can visit, and when, and allow remote access to files.

"It is a big part of the business proposition," says Ms Crone.

Charges for excess traffic, at between $2.67 and $4.44 per gigabyte, are less than a quarter of the price paid by consumers.

Future products that will be provided through the business hub include online back-up and storage for businesses, and software applications that will be available for rent online.

IDC telecommunications research manager Rosalie Nelson says the launch of the hub is a positive step for the small business market, which has had to go without certain information technology services or resort to consumer offers.