ClubTelco culls national price scheme

Melbourne internet service provider ClubTelco will remove its national broadband pricing from next month, blaming a widening gap in wholesale prices for metropolitan and regional areas.

First introduced in June last year, the national pricing meant metropolitan and regional subscribers paid $30 a month for ADSL with 10 GB download quota or $50 for unlimited downloads.

ClubTelco intends to reverse the strategy from February 9, however, requiring regional users to pay $20 more a month than their metropolitan counterparts.

The telco's entry-level 10 GB plan will remain at $30 a month for metropolitan users but increase to $40 a month for rural subscribers.

Its unlimited plan will drop to $40 a month for metropolitan users but increase to $60 a month for rural users.

The company laid the blame on a continuing discrepancy between metropolitan and rural Telstra wholesale pricing.

The pricing was based on a cross-subsidy between metropolitan areas, where ClubTelco runs its own DSLAM network in 379 exchanges, and regional areas, where it resells Telstra Wholesale ADSL ports at a higher cost.

"We have been trying hard to absorb this price [difference] to provide one price nationally," ClubTelco said in a Facebook post announcing the changes.

"Unfortunately though, due to the increase in usage and the higher regional cost from our supplier we [are] now introducing a price increase in order to maintain the same level of quality in our Broadband services."

Scott Stavretis, CEO of ClubTelco's parent company, Eftel, told iTnews that while Telstra Wholesale prices had dropped in recent months in metropolitan areas, it had remained stagnant in regional areas, causing a discrepancy.

"In regional areas we were making little or no margin, we were making a much higher margin in metro," he said.

"We wanted to balance it out and make sure we're competitive in metro areas."

ClubTelco is attractive largely due to its month-to-month plans with no lock-in contracts, provided users pay an inflated first month cost and a $50 annual fee.

However, the lack of lock-in contracts has been blamed by users affected by the changes as an excuse to easily raise prices with little warning.

Stavretis said the company had received a "few cancellations" from regional users since announcing the changes but that the cancellation rate had since dropped off.