UTV Internet enters flat-rate fray with low prices

25 Jun 2003

UPDATE: UTV Internet has launched its flat-rate service for a monthly fee of €24.95, some €5 less than industry observers expected and 16pc lower than its own original estimates. A ‘lite’ version of this service is also being launched at €9.99 per month for a limited number of hours.

The move comes mere days ahead of the full launch of flat-rate internet services, also known as FRIACO (flat-rate internet access call origination). The telecoms regulator ComReg has directed the introduction of these services and has designated 27 June as the date for Eircom to provide other operators with wholesale rates.

Under the terms set out by ComReg, UTV is allowed to advertise its service and accept customer orders, but it cannot begin formally offering flat-rate internet access before Friday. However its move is an aggressive one as it effectively sets the bar low for prices; many operators had been expecting to weigh in with services that would cost consumers €30 per month. UTV Internet is providing two services; UTVip XL offers at least 180 hours access anytime day or night for a set monthly fee of €24.95; UTVip Lite offers 30 hours per month dial-up for €9.99.

In addition, UTVip customers can also avail of telephony services which offer 25pc off Eircom standard call rates for local, national and international voice calls, as well as a 5pc discount on mobile calls.

One telecoms industry source suggested that, even at €30 per month, there is scant margin to be had for operators, however UTV Internet managing director Scott Taunton confirmed that the company would not operate the service as a loss leader to boost its own market share. UTV’s pricing model actually contains room for adjustment in the event that it is undercut by a competitor. Even if it does not alter its price, the company has added the caveat ‘at least’ 180 hours in its statement announcing the service, leaving open the possibility that it may increase this number to remain competitive.

Raising the hourly amount per month may be a moot point, Taunton suggested. He cited UTV’s experience in running FRIACO services in Northern Ireland for the past two years, which showed that on average, users tend to spend 35 hours online per month, well inside the 180-hour limit announced today. Taunton added that flat-rate services had proved to be an important “transitional step” between standard dial-up access and fast broadband connectivity.

Esat BT is still keeping its powder dry until Friday but a spokesperson indicated that the company would have very little leeway to adjust its pricing to compete with UTV Internet. Its expected price is due to be in the region of €1 per day, which is slightly better than the company had been expecting two or three weeks ago.

Although Eircom is launching the wholesale flat-rate service – as it has been directed – on Friday, it is not thought to be planning to unveil its own services on the launch date itself. In a statement issued on Wednesday, the operator said its retail division expected to announce details of packages for residential and business users ‘shortly’.

By Gordon Smith