Logic deal sparks an internet pricing war

Royal Gazette yesterday:

By Alex Wright


A pricing war could be sparked in the wake of the launch of Logic Communications Ltd.’s latest internet service deal.

Logic’s deal will see existing customers on the 1Mbps contract upgraded to 2Mbps, with the price being slashed by $10 down to $99.95 per month.

But competitor Transact has hit back at Logic’s latest offering, claiming that they are the real innovators in the Bermuda internet service marketplace.

Bill Dickinson, senior vice-president of Transact, countered Logic’s move to offer a faster internet service at a reduced price, pointing out that his company will remain to be competitive in the market by reducing their current two megabyte by two megabyte service to $99.95, while its 1Mbps service would come in at $89.95 and the 600kps, 300kps and 150kps would be aggressively priced for all customers regardless of whether they are CableVision, DSL or M3 Wireless users.

He explained that new DSL and CableVision customers would also receive the first month free, subject to conditions.

Mr. Dickinson went on to stress that Transact have been offering 2Mbps for $109 when all of the other ISPs were offering it at $189 and were responsible for lowering the price and not just following Logic.

Among the other innovations introduced by Transact, according to Mr. Dickinson, his company are the first to:

• Introduce symmetrical speeds back in 2003 when all other ISPs were offering upload of 128k regardless of download.

• Increase symmetrical speeds to 150k, 300k and 600k compared to their competitors’ offers of 128k, 256k and 512k.

• Offer any speeds higher than 512k when they introduced a 1Meg offering in 2006.

• Offer 1.5Meg speeds when all others were not offering more than 512k.

• Interconnect with CableVision and offer a 2Mbps service at $80.00 per month less than their competition.

• Offer high speed accelerated dial up in 2004 in response to expensive local Telco DSL prices.

He added: “Transact will continue to offer speeds and pricing that we can afford (based on expensive off-island capacity that we are still forced to buy) and that customers demand.

“We would love nothing more than to offer real high speeds at more aggressive prices, but until something significant changes with the regulatory situation, we are stuck paying premium rates to our upstream providers.”

Che Barker, marketing manager at fellow rival Northrock Communications Ltd., said his company would match Logic’s deal.

“We are already matching that,” he said.

And he predicts other competitors will follow suit.

“I think everyone in this industry will be matching that price,” he said.

Mr. Barker admitted that not many customers had taken up the deal because they are not interested in the higher internet speed.

“There has not been a large amount of people coming forward,” he said.

“It seems that everyone thinks that people want two megabytes of higher speed, but we find that the majority of our customers in the lower range prefer a low price to the higher speeds.”

Logic had not responded at time of going to press.

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