IHUG Trims Costs -- Will Others Follow?
11 October 2000 Edition|
As reported here
yesterday, IHUG has announced
intentions to trim its workforce by up to 60 and "refocus" on
core activities -- is this the start of a trend?
The falling Kiwi dollar is cited by IHUG as the key force behind the moves
announced yesterday but one can't help but wonder if the recent plummeting
cost of flat-rate dial-up Net access hasn't got just as much to do with it.
Remember -- it wasn't long ago that the benchmark rate for flat-rate access
was around $40 a month -- now it's fallen below $30. That's a big hit for
any business to take.
Of course the proliferation of "free" ISPs has had a significant effect on
driving the price of pay-for-access ISP prices too -- but, as suggested
previously in this column, I think the days when we have a choice of several
such free services are very numbered.
As the false gilding continues to wear off Net-related businesses, investors
and shareholders are demanding that more attention is paid to creating some
good old fashioned profits. The 1999, model where nobody cared about profits
so long as they could sell their shares for more than they paid for them are
well and truly over.
Even Telecom, that juggernaut of the local ISP industry must be feeling the
pain -- its shareprice significantly down from those halcion highs experienced
a year or so ago.
The next few months will be very telling and could see other ISPs rationalising
their resources and refocusing their activities.
Talking Of The Internet
Yahoo! made an interesting announcement today (see the link in the news
They're continuing to diversify by getting onboard the voice bandwagon --
offering a whole range of voice-related services over the Internet and by
One of the most intriguing is the ability to ring a toll-free number and
have your new email read to you over the phone. That has to have appeal
for those people who are always on the move and who can't afford or won't use a
They're also offering something which I think is long overdue in this country --
the ability to make long distance phone over the Net calls through your PC.
Yes, I know you can use Net2Phone and a raft of other software packages -- but
I've always been surprised that one of the main ISPs hasn't taken advantage of
its own network to offer a service such as this for free -- as a "unique
selling feature" to customers.
Of course Telecom has leveraged it's strength in the toll market to help sell
its flat-rate XTRA service by bundling a special toll package with new
signups -- a move that more than a couple of Aardvark readers have suggested
is decidedly anti-competitive.
However, both IHUG and now ClearNet (as of this am) are also offering special
voice deals to lure users to their internet access services.
One thing we can be sure of -- the Net-access market is getting increasingly
competitive and that spells good news for users -- up to a point.
The risk we face is that the competition becomes so fierce that only a tiny
number of big players survive and that risks the formation of the kind of
cartels we see in the area of banking and petrol.
That Draft Paper On The New Economy
Thanks to all those who have already contributed their comments, critiques and
suggestions to the draft paper on fostering a "new economy" I've published
Surprisingly enough I've had several emails from citizens of other countries
including the USA, England and Australia who have all said that such policies
wouldn't go astray in strengthening their own "new economy" activities.
If you've not yet voiced your opinion then please tell me what you think.
Thanks also to those who have sent emails acknowledging that I've contributed
some help to their own "new economy" enterprises. I could do with more --
remember that I want to be recognised as someone who's doing his best to
stimulate this new economy and not just as a critic of existing
As always, your feedback is welcomed.