By Amanda Morrall
It may come as little surprise to New Zealanders that broadband rates in this country are expensive but to Hungarians, whose rates rank fourth most affordable among OECD nations, the price gap came as somewhat of a shock.
New Zealand's 33rd place finish on the affordability charts is difficult for foreigners to square with this country's status as a developed nation.
It's a point that Flip NZ, the latest telco to enter the market, was keen to emphasise as part of a strategy to steal business from its main competitors.
The price differential formed the basis of its ad campaign launched a week ago.
Flip's marketing manager Scott Hoogerbrug said the expression of surprise shown by the Hungarian lay people who feature in the company's commercial (see below) was genuine.
"They couldn't believe that they were paying a half to a third of what we pay.''
New Zealanders, accustomed to the high rates, could have a harder time swallowing Flip's sales pitch of $49.95 a month for a landline and up to 5 GB of broadband.
The no frills package, geared to the low volume user who still enjoys using their landline, is a budgeters' dream.
Because the product works on a pre-pay basis, it has built-in protections for the user. Once you exceed your allocation, you have to top up.
Another 10 GB of data costs $10 or $15 for 20GB. The system also allows the money conscious user to keep their toll calls within limits because you can't go over your prescribed usage.
"Your usual providers just let you go and go and then you get big fat bills. With Flip you need to top up. If you only want to spend $10 a month on toll calls, you top up $10 and that's all you get.''
Hoogerbrug said the main reason the company (a subsidiary of CallPlus Group which also owns Slingshot.co.nz) is able to undercut its competitors on price is because it owns the network used to provide the service while other players still rely on traditional resold Telecom networks.
"Also, the bigger companies are trying to protect their margins by high data caps, which most people simply don't need, and bundling other services like mobile to give the impression of value."
An estimated 50% of New Zealanders use 5 GB of data or less a month.
Outdated customer support models also drive up costs, which the average user is forced to finance, adds Hoogerbrug, noting that Flip is a strictly an online model.
"Flip avoids that by a big investment in online which stops the need to call us for every little change."
Flip's network presently covers 60% of New Zealand however there are plans to expand when demand for its services grows.