Tuesday, March 29, 2005

Broadband price and offer war starts

A broadband price and value proposition war seems to be breaking out in Latvia. First Lattelekom doubled the speed of its UltraDSL business class connections (to a maxium 4 Mbps), then Telia MultiCom (TMC) announced it was slashing prices yet again for the consumer sector, making a 1 Mb line at LVL 19.95 a bargain compared to the ca. LVL 18 one now pays for HomeDSL, including renting a DSL modem from Lattelekom. Even if Lattelekom doubles the speed of its HomeDSL connection (as rumored), the TMC deal is pretty attractive.
Now cable TV, internet and telecoms provider Baltkom is slashing its broadband prices (they are still above TMC's) but throwing in a LVL 1 subsidized computer deal. The machines on offer (starting from LVL 25 downwards) are relatively new, refurbished hand-me-downs from the US with some Linux bells and whistles installed. You have to sign up for at least two years of a package of services from Baltkom (presumably, the more, the cheaper your computer).
By adapting the subsidized mobile handset model, Baltkom has gotten the jump on its competitors, since there is not much to do with the internet unless you have a computer.
Watch for Lattelekom coming up with something similar, but more high-end. The killer value proposition here will be IP TV, so if you ask me, the deal should be for a big flatscreen monitor (say, 17 or 2o inches), with the whole Windows Media package (I grate my teeth, I would gladly take an iMac G5 ), payable in installments along with a turboclass DSL line. What it will be in reality is another question. Lattelekom flopped once with a computer and dialup deal, perhaps an exception that proves the rule.
To be sure, there are unanswered quality and coverage issues with most of the offers. TMC says it has a 100 mbps link to the international internet, but will that suffice if lots of folks jump on the 1 mbps offer? Baltkom owns its own optical cable from Latvia to the Swedish island of Gotland with a further link to the mainland and the global networks that terminate there. This means Baltkom has more than enough bandwidth, but so does everyone else, so this is probably not an issue. Both Baltkom and TMC cover only those areas within the reach of their private optical networks, Lattelekom can deliver DSL nationwide, almost in all cities and towns and probably via WiMax or cdma 450 anywhere.
On the business side, Lattelekom will probably look to hosting and "leasing" applications for small and medium sized businesses, perhaps packaging these with a business broadband subscription. The company probably realizes that the more broadband there is, the less pay-by-the-minute voice there will be, so my advice to Lattelekom would be to be skilled at implementing corporate VOIP, perhaps folding a Skype solution into its offer (for intraoffice and most other calls).

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