This is definitively bad practice. But Darwin will fix that. They
will lose customers (such as yourself) by those practices.
If you reputation as a hosting provider becomes "sign with us and
we'll steal you customers", their future as a hosting provider is
going to be very short.
I love the excuse, "they're doing, it so it's OK".
What Telecom is doing in that respect is wrong and the only reason
they get away with it is that they are a dominant player, Orcon is not.
The networking market in NZ has a long memory and very small
tolerance for shonky business practices.
jfp.
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Jean-Francois Pirus