Internode clarifies Telstra monopoly to consumers
- 30 September, 2010 12:27
- Comments 7
Internode's Simon Hackett
ISPs are not ‘crying poor’ when they complains about Telstra’s wholesale prices, according to Internode.
Internode managing director, Simon Hackett, decided to clarify for consumers what the company's stoush with Telstra is all about with a follow-up blog post to his entry last week.
The South Australia-based ISP has publicly expressed its disdain over Telstra’s alleged ‘price squeeze’ on wholesale customers, including itself, since July.
This sprouted from Telstra BigPond’s dramatic price cuts to its retail broadband plans without making appropriate price cuts for its wholesale customers.
Accusations of Telstra’s unfair treatment of wholesale customers have persisted for many years with ISPs such as iiNet and iPrimus publicly voicing concerns over Telstra’s monolopy on the market.
While the issue wasn’t new to people following the ISP market, the public could be unclear about why smaller ISPs were up in arms about Telstra, Hackett said in his blog post.
“Where this is mentioned, it can be frequently misunderstood by consumers to mean that providers are crying poor’ or ‘not trying hard enough’ – that it’s nothing but an exercise in sour grapes,” Hackett said. “It is none of those things.”
He said while consumers may view cuts to BigPond plans pricing as a good thing, Telstra was killing competition in places where it owns the only ADSL2+ infrastructure available by not lowering wholesale access prices as well.
“This means, specifically, that they are offering higher pricing – above that of BigPond – outside competitive areas, contrasted with far more competitive pricing and others than BigPond in competitive geographic areas,” Hackett said.
“… The issue here isn’t a moral one, or a question of providers such as Internode ‘not trying hard enough’ or ‘not negotiating well enough’.”
“It is also important not to confuse this situation with a slanging match over which competitive providers have built more of their own ADSL2+ DSLAM deployments.”
Hackett also highlighted the importance of the National Broadband Network (NBN) remaining a wholesale service provider. He said the permanent solution to Telstra’s stranglehold on the ISP industry was for it to be structurally separated.
This was part of the Federal Government’s Telecommunications Reforms bill which has been put on the backburner since this year’s election.
“It remains very disappointing one major side of politics has failed in its promise to force this outcome and the other side of politics claims [despite this obvious evidence to the contrary] that this separation is not even necessary because the current system ‘works’,” Hackett said. "No, it doesn’t. The current system is badly broken. And consumers are the losers."
Early this week, a Telstra wholesale spokesperson refused to discuss Internode’s claims and declined to engage in a “public battle” with the South Australian ISP on private negotiations between the company and its wholesale ISP customers.
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Comments
sagikoon
1
In my opinion if Telstra provide 10% of price margin to ISP retailers, that is enough.
Steev Fletcher
2
What about the Telstra shareholders? Aren't they allowed to get a return on their investment?
Personally, i am not with BigPond - I opt to pay more for a quality service that never breaks, always kept in the loop when there is planned maintenance.
Bryce
3
@sagikoon
If Telstra provided a 10% margin between their wholesale price and their bigpond retail price we would not be having this discussion.
Judge Judy
4
Not Guilty, Case closed.
Stop whinging and move on. ACCC's not going to be the solution. The ISP's have to find a smarter way to compete. This happens everyday on all other industry. The smaller players are always disadvantage. Look at the specials on the catalogue the big retail guys put out. i'm sure there are items the smaller players cant even buy from wholesale. yet they still survive. They provide a different service levels that big companies might not. Should they complain to ACCC as well.
Telstra's gain in market share was due to the pakage they have on offer. bundle with T Box,T Hub and etc. Its happens everyday in life. Everyone business(if they are smart and proactive)does it. You buy a value meal when you go to maccas. Would you complain to ACCC if you cant make a buck and maccas is selling selling apple pies for $1? its haqppening everyday around the world, the big guys are getting bigger and the smaller guy is getting smaller. Unless there's a law that stop that practice, well i see no wrong. Just rab a computer catalogue and you 'll companies like HP, DELL just to name a few, selling PC & NB below cost. The price they are selling at retail, even the big shops cant build a whitebox PC. at that price, they would'nt even be able to cover the parts. Do they complain HP and the big retail chains to ACCC?
Honestly there wouldn't be all this fuss if it was another company. But because its Telstra and it was owned by the government, they shoudl be judged differently. I don't think any company would invest in Australia if they have to play by the same rules as Telstra. Why should i wholesale it, where's my return. Remember the government sold Telstra and gained billions. Why dont Internode go to Optus wholesale? They have their infrastructure. We never hear anything about Optus.
By the way, i have nothing to do with the industry or a Telstra shareholder. I was a telstra customer and now an iinet customer. Now that SOL is gone, Its a good thing for consumers if Telstra gets its act together and be competative. Both Internode and iinet are not small players. In the business world, there's no sure win. They are just using the public perception so ACCC are pressured to do something.
Tony Antoniou
5
There's a reason why the small computer businesses don't complain to the ACCC about HP and their like undercutting them ... HP doesn't own any infrastructure that's common to all computer retailers be it large or small. You're comparing apples to oranges with that statement.
A computer retailer just needs to open up a building, make some PCs and hopefully sell them on to their customers.
An ISP needs to obtain space at Telstra's buildings (exchanges) to put in their equipment, connect to Telstra's backhaul, copper, etc. Where no equipment has been deployed by the other ISP, they purchase Telstra's retail circuits/ports at wholesale cost. See the pattern here? It's nothing like what HP, Dell and the like are doing. Therefore, your analogy is flawed.
There's no public perception here. It's fact. If it wasn't fact, Hackett would be in some serious legal hot water by now.
lorro
6
They should also state the monopoly Telstra has on some of its Fibre to the home networks, my new house only has Telstra fibre, can not go with anyone else because Telstra will not allow any other retail providers, thats what you call a monopoly (and I have to get internet to watch TV via IPTV)
CamelTrader
7
Quote from JudgeJudy "Its a good thing for consumers if Telstra gets its act together and be competative" .
Judging by the grammar and spelling, you haven't even understood (or read) the article : Telstra have, over many years, demonstrated a corporate culture of being UNcompetitive, restricting consumer choice, specifically targeting the technically uninformed (the elderly, migrant parents of school-age children, etc) with advertisements featuring superannuated footballers in Hippie VW's and "The Great Rabbit Fence", blatantly lying to customers : "you have three kids in High School? Don't worry, 400 MB is plenty..." and that was on a wireless two year contract with horrendous excess charges - when the customer had specifically asked to be connected to ADSL!
Whenever you ring Telstra, simply start the conversation with "this call is being recorded" - you'll be amazed at the difference in the level of service and honesty! As for the shareholder argument - as a taxpayer, I had already PAID for the infrastructure, anyone stupid enough to buy what they already owned deserves to get fleeced!