Telstra reduces wholesale broadband prices

Telstra reduces wholesale broadband prices

Telstra has announced new wholesale broadband rates it claims will satisfy demands from disgruntled customers and competition watchdog, the Australian Competition and Consumer Commission. But an ISP has warned that Telstra's abolition of volume-based discounts in its new pricing schedule has removed growth incentives.

The national carrier has introduced two access packages, with the Protected Rates package offering wholesale charges at a 40 per cent discount off retail prices. The second package, Growth Option, offers greater price reductions for higher speed plans.

The packages are a response to the ACCC’s threats of court action if the telco did not reduce its rates.

Protected Rates prices start at $15.55 for the 256k/64k package with usage up to 300MB per month.

These wholesale prices have been determined by deducting 40 per cent of BigPond’s retail prices, as well as deductions for other wholesale costs, according to Telstra.

Previously, Telstra's 256k wholesale package was $29.75.

“The Protected Rates package specifically addresses industry concerns about the available margin between retail and wholesale prices, giving wholesalers the security of knowing retail and wholesale prices will move in tandem,” Telstra wholesale broadband and media group managing director, Bruce Ackhurst, said.

The Growth Option rates favour ISPs looking to upgrade customers to higher-speed plans. These start at $27 for 256k. The other prices are 512k/128k at $33.21, 1.5M at $57.01, and 512k at $64.64.

Telstra’s bundled DSL virtual-ISP products will also receive new Protected Rates prices.

All wholesale prices exclude GST.

While ISPs nationwide were still receiving and evaluating information from Telstra yesterday afternoon, Internode managing director, Simon Hackett, welcomed the price cut. At first glance, he said Telstra had finally cut enough off its wholesale price.

“We need to do some analysis, but I think there’s every chance the price cut will be enough to allow ISPs to avoid retail price increases,” Hackett said.

One peculiarity of Telstra’s new wholesale pricing table was that it abolished the previous volume-based discount model, Hackett said.

“It’s a big shift for Telstra," he said.

The playing field had been significantly levelled by the move, as wholesale price for entry level ISPs would now be the same as that commanded by large ISPs such as Internode, Hackett said.

“It’s part of the ACCC’s mandate to make sure the industry is open to new entrants,” he said. But larger ISPs like Internode would no longer be rewarded for growth.

“It removes the growth incentive of sign up more customers, get a cheaper price,” Hackett said.

Internode was expecting to raise the loss of the volume-based discount with Telstra this week, and would seek clarification of a number of terms and conditions not detailed in Telstra’s announcement today, he said.

The ACCC and other ISPs contacted by ARN were unable to comment by press deadline.

For the full story see next week’s ARN.

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