Updated: Internode cries foul over Telstra broadband pricing

Updated: Internode cries foul over Telstra broadband pricing

The SA-based ISP wants the ACCC to act on Telstra’s “anti-competitive conduct”

Internode wants the Australian Competition and Consumer Commission (ACCC) to ‘lay down the law’ to Telstra over what it alleges is anti-competitive behaviour breaching the Trade Practices Act.

The South-Australian Based ISP claims Telstra was in breach of section 141AL of the Trade Practices Act 1974.

Internode regulatory and corporate affairs, John Lindsay, said Telstra has recently lowered prices on several ADSL2+ BigPond retail plans without making appropriate price cuts for its wholesale customers.

“This means BigPond’s retail cost is now substantially below the wholesale cost of those plans,” he said in a statement. “In turn, that means matching those BigPond ADSL2+ prices through the Telstra wholesale access path would send any provider broke."

Through its lawyers, Internode has sent a letter to ACCC chairman, Graham Samuel, appealing for action.

The ISP said it feared Telstra, as a monopoly provider of ADSL2+ services across Australia, will lure more customers into long term contracts with cut-priced retail broadband plans and weaken its competitors.

“This means when it engages in such a ‘price squeeze’, it is consumers who ultimately suffer through a lack of competitive retail choices in the market,” Lindsay said in the statement.

In the letter, Internode detailed such “anti-competitive conduct will have most effect in the large number of exchange service areas (ESAs) without competitive infrastructure”.

Telstra denied Internode’s claims of ‘price squeezing’.

“It’s an extremely competitive market and our new plans are reacting to that,” Telstra public affairs adviser, John Court, said.

He said Internode only questioned the availability of three plans, one of which is no longer available.

“Our competitors have a whole range of ways which they can provide broadband using different wholesale services from us or from other providers,” Court said. “That includes getting LSS (line sharing service) for $2.50 a month or ULL (unbundled local loop) for $16 a month.

“So if you look at what is available from competitors and Telstra, there are certainly healthy margins there for them to make.”

Court said Telstra has not been contacted by the ACCC regarding Internode’s letter.

Fellow ISP and telco player, Primus Telecom, is also a disgruntled Telstra wholesale customer.

In terms of fixed-line services, Primus and other telco players have been complaining to the ACCC for years but to no avail, according to Primus CEO, Ravi Bhatia.

“The situation in Australia today is – and it has been for years – that very often the retail prices charged by Telstra are lower than wholesale prices it charges wholesale customers,” he said. “This is an old complain which has resulted in the decimation of a competitive telco industry over the years but the ACCC does nothing.

“Given my past experience, if it hasn’t acted for seven years, what is the chance of them acting now?”

Ravi said ISPs have very few places they can appeal to other than the ACCC and vented on Telstra’s ‘flawed’ pricing structure which has led to repeated calls for Telstra's retail and wholesale arms to be separated.

“The whole pricing mechanism with Testra is if Telstra wholesale wants to set a price it must be approved by Telstra retail; now what kind of bullshit is that?”

Telstra wholesales 1,691,000 DSL ports to its competitors, according to Internode.

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