COMindico, Telstra deal sets template

After months of negotiations, Telstra has reached an agreement with COMindico for the connection and carriage of data calls over Telstra's data network.

The two companies have been struggling to reach a commercially viable solution for the provision of Internet calls. This requires they move off the public switch telephone network (PSTN), which is designed for voice transmissions, onto Telstra's purpose-built data network.

The commercial model will become a template for other Telstra Wholesale data customers. It will be implemented as part of the company's new "responsible" strategy over the coming months.

"We are delighted with this deal, which strikes a fair balance between serving COMindico's customers and Telstra's legitimate commercial needs," said Gerry Moriarty, Telstra's group managing director for infrastructure services and wholesale.

The deal, the terms of which are confidential, underpins Telstra's view that the PSTN interconnection model is unsuitable for data traffic. The PSTN network bears different cost structures to the data network. Telstra has sustained massive losses in the past by purchasing PSTN dial-up Internet calls across other carrier networks on the same model as voice calls (averaging 3 minutes in duration).

"We expect the industry to migrate to more efficient models, where voice traffic is carried on the PSTN and data traffic through alternative interconnection arrangements," said Moriarty.

Telstra is showcasing the resolution with COMindico as proof that carriers can effectively solve disputes by commercial negotiation. In the midst of a maturing market, the telco is desperately trying to shake its tag as the big, bad market dominator that resents competition and attempts to squeeze smaller players from the market. In reality, Telstra has experienced some of its strongest growth over recent years in the deregulated, competitive sectors.

"The market doesn't seem to realise that we don't benefit from the demise of players such as One.Tel," said David Rampa, national general manager of customer marketing and sales operations. "They were a Telstra customer, and a very good one at that."

"Telstra has always offered connectivity to COMindico. It has always been keen to do business, provided the deal was a commercially acceptable one," said Moriarty. "Telstra has never refused to offer connectivity and has always prepared to provide access to its own network."