People extends Telstra contract with AU$200m deal

People Telecom has signed a new AU$200 million supply agreement with Telstra for its national fixed wired and broadband services.

The three year agreement extends the relationship between People Telecom and the national carrier beyond its initial 18 months, after "an exhaustive competitive selection process" as described by People Telecom's CEO John Stanton in a statement released today.

According to Stanton, the process took six months, in which time his company had to compete with the "three main players" for the agreement. Stanton told ZDNet.com.au that "it required a great body of work to come up with this result".

"The agreement is a significant wholesale spend and a major target for all the big players in Australia," he said.

At least 19 separate schedules form the agreement for the wholesale supply of a range of services ranging from fixed-to-mobile ADSL to international direct dialling (IDD).

Stanton said the agreement is reflective of the "longstanding goodwill" between the two companies.

Telecommunications expert, Paul Budde said, "People Telecom has always been a good customer of Telstra and I assume that Telstra came to the party based as much on this goodwill as anything else".

He went on to say that it would be very difficult for any smaller provider not to have an agreement with the national carrier based on the fact that "Telstra is by far the biggest network operator in Australia". He added that the new deal struck between the telcos represents a shift in focus from voice telephony to broadband.

"What is promising is to see that the two can negotiate effectively without having to go through the ACCC," added Budde.