Playing the relationship game with Telstra

commentary Events this week highlighted the differing relationships which telcos have with the nation's former monopoly carrier. Speaking with ZDNet Australia, a spokesperson for Primus confirmed this week the telco is preparing to sue Telstra.

commentary Events this week highlighted the differing relationships which telcos have with the nation's former monopoly carrier.

Renai LeMay, ZDNet Australia
Speaking with ZDNet Australia, a spokesperson for Primus confirmed this week the telco is preparing to sue Telstra. The legal action is believed to centre on the incumbent's pricing of its wholesale telephone services.

Primus is expected to allege Telstra has raised the price of its wholesale telephone line rental above what its own retail arm charges consumers. And according to reports, AAPT may also decide to join in the action.

The pending suit will add to long-standing complaints by telcos like iiNet about Telstra's pricing. Broadband sellers like iiNet are particularly concerned about the cost of access to Telstra's broadband infrastructure.

But other sections of the telco community appear to have a happy relationship with the nation's incumbent.

Business-focused People Telecom announced Monday it had signed a new agreement with Telstra's wholesale division, covering the provision of fixed wire and Internet services.

"People Telecom first became a Telstra Wholesale customer more than five years ago. Our customer experience led to us choosing Telstra Wholesale as our supplier of first choice for the past three years, and now, into the future," the company's chief executive Ryan O'Hare said in a statement.

"We chose Telstra Wholesale for this multi-million dollar supply agreement because of its unique service offerings and competitive wholesale tariffs," he added.

People Telecom isn't using Telstra Wholesale for all of its needs though -- just last week the company announced it had cut a deal with Voice over Internet Protocol (VoIP) specialist engin for access to its network. Telstra does not currently provide a wholesale VoIP service.

When asked by your writer about the disparity between his company's cosy relationship with Telstra and the rocky legal path about to be trod by Primus, People's O'Hare pointed out the difference in customer bases between the two companies.

"We don't do consumer so we're not really affected by the line rental issue as much as AAPT and Primus would be," he said.

He acknowledged that both Primus and AAPT had business customers as well as consumers, but emphasised both telcos had a "very significant consumer base".

"The relationship we've got with Telstra is excellent," he added.

Obviously the situation is a little muddier than O'Hare claims; both Primus and AAPT do have significant numbers of business customers and the latter has lately made a significant push into the business space. In addition People Telecom's Web site publicly advertises its consumer services.

But O'Hare's point is valid. Business-focused telcos are probably more likely to be able to weather wholesale price hikes due to the higher profit margins they can garner from selling business-grade telecommunications. Businesses are also less fickle about switching their services to other carriers than consumers are.

That doesn't mean People Telecom won't eventually end up in court against Telstra on one issue or another as Primus is likely to.

However O'Hare's characterisation of his company's relationship with Telstra as "excellent" is a standout case in an industry which seems increasingly to be moving towards a hostile relationship with the incumbent.

iiNet's managing director Michael Malone told his company's annual meeting of shareholders this month that iiNet was moving towards a relationship with Telstra governed by regulation as opposed to business agreements.

Optus' chief executive Paul O'Sullivan also lambasted Telstra last week, publicly threatening it with legal action over access to Telstra's proposed next-generation optical fibre network.

What's your company's own relationship with Telstra like -- is it "excellent" or are you briefing the lawyers? Send your thoughts through to renai.lemay@zdnet.com.au.

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