Telstra bites back over broadband pricing cuts

Protests arose following Telstra's announcement of cut-price ADSL and cable services for retail customers -- starting at AU$29.95 -- with rival Internet providers saying they are unable to make a profit as some wholesale prices they secure from the carrier are higher than the retail prices now being offered by BigPond.

However, Telstra says current prices allow adequate margins across the wholesale product range, as negative margins in some wholesale product areas may be counteracted by large profit margins derived from other products.

Rod Bruem, a Telstra NSW spokesperson, says that there had been ongoing talks with the Australian Competition and Consumer Commission regarding the new price packages and that the watchdog was aware of the telecommunications company's plans before their release.

Bruem said the new "entry level" deals may not harm all the carrier's wholesale customers as wholesale prices vary according to the size of the buyer. He agreed that the impact would be felt most by smaller Internet service providers.

"We are talking with wholesale customers individually and confidentially," said Bruem, adding "We believe that our pricing is competitive and that we are meeting our obligation to our customers".

Bruem said talks with the ACCC were continuing, with possible outcomes being a reduction in wholesale prices, a raising of retail prices or the watchdog giving the green light to the carrier's move, undertaken a day before rival Optus launched its residential DSL service.

"We believe this pricing will stimulate broadband take-up, and that is for the good of the entire industry," said Bruem.