Telstra bites back over broadband pricing cuts

Telstra bites back over broadband pricing cuts

Summary: Telstra has refuted claims its new budget price broadband retail offers are unfair to rival Internet companies who buy wholesale capacity from the carrier, saying that they are confident they are not pricing their competitors out of the market.Protests arose following Telstra's announcement of cut-price ADSL and cable services for retail customers -- starting at AU$29.

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Telstra has refuted claims its new budget price broadband retail offers are unfair to rival Internet companies who buy wholesale capacity from the carrier, saying that they are confident they are not pricing their competitors out of the market.

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.

Topics: Broadband, Government, Government AU, Telcos, Telstra, NBN

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15 comments
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  • While its good to see the mighty monopoly of Telstra finally supplying broadband for reasonable prices, their attitude regarding their wholesale customers is a rotten as ever.
    OF course as soon as it was partly privatised, Telstra's loyalty turned from their customers to their shareholders.
    The only reason they have introduced an affordable broadband service is that nobody was buying it at the higher price, instead going with ISPs that know what value-0for-money and customer service actually meant.
    zybch
  • This serves to highlight the number one problem with competition in telecommunications in Australia. It is incredible that rather than seeking alternatives, such as building their own infrastructure, investing money into Peering exchanges, or leveraging wireless last-mile technologies, these ISP's and Carriers continue to complain over wholesale access rates.

    Yesterday's Financial Review stated "Telstra is legally obliged to ensure its competitors make a profit". As a shareholder, I am appalled. As a common citizen, I am also appalled that there still does not exist true competition in Telecommunications in Australia, due to the refusal of large oversea's telco's (ie. Singtel, Telecom NZ, MCI etc) to actually invest money in the Australian telecommunications market. Stop the complaining about Telstra, and start asking the bigger questions
    anonymous
  • Someone is taking steps to seek alternatives such as building their own infrastructure, investing money into Peering exchanges, or leveraging wireless last-mile technologies: http://www.agile.com.au/press/index.htm
    anonymous
  • "This serves to highlight the number one problem with competition in telecommunications in Australia. It is incredible that rather than seeking alternatives, such as building their own infrastructure, investing money into Peering exchanges, or leveraging wireless last-mile technologies, these ISP's and Carriers continue to complain over wholesale access rates"

    And they would invest this money how if Telstra under-cut them and made it almost impossible to garner a customer base?

    Infrastructure and developement require investment capital which can come in the form of service fee's paid by customers , which you can't do if a service that the competition offer costs less than the cost of providing it & you don't have their deep pockets and power over the infrastructure that you require and they own.
    anonymous
  • These new pricing plans show the full extent of Telstra's rip-off practices. $29 a month for 256Kbps ? Cool ! 200 Mb download limit - NOT COOL. How many people are going to be caught out here with excess data charges - or are telstra just going to downgrade the link speed when 200 Mb is reached in a month. Telstra need to be told to be honest for once and to stop hiding the real costs of their "services".
    anonymous
  • Well for one I mention TPG, their offering of ADSL 256Mb, for $49.95/mth UNLIMITED, in time or D/L & U/L. is the the fairest I have seen.

    Calculate for yourself what telstra's deal would cost for someone D/L 5GB. Horrendous cost.

    That is not a huge amount for a lot of people.
    bunkoramo9
  • Why does the government not do something about Telstra. It's obvious that a fully privatised telstra would just smother the competition. why not separate the wholesale from retail arms, and then we can have real competition from the retail telstra
    anonymous
  • Get over it! Telstra can't win. They get harrassed because their prices are too high. They get harrassed because their prices are too low.

    If the other ISPs don't like dealing with Telstra wholesale they need to jointly invest in alternative infrastructure and remove their dependency. Quit the whining and take some risk Marburg!
    anonymous
  • And just how would they have reached the point of profitibility in the wholesale market Ethelred the Unready if the ACCC hadn't intervened? so they could actually do something infrastructure wise?

    When you know more about Telstra's other hidden adsl rip-off's for the wholesaleer (along with their penchant for doing anything that weakens their competition by just about all means at their disposal) then your head may leave the clouds and the sweet smell of Telstra may begin to smell more realistically like a dead carp on a river bank to you.
    anonymous
  • All this talk of cheap adsl is fine, if you can get it. I live approx 40k from Newcastle, in an area while not over populated, is certainly not underpopulated. We can't get adsl at any price. Our exchange is not suitable. When will it be suitable? No one seems to know. So much for good service in regional areas.
    peter.a.marr
  • What a typically arragant reply.

    First, an admission that the profit margins are "large" well if they are large for ISPs then guess what, they are even larger for Telstra who charge more for the higher end plans. One response might have been to reduce the prices to "stimulate broadband take-up" rather than establishing a "foot in the door" offering in an attempt to capture the unsuspecting customer who will soon find that they are locked into Telstra and paying excessive volume charges.

    The other comment to be very worried about is "..wholesale prices vary according to the size of the buyer..". Not suprising however consider who is going to be the largest buyer of any Telstra wholesale product. Thin edge of the wedge to stop future competition.
    anonymous
  • What a typically arragant reply.

    First, an admission that the profit margins are "large" well if they are large for ISPs then guess what, they are even larger for Telstra who charge more for the higher end plans. One response might have been to reduce the prices to "stimulate broadband take-up" rather than establishing a "foot in the door" offering in an attempt to capture the unsuspecting customer who will soon find that they are locked into Telstra and paying excessive volume charges.

    The other comment to be very worried about is "..wholesale prices vary according to the size of the buyer..". Not suprising however consider who is going to be the largest buyer of any Telstra wholesale product. Thin edge of the wedge to stop future competition.
    anonymous
  • Bigpond package is not cheap at $29.95 because as soon as you go over by just 100MB it becomes $44.95 and goes up $15.00 per 100MB. If you compare this against say Bizmail $39.95 for 1000MB and 1/2 a cent for excess, the bigpond plan would be around $150.00 per month!!! Bizmail is just one example, there are many others out there. The problem is 200MB is nothing for the average user.
    anonymous
  • Telsta once again show's their total lack of thought for their wholesale partners. This move only further proves to ISP'S what they already know from dealing with Telstra's constant backflips, lies and uncompetetive practices.
    Considering Telstra has the Australian government to thank for it's postition in the marketplace they should let the smaller groups who do Broadband already at better prices and with better support keep providing the service and only be a supplier. Theres enough money for them this way.. But they are just greedy
    anonymous
  • Why does know one talk of oversubscription ratios, it must be remembered that providers offering unlimited downloads have high oversubscription meaning downloads may slow in peak times. Anyhow providers like iinet, froggy and netscape have little or know oversubscription and make the likes of telstra look pathetic when price, speed and downloads are taken into account.
    anonymous