Telstra price squeeze ignored: Internode

Telstra price squeeze ignored: Internode

Summary: Telstra has been squeezing prices to its wholesale customers for almost a year now, and the national competition regulator has taken zero action in response, according to Internode managing director Simon Hackett.

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Telstra has been squeezing prices to its wholesale customers for almost a year now, and the national competition regulator has taken zero action in response, according to Internode managing director Simon Hackett.

After unveiling a substantial revamp of his company's broadband plans yesterday, Hackett posted a lengthy blog post detailing some of the background behind the changes.

"Why have these changes happened?" asked Hackett. "Since mid 2010, a powerful monopoly service supplier has been engaging in a 'price squeeze' that has been described in previous blog posts on this site."

The Internode chief said that during past price squeezes, the Australian Competition and Consumer Commission (ACCC), which keeps a close eye on the wholesaler concerned, Telstra, had ultimately acted to remind the telco of its obligation to "play nicely", with the result that "positive and appropriate" changes had been made to wholesale access costs.

"Unfortunately, for this current price squeeze, no ACCC enforcement action has yet been undertaken, and so, not surprisingly, the price squeeze remains in place; indeed it has, in fact, become more intense in the last few months," said Hackett.

Telstra and the ACCC have been invited to respond to Hackett's comments, but had not done so by the time of publication.

Hackett last complained publicly about Telstra's prices in September 2010. At the time, the Internode supremo speculated that Telstra's wholesale division was giving some retail ISPs better deals because they hadn't built out their competitive broadband infrastructure as some, like Internode, iiNet and TPG, had.

In response to Hackett's complaints, Telstra chief executive David Thodey said that the Internode CEO had not contacted him directly about the matter. "We will continue to be absolutely vigilant in being fair and equitable in that wholesale environment," he said at the time.

But yesterday, Hackett said that Internode's most recent wholesale pricing negotiations had failed to yield "any effective improvement" in its access costs. "In fact, our effective wholesale access costs have actually risen in some geographic areas, despite movement in the opposite direction in applicable retail pricing conditions," he said, noting that Internode's Telstra-based broadband plans had changed as a result.

Ultimately, the National Broadband Network (NBN) is slated to resolve Internode's complaints in the long-term, with NBN Co committed to providing services to each competing ISP on an equal basis. However, Hackett noted that he hoped the ACCC would decide to take action on the alleged price squeeze eventually, especially in rural and regional areas.

"These services are ultimately to be replaced by far better broadband services based on the National Broadband Network," he said. "However, the NBN is a ten-year project, so it is clearly important that the ACCC does take some action to encourage appropriate market behaviour in monopoly areas in the meantime!"

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

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