ISP threatens Telstra with civil action on broadband pricing

South Australian based Internet provider, Internode Systems, has lashed out at Telstra over its newly adjusted wholesale broadband prices, saying they may take civil action against the telecommunications heavyweight for loss of income if the prices aren't fairly adjusted within the next few weeks.

South Australian based Internet provider, Internode Systems, has lashed out at Telstra over its newly adjusted wholesale broadband prices, saying they may take civil action against the telecommunications heavyweight for loss of income if the prices aren't fairly adjusted within the next few weeks.

The managing director of Internode, Simon Hackett, said the price-cut made to Telstra's wholesale fees was "trivial", leaving many of the competing Internet providers still at a loss in trying to match the carrier's recently-reduced retail prices.

"The net effect was to reduce our costs by AU$2 per customer. We needed at least a AU$12 reduction to restore our profits to the correct margin," said Hackett, adding "Telstra produced the perception that the problem had been fixed but it hasn't. The move was a token gesture."

Telstra's new wholesale broadband prices came into effect last Thursday following protests from its wholesale customers that the company was offering some broadband connections cheaper to its retail customers than to its wholesale patrons.

The Australian consumer watchdog, the Australian Competition and Consumer Commission (ACCC), has been investigating Telstra's pricing schemes since the announcement of its discount entry-level broadband retail prices last month, and Hackett says they are not done with Telstra yet.

"If you own the road then it's illegal for you to block others access to it," said Hackett, adding that he has faith the ACCC will produce a fair outcome.

Hackett said the last time Telstra was reprimanded for competition breaches in 2001 the broadband market was not large to provoke a legal response. However, he says, now there are many more broadband dealers who have a lot to lose over the company's alleged misconduct.

"This time around, if the ACCC issue notice that Telstra is in breach of competition rules we are retaining the option to take up a civil case for compensation," said Hackett.

If the case goes ahead, Hackett says Internode will be seeking compensation for lost monies as from the day the entry-level BigPond retail deals came into effect, adding he believes the company has a reasonable chance for success.

"If they fix it in the next few weeks then there won't be much to compensate but last time it took 18 months. The stakes are higher now, we have our business to lose," said Hackett.