Telstra 'price squeeze' claims go to ACCC

Competitors have acted on concerns about new Telstra pricing, lodging a complaint with the Australian Competition and Consumer Commission (ACCC) over an alleged "price squeeze" between the incumbent's wholesale and retail margins.

Competitors have acted on concerns about new Telstra pricing, lodging a complaint with the Australian Competition and Consumer Commission (ACCC) over an alleged "price squeeze" between the incumbent's wholesale and retail margins.

Telcos have argued in the past that it is very difficult to compete with Telstra if it offers a service at a lower price through its retail company BigPond than it offers through its wholesale arm.

Internode and iiNet last week said that they were looking at lodging a complaint.

Today Internode confirmed it had lodged a complaint with the ACCC last Friday, also representing iiNet. Internode carrier relations manager John Lindsay said the ACCC had acknowledged the complaint.

"It's simply not economically viable to sell retail products that are based on a wholesale input from Telstra where that cost is above the prevailing retail price," Lindsay said today.

"BigPond have recently lowered their retail prices on at least three major ADSL2+ plans, without making appropriate changes to the underlying access prices to deliver the same services via Telstra Wholesale," Lindsay said. "This means that their retail cost is now substantially below their wholesale cost on these plans. That, in turn, means that matching those BigPond ADSL2+ prices through the Telstra Wholesale access path would send any provider broke.

"Internode have submitted a complaint to the ACCC which explains the nature and importance of this situation in detail, and which asserts that this conduct can, and should, trigger the issuing of an ACCC 'Competition Notice' under the Trade Practices Act, requiring Telstra to modify its wholesale access pricing in an appropriate manner."

Internode and iiNet's complaint to the ACCC can be read here (PDF).