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People Telecom picks Telstra and maybe iiNet

Business-focused telco People Telecom has signed a new AU$100 million agreement to resell Telstra services and flagged an interest in doing the same with iiNet. The Telstra deal, which was announced in an e-mailed statement this afternoon, covers fixed wire and broadband services and will last until the end of 2007.
Written by Renai LeMay, Contributor on
Business-focused telco People Telecom has signed a new AU$100 million agreement to resell Telstra services and flagged an interest in doing the same with iiNet.

The Telstra deal, which was announced in an e-mailed statement this afternoon, covers fixed wire and broadband services and will last until the end of 2007. It comes as a similar existing Telstra arrangement is due to end in July.

But the telco's chief executive officer Ryan O'Hare told ZDNet Australia via telephone that Telstra would definitely not be selling wholesale access to high-speed ADSL2+ services.

Telstra will only offer ADSL1 services at speeds of up to 1.5Mbps, while ADSL2+ offers up to 24Mps. Telstra is known to have ADSL2+ capability in some areas but has not yet started selling the high-speed services.

To alleviate this gap, People Telecom already has an arrangement with NEC's wholesale DSL division NEXTEP and is interested in building a similar bridge with iiNet.

Financially troubled iiNet announced on May 26 its new partner PowerTel would provide wholesale access to iiNet's extensive broadband network, in an attempt to wring greater returns from the infrastructure.

O'Hare said iiNet's move certainly offered People Telecom greater opportunities.

With respect to the six-month Telstra deal due to end this month, O'Hare said Telstra had wanted to refrain from signing a longer deal last year. This was due to the changing relationship Telstra was having with its wholesale customers since the telco's new CEO Sol Trujillo came on board in the middle of last year.

But he said Telstra Wholesale had flagged an increased readiness to deal with People Telecom due to the fact it was not investing in competing broadband infrastructure as others -- for example, Optus, iiNet and Internode -- were doing.

"The agreement demonstrates the success of People Telecom's model in building quality partner relationships and customer scale rather than being solely focused on network build," the People Telecom statement said.

In February, O'Hare said he would leave the CEO role after June this year. However, today he said he was likely to keep his position a little while longer.

He said the company had narrowed its search for a replacement down to several excellent candidates.

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