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Telstra wholesale silence makes ISPs jittery

ISPs reselling Telstra's broadband services are concerned that the telco is about to start selling ADSL2 services directly to consumers without offering them as a wholesale product -- a move one provider said could be illegal.
Written by Renai LeMay, Contributor
ISPs reselling Telstra's broadband services are concerned that the telco is about to start selling ADSL2 services directly to consumers without offering them as a wholesale product -- a move one provider said could be illegal.

A number of Telstra's resellers have complained that the communication flow between them and the telco's wholesale representatives has virtually shut down -- just weeks before Telstra is due to publish a company-wide strategic review following the appointment of Sol Trujillo as CEO earlier this year.

"We can get no direct guidance from our Telstra representatives, pending that review," Simon Hackett, managing director of Internet Service Provider (ISP) Internode told ZDNet Australia this week. "The review is their excuse to say nothing."

Adelaide-based Adam Internet too, is having problems with information flow.

"I'd say probably another week or two, we're waiting on some stuff from our Telstra representative," the ISP's managing director Scott Hicks said, commenting on the timing of his decision whether to keep reselling Telstra's wholesale ADSL services to regional areas.

For Internode and other ISPs, the pre-review silent treatment could signal an imminent major push for broadband customers from Telstra.

Multiple industry sources have told ZDNet Australia  that they expect Telstra to soon launch a range of high-speed ADSL2+ plans through its BigPond retail division, without offering the equivalent to wholesale customers.

ADSL2 and 2+ are the next evolutions of the ADSL standard through which most Australians receive broadband. They respectively allow speeds of up to 12Mbps and 24Mbps, while basic ADSL only goes up to 8Mbps, and is limited by Telstra down to 1.5Mbps for quality reasons.

Most broadband providers resell Telstra's wholesale ADSL offering, but a few like Internode, Adam Internet and iiNet offer ADSL2 and 2+ services in limited, primarily metropolitan areas on their own infrastructure.

Telstra said back in March it would have rolled out ADSL2+ hardware to almost all ADSL-enabled telephone exchanges by mid-2006.

A spokesperson for the giant telco said last week there was as yet no launch date for ADSL2+, or for another Telstra project dubbed 'New Ground' that could see the limiting factor extended on which locations can get ADSL services at what speed.

"I expect more clarity on finalisation of both projects following the conclusion of our company-wide review later this month," the Telstra spokesperson said.

But Internode's Hackett and others expect the services sooner, not later.

"For us in the wholesale part of the industry, the concern we've got is that Telstra may be on the verge of what I would read as breaking the law again," said Hackett.

In other words, "selling high-speed services through retail and refusing to sell them through wholesale".

"That's the feel within the industry, that Telstra are going to go down that path," added Alex Chagoubatov, marketing manager for Perth-based Westnet.

"Telstra has made an indication that if they release ADSL2 or 2+ services they'd be looking to release them through their retail division, rather than the wholesale," he continued, although he noted it was difficult to know what Telstra would do until it occurred.

A third source concurred, saying they believed products would be launched at speeds of 3Mbps and 6Mbps.

Those speeds would match the 6Mbps Telstra put forward in its failed National Broadband Plan to the federal government, which was disclosed to the public in September.

However, not everyone is suspicious of Telstra's silence.

The head of broadband seller Netspace said he didn't think it was likely Telstra would go down the path of withholding ADSL2+ services from its wholesale arm.

Stuart Marburg pointed out Telstra had already been through a significant amount o trouble with the nation's competition regulator when it cut its retail ADSL prices significantly back in February 2004 without passing on the cuts to wholesale customers.

"I don't think they'd do that again," he said, noting if the telco did something similar again, "that would make it very difficult and almost impossible to compete."

Netspace wouldn't be shy about complaining to the Australian Competition and Consumer Commission in such a situation, Marburg stated.

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