Telstra chief executive David Thodey today said he had not been contacted by Internode managing director Simon Hackett in relation to the smaller telco’s ongoing complaint about Telstra’s wholesale prices.
Late last week Internode managing director Simon Hackett again speculated that Telstra Wholesale was giving some retail internet service providers better deals because they hadn’t built out their own competitive broadband infrastructure as some, like Internode, TPG and iiNet had.
Internode is locked in pricing discussions with Telstra Wholesale that Telstra has so far declined to comment publicly on due to their sensitivity, and the pricing issue was also raised with the Australian Competition and Consumer Commission after Telstra dramatically chopped broadband prices earlier this year.
However, at Telstra’s annual investor day today, Thodey told journalists the issue hadn’t crossed his desk. “If any access seeker is unhappy, they have not contacted me,” he said.
The Telstra chief executive said in relation to the issue that according to industry regulation and “under law”, Telstra was required to be fair and equitable to all of its retail internet service provider customers, despite the fact that such companies competed with Telstra’s own BigPond ISP brand.
“We are very diligent about doing that,” he said. “We will continue to be absolutely vigilant in being fair and equitable in that wholesale environment.
The telco’s price changes, as well as recent bundling and customer service efforts, however, have already gone some way towards aiding its attempt to claw back market share in the fixed-line broadband market. Today Telstra revealed it was no longer losing consumer fixed broadband customers — reversing a trend of market share loss that had been stinging the customer over the past few years.
There has also been discussion in Australia’s telecommunications sector recently about the rapidly shrinking ranks of broadband providers.
In August iiNet chief Michael Malone said there were only four and a half “meaningful” players left in Australia’s ISP market — consisting of Telstra, Optus, iiNet and TPG, with Internode being the “point five”. The market has recently consolidated down to a shortlist of key players, with iiNet especially acquiring to bulk up its customer numbers.
Thodey was asked directly about the issue this afternoon, and whether he thought the diminishing numbers of players would affect competition, and ultimately, consumers. But his answer was brief.
“I think there’s very active competition in the market,” he said.
Image credit: Telstra
“Call me, Thodey tells Simon Hackett”…
But what should he call him? I would guess Hackett has a broad selection of names he can think of.
Boom boom tish.
I must say that I’m surprised that David Thodey was unaware of the current active complaints against the monopoly pricing practices of Telstra in the Wholesale ADSL (and Wholesale FTTH) markets. One would have expected that he might have heard about it by now.
But I’m also encouraged by that news, because perhaps it explains why it hasn’t yet been fixed!
I’m sure that once Mr Thodey understands just how unfair and unreasonable the current Telstra Wholesale ADSL pricing is, relative to the recent drops in BigPond retail pricing, and in light of the substantial market power that Telstra holds (and its consequent obligations under the Trade Practices Act), that he’ll jump at the chance to restore the market competitiveness of a valued wholesale customer.
For reference, the complaints that haven’t yet reached Mr Thodey have been raised at levels up to and including the Managing Director of Telstra Wholesale, Paul Geason, who reports to Mr Thodey directly.
Again, while it seems unusual that Mr Geason has not chosen to mention those complaints, however I would (again) be more than happy to correct that unfortunate oversight personally.
I’ll drop Mr Thodey a line now. I’m sure he reads his email.
Regards,
Simon Hackett
MD, Internode
Awesome Simon — it will be interesting to see how he responds. If Thodey is serious about customer service (as he seems to be), you would have to assume that means *all* customers — not just customers of Telstra’s retail branch.
Indeed, Thodey would do well to remember too that many Internode customers (and customers of other ISPs) are still Telstra customers as well.
Telstra’s behaviour as a wholesaler certainly didn’t motivate me to continue either my or my wife’s mobile contract with them, and it was a happy day when I churned across to Internode for my landline service, finally removing all Telstra bills from my sight.
Or in words that exec types may understand: your behaviour on a wholesale level may cost you more in terms of ARPU than you gain by gouging other ISPs.
“For reference, the complaints that haven’t yet reached Mr Thodey have been raised at levels up to and including the Managing Director of Telstra Wholesale, Paul Geason, who reports to Mr Thodey directly.”
Very interesting indeed.
For Telstra’s sake, I’d hate to see some documents which might contradict its publicly stated position.
Simon, what exactly is the problem? Mate, TPG has better deals than Telstra & they use Telstra’s copper, funny that, eh?
Your comparing TPG ADSL1 plans with Internode ADSL2 plans. TPG only offer ADSL2 on their own hardware, not via Telstra Wholesale
implying that TPG have a level of network availability (contention ratio) and service anywhere near the level of Internode.
@ anon & jack,
TPG does access Telstra wholesale & offers cheaper prices than Internode to their end customers. You can debate the services levels, but you can’t deny the better cost value from TPG.
Furthermore, TPG’s acquisition of Pipe Networks has increased their international, state & local backhaul bandwidth.
Your right they do provide access via Telstra Wholesale but only for ADSL1 products. Saying TPG has better prices than Internode isn’t a fair comparison when they are different products. I’m sure if Internode offered ADSL1 instead of ADSL2 products they would be much the same if not better than TPG.
“I’ll drop Mr Thodey a line now. I’m sure he reads his email”
He does indeed read his email. He responded to my email within 24 hours and I am just a TW (not through choice) and Internode customer.
I just kept escalating further up the food chain until the desired outcome was achieved. I believe that same practice is effective in the heady corporate world in which you reside. Maybe you should try it as clearly Mr Geason isn’t escalating on your behalf.
“I’ll drop Mr Thodey a line now. I’m sure he reads his email”
He does indeed read his email. He responded to my email within 24 hours and I am just a TW (not through choice) and Internode customer.
I just kept escalating further up the food chain until the desired outcome was achieved. I believe that same practice is effective in the heady corporate world in which you reside. Maybe you should try it as clearly Mr Geason isn’t escalating on your behalf.
But in the real world we know that statements like – “If any access seeker is unhappy, they have not contacted me,” is double talk for “I know that these issues exist but it isn’t in the best interest of my company or myself to talk about them to you now.”
It direct contact is made it would also just give him justification to repeat ad nauseum that formal complaints should go through the appropriate channels so that they can be addressed properly.
Internode didn’t want to do a mass rollout of 300+ DSLAM’s and is now crying foul because they are getting a bad deal from Telstra.
Well Simon you have to spend money to make money. Taking the EASY option and mostly relying on Optus and Telstra reselling got you into the problem your in now.
Testra: 1884 dslams.
TPG: 386 dslams.
Optus: 342 dslams.
iiNet: 332 dslams.
iPrimus: 241 dslams.
Internode: 164 dslams.
EFTel: 68 dslams.
^Australia wide.
TPG, Optus,iiNet all get cheaper prices from Telstra because they have bigger sticks to wave than Internode.
This was confirmed by David Thodey response on the matter.
Jason, you are missing the underlying fact here. The fact that Telstra are legally required to resell Telstra ports at competitive rates. When Telstra was sold off from the government to become public, it was stated and is required to supply TW at rates on which makes it a level competitive playing field.
Having your own DSLAMs or not shouldn’t make any difference in TW pricing.
Jason,
Unfortunately you are completely wrong. Its got nothing to do with chest beating over competitive DSLAM installation counts. At all
The price squeeze is the situation that applies where there are *no* competitive DSLAM installations – in the massive number of exchanges (and in all RIM cabinet ADSL2+ deployments) where consumers have no wholesale supplier choice.
Its not about who has built the most competitive DSLAM’s at all; In those terrains, wholesale access pricing for the underlying access service is Declared. In monopoly ADSL2+ areas, that access isn’t (yet) Declared (which is a part of the problem).
Please, Jason, before making incorrect accusations, take the time to read the full story.
I have taken the time to re-write the explanation of what is happening in a clearer and shorter manner for you, and you can read it right here:
http://blog.internode.on.net/2010/09/30/price-squeeze-explained/
Please take the time to do that. If you have the time to make incorrect and inaccurate accusations about my company, the least you can do is read the full story and be properly informed about the truth.
Its clear from your accusation that you don’t yet understand the situation.
Regards,
Simon Hackett
Simon – I’m with you 100% on this.
Although they have been comparatively tiny operations compared to ISPs such as Internode, I have worked in service provider environments where I have seen first hand, the Telstra pricing structures and provisioning tactics they use to drive their own position in the market.
One particular case has always bugged me.
Where I was working at the time was using the Telstra DSLAM network. A number of provisioning attempts for customers were declined as “too far from exchange”, so we lost those customers. A small number of those lost customers informed us that they went to Bigpond and were able to be provisioned – suddenly not “too far from exchange”.
I pressed the owner of the operation to push Telstra for explanation of these – (there were at least a dozen cases as I recall) – but he “didn’t want to rock the boat”.
Telstra also gave us wholesale pricing that was HIGHER than the many of the Bigpond RETAIL pricing packages.
Telstra do try to manipulate the market. We were very small fish in a very big pond (pun intended). Seems to me they are trying to squeeze the bigger fish too.
Simon,
Out of interest why do you think the ACCC will ‘declare’ wholesale ADSL2+ when in the past they said they would not.
I am sure you remember the controversy that accompanied Telstra Wholesale releasing ADSL2+ to ISP’s like yourself, they were after assurances from the ACCC that it would NOT be a declared service, this assurance was given by Samuel of the ACCC and it was backed up Coonan when she was Communications Minister in the Howard Government then again by Conroy in the Rudd Government.
I cannot see what has changed since then for the ACCC to change its mind other than there are now in 2010 even MORE exchanges enabled with non-Telstra ADSL2+ ports and choice of suppliers!
It is nice and emotive to use the term ‘monopoly ADSL2+ area’ when you know for a fact that monopoly means one supplier, wholesale ADSL2+ has multiple suppliers, in fact you use one of the biggest yourself – Optus, you could also use other suppliers if you wanted to increase your exchange coverage beyond what Optus can offer you.
I read that Optus has stopped its DSLAM rollout in late 2009, have you asked your wholesale partner to keep the rollout going so you are not so dependent on Telstra Wholesale to take up the ADSL2+ exchange slack?
The fact that other ISP/Telco’s do not want to enable a exchange for commercial reasons of poor or little return does not automatically make that exchange a ‘monopoly area’ because Telstra have bothered.
Perhaps on some individual regional and rural exchanges basis Telstra lose money on providing wholesale and retail ADSL2+, that’s why you and others have not rolled your DSLAM gear into them, but you are not concerned about all of that on Telstra’s Management behalf, you just want Telstra to provide wholesale access to you for less.
A interesting fact about marketing ADSL2+ wholesale as a product is that is optional to sell it, as you are well aware one of your biggest competitor ISP in Australia with one of the biggest exchange rollouts is TPG , TPG do NOT wholesale ADSL2+ as they have made a commercial decision not to do so and the ACCC have no intention to force them to.
Telstra has also made a commercial decision to wholesale ADSL2+ based on a tiered exchange system and of course previous assurances as explained above by the ACCC and the Government of the day, but equally they could make another commercial decision and withdraw the product from the market tomorrow if they wished.
I also wonder if you also have any comment on how the non-Telstra ADSL2+ wholesalers charge their ISP clients, in other words are you concerned that maybe other OPTUS ISP clients might be getting a better wholesale deal than you, or is your concern only about one supplier – Telstra, and only that other Telstra ISP clients might be getting a better deal than you?
Have a look at the areas where Telstra in your words “have bothered” to install DSLAMs, and tell me how many of those used funding from the govt (HIBIS, Broadband Connect, etc.)?
Now explain to me why govt funding should be used to subsidise these exchanges so Telstra can charge MORE to wholesale customers than what they charge to their retail customers?
I am glad you brought that up and I am fully aware of which exchanges have or not been enabled by Government funding in the past, it is in the public domain as a spreadsheet on the Telstra Wholesale website.
First of all such funding was open to all ISP’s/Telco’s to apply for, the fact that most could not be bothered and Telstra did and got the funding by default in the absence of other applicants is not Telstra’s fault.
I would also like you to specify where Telstra charge more for a wholesale port than BigPond charge for that same port at a retail level, don’t forget to factor in ALL the other conditions pertaining to other Telstra products that you have to buy including the contact length before you can get the so called ‘cheapest’ ADSL2+ BigPond plans.
So how does this relieve Telstra of their responsibilities as a monopoly provider under the Trade Practices Act?
Wholesale ADSL2+ is NOT a monopoly service there are many alternative suppliers that cover the vast majority of Australia’s population, wholesale ADSL2+ is NOT a declared service.
Telstra has no ‘monopoly’ responsibilities under the provision of such services, other than to its shareholders not lose money from such services!
:)
It doesn’t, but it’s (supposed to be) far faster to resolve the issue directly with the CEO of the company than waiting on the ACCC to act.
Thodey has opened the door on this, it’s now up to Simon and others to charge in.
Really looking forward to something good happening with plan because, currently, my resold Telstra port over Internode is painfully below par compared to either 3rd party DSLAM plans or Telstra itself. It’s fortunate for Node that I (and I’d guess quite a few of it’s customers) have big issues with Telstra’s actions and refuse to reward them for their ongoing shenanigans even if it would be in our best interests, both financially and quota/speed.
Dear Alain,
Unfortunately most of what you have said in various posts here is incorrect or is wrongly framing the issues in ‘competitive’ terrain as being the ones that apply in monopoly terrain.
Far from your (incorrect) claims that there is no problem to solve, we believe up to half of the entire Australian population cannot access all those nicer offers you refer to from other retailers (including Internode).
You may not think that this is important. We happen to think so, but we don’t require you to hold the same view.
I expect you’re one of the ‘haves’, in this context – and when you’re in that space, its easy to underestimate or to not understand the plight of the ‘have nots’, those who do *not* have access to a competitive marketplace in ADSL2+ right now.
Perhaps you have not actually read what I wrote about the situation, which addresses most of your points. Its right here:
http://blog.internode.on.net/2010/09/30/price-squeeze-explained/
You are welcome to disagree (and you clearly do!).
I’d just ask you not to move beyond disagreeing that the ‘have nots’ have a problem in terms of limited competitive choice, into making unfounded, incorrect and/or misleading statements about Internode and/or about me.
It seems your views are so strongly held that its unlikely I can convince you otherwise – so at the bottom line, I suppose we must agree to disagree on them. Thats life.
So in the meantime I’ll get on with running a company as best I can, and you’ll get on with whatever it is that you do in your day job, and we’ll let Telstra and the ACCC decide what to do about the situation (as its ultimately up to them, not to you – and not even to me).
Regards,
Simon
Simon,
Well thanks for your response, I appreciate you saying that a number of my statements are ‘incorrect’ without actually specifying which ones they are and why , the pertinent one of course is in the context of your current complaint to the ACCC is where the ACCC and the Government of the day assured Telstra it had no intention of regulating wholesale ADSL2+, back when Sol was CEO, and it was a major reason why Telstra released it.
http://www.minister.dbcde.gov.au/__data/assets/pdf_file/0016/81223/senator_conroys_letter_to_telstra.pdf
I still will be interested to know what changes you feel have taken place in the ADSL2+ market since then that is substantial enough for the ACCC to change its mind, it certainly is not less competition, the likes of Optus,TPG and iiNet ADSL2+ and Naked DSL products seem to be going gangbusters.
The only change that is really noticeable that I can detect is that BigPond in 2010 does not liking losing customers anymore, and is working hard by offering better value to stop the bleed of customers to ISP’s like yours.
Here’s a question for you Alain – ACCC/DBCDE position/comments notwithstanding – do you believe that it is fair for Telstra Wholesale to charge one ISP a certain price for access to a DSLAM port and the local copper loop to the customer, and charge another ISP a different price for exactly the same wholesale product?
Sales volume is the only logical reason for price difference in a commodity market that Telstra has by the nuts – they charge whatever price they want, because they can. Drive higher numbers, get a better deal. Drive lower numbers, and per connection costs will be a higher.
In theory, Internode should be able to earn more customers requiring access to Telstra DSLAM ports – (since they have less areas than the others with their own equipment) – and should therefore be sending higher volumes to Telstra, and should be on that per-volume basis be getting a better wholesale deal from Telstra than they are currently apparently getting.
This is not strictly Telstra’s fault – the moment that Telstra was made answerable to shareholders on the stock exchange, it is their legal responsibility to generate value for those shareholders, “fair” or “unfair” pricing to customers notwithstanding.
It is a fault of the sale of the CAN (Customer Access Network) along with the rest of Telstra that created this market inequity. Telstra SHOULD have been sold off, the network SHOULD NOT have been.
The market has failed at this, and only the structural separation of Telstra has a chance of fixing this. Whether that is through the birth of the NBN or not, remains to be seen. If the Coalition had/has their way, Telstra would continue along on its merry way, promoting market inequity.
Because whoever the ISP is – (and whether or not they have their own DSLAMs or not) – some part of your (and my) money comes back to Telstra because they have an almost absolute monopoly on the “last-mile”.
“do you believe that it is fair for Telstra Wholesale to charge one ISP a certain price for access to a DSLAM port and the local copper loop to the customer, and charge another ISP a different price for exactly the same wholesale product?”
But that statement in itself is pure speculation, even Simon H in the article above states that he ‘speculates’ this is what is happening, I assume other Telstra ISP customers don’t email Simon everyday and say “Guess what I am getting TW product for” as much as Simon does not notify them.
I might use different wholesalers for my retail product line and I try to negotiate the best deal I can with my Sales Rep, it does not necessarily mean I can expect or even demand the same buy price as a Safeway type of client does it?
I would like to see actual figures quoted, all this theorising is pure conjecture, but I guess only the ACCC has the power to get Telstra to divulge their ADSL2+ port pricing across ISP’s.
But I bet it is not that simple, pricing would not be based on a pure port pricing alone, it would be based on what other Telstra products you take with the wholesale package, the size of your client base and basic business contract guff like T&C of payment, that would apply to all ADSL wholesalers not just Telstra.
“I would like to see actual figures quoted”…
You’re suggesting that Simon breaks a commercial-in-confidence agreement just to satisfy your curiosity?
Nutty…
Well you repeated the ‘speculation’ in the form of a direct question to me, if the original assertion is pure speculation then any answer is the same and meaningless, asking for actual port pricing across ISP’s and the conditions attached so we can see the actual ‘difference’ seems like the rational question from where I sit.
Nutty indeed….
I never said it wasn’t a rational question – just that Simon isn’t going to reveal confidential contract details on a public website like this…it is indeed “nutty” for you to think that he should…
Well this discussion is like a dog chasing its tail – Simon H has speculated that ISP’s that have not put their own DSLAM’s into exchanges get a better deal from Telstra Wholesale than ISP’s that have.
First of all why he would think Internodes ‘limited boutique’ exchange rollout is in any way a ‘threat’ to BigPond or Telstra Wholesale is beyond me, but let’s humour him for the moment.
On that premise I could also ‘speculate’ that Telstra do not discriminate on that basis, so what other ‘speculation’ can we add to the potting mix here, it is all so meaningless in the absence of FACTS based around Telstra Wholesale port pricing across their ISP customers in Australia.
Telstra Wholesale have been selling ADSL1 and ADSL2+ to ISP’s for a long time now, I wonder what has happened in 2010 that has triggered this sudden urgency about complaining to the ACCC about TW pricing?
Oh that’s right BigPond finally after many many years of offering the crap value BB plans on the market have finally decided to compete on value because they want to keep their customer base intact.
ISP’s pretend they love ‘competition’ as a concept, but not when BigPond decides to play them at their own game it seems.
so Hackup whinged and whined crying foul yet neither him nor any of his cronies ever approached the boss?
maybe that might have been a good starting point, you think?
good work Hatchett you constantly entertain me.
So go straight to the top, rather than go through the proper channels?
well he has been so passionate about this “issue” why wouldnt he attempt to contact the top at least?
i am not saying it is the right or wrong process just that if i was pissed off as much as she makes out to be then i would be heading for the boss
so he then contacts via email? ok its just getting sillier, and of course he continues to throw around consipracy theories of how he knew and was being cryptic in saying that Simone didnt contact him
just ring the man for gawds sake, whats the fear? that he is wrong and is being charged correctly?
oh well he has his little support/fanboi base on whirlpool to comfort him
If Telstra and TW resembled functional organisations in any way, contacting David Thodey would have been completely unnecessary. The relevant issues are based on decisions made below Thodey’s level and the complaint should be able to be resolved on contact with the TW account manager. Expecting the customer to be the gopher is completely ass-backwards and Kafkaesque. Why would the CEO ever be the “starting point” to resolve an issue raised by a customer? Should I call Simon Hackett when I lose DSL sync?
” Should I call Simon Hackett when I lose DSL sync? ”
Why not, he seems to have all the time in the world posting comments
[sarcasm]
Geez, heaven forbid a managing directory wanting to get out and actively promote his organisation, and get the best possible deals for them!
[/sarcasm]
yet doesnt get pro-active enough to take it to the top
poor fellow, hey group hug everyone
Hackett hasn’t been “pro-active” enough to complain to Santa Claus or the A-Team either, but he (allegedly) has been pro-active enough to contact the head of TW which is already way above and beyond the highest escalation point officially available to a TW customer. It is not the customer’s job to find the service provider’s organisational chart and go up; at that point either it should be escalated internally by TW/Telstra or the ACCC should be involved. If Thodey wants to make TW customers look like whingers for not contacting him then he should be listed as a contact for said customers. Otherwise, it’s his own staff he needs to be accusing of not having told him things
Yeah – fancy BigPond not wanting to lose customers – outrageous attitude!
I would like you to explain exactly which RETAIL Bigpond customers are affected by Telstra Wholesale’s WHOLESALE access pricing for Internode?
Sorry I don’t get what you are asking, my scan of it is it doesn’t make any sense.
Next time a friend of mine gets sent the same wrong bill from Telstra, for nine months straight, including threats of legal action (even though it’s not her name, her bill, she’s not the same person and doesn’t even know the person that is being billed by Telstra), I will get her to contact Mr. Thodey directly. Apparently that is the only way anything ever gets done inside Telstra!
Now that Mr. Thodey has been contacted by Mr. Hackett, I expect the wholesale pricing issue to be resolved within days, if not sooner.
Because if it isn’t then they are just proving my allegation that they are a bunch of lying, conniving thieves! Which is what I will continue to believe until they prove otherwise. I’m not going to hold my breath though – they have been proving and strengthening my beliefs for several decades now…
if there is an issue to be resolved of course
and the my friends, sisters, aunties next door neighbours step brothers bill is stuffed stories are bit old dont you think?
and no matter what the end result of Hackbitch contacting Thodey is, Telstra will still be in the wrong in the internode fangirls eyes
Because it’s tied to her number and Telstra won’t let her churn! You can choose not to believe it, but it won’t make it any less true.
Your use of profanity makes me think you’re what… 13???
and why is your friend ( cant believe i am buying into this but anyways ) so concerned if its not their name, the same person or even know the person on the bill, i mean how are they being threatened if its not them, why doesnt she ignore it if its not her?
sound a bit like bullshit to me
(Oops, replied to the wrong post – here it is again)
Because it’s tied to her number and Telstra won’t let her churn! You can choose not to believe it, but it won’t make it any less true.
Your use of profanity makes me think you’re what… 13???
so its her number under her name?
so the bill is under someones elses name?
getting even more complicated, and unbelievable
You can choose to believe whatever you want! I have no reason to make up stories about Telstra. I don’t need to, they do a good enough job of that themselves.
“and the my friends, sisters, aunties next door neighbours step brothers bill is stuffed stories are bit old dont you think?”
It will be the day Telstra stop doing it! So far they don;t seem to be able to.
It doesn’t happen to me because I haven’t been with Telstra for many years. That fixed the problems for me. :)
As I’ve mentioned in a comment on another article, this Telstra blog post describes the new customer-service initiatives while documenting some amazingly illogical current customer problems with Telstra. “the my friends, sisters, aunties next door neighbours step brothers bill is stuffed stories” are alive and well, unfortunately. David Thodey is trying to change that, and I wish him luck.
drahcir, please abandon the ad hominem attacks, and stick to the facts.
what facts are those?
so far we have thodey saying hackett hasnt contacted him , then we hackett saying thats true but thodey is not telling the whole truth
then theres the speculation as to wether or not telstra is selling the service cheaper to other providers which is yet to be proven but telstra have been crucified by all of H’s cronies already
so what facts should i stick to?
and the reason i say the brothers, sisters etc etc are getting old is because it always happens to someone else doesnt it
Nope, it used to happen to me too. Nothing with Telstra was ever simple! Ever. So I left. But from what I’m hearing (and seeing), they are still up to their old tricks.
I applaud Simon for the dedication shown here – I doubt many (if any at all) people in an equal role at one of the other 4 big ISP’s would be dedicated enough to bother commenting on an article.
he only replied to save some face
if he didnt reply then his fans would be thinking wether or not he actually was looking after their interest
he doesnt do anything just because hes a nice guy,its about the $ like most business owners
this demi-god image of him is just too weird for words
As I mentioned in another post,
It would seem that many people commenting on this subject matter make broad sweeping accusations with a pre-conceived bias, based on generalised assumptions that are void of fact.
If in order to survive, you need to rely on the incumbent being nice along with Fed Gov’t & Accc intervention every time things don’t go your way; your business model is flawed & If a competitors business model or liquidity reserves can’t support increased competition from Telstra or reduced profit margins than its time for them to have a serious re-think. That unfortunately is the reality of doing business.
Having to play by the rules and adjudications of industrial regulators is another reality of doing business, but Telstra don’t seem to be acknowledging that. The competition notices they are served with time and time again for violations of the same principle are a matter of fact. Regulation is necessary to maintain competition in any environment where the playing field is not level, and if we don’t like that, then we need to be prepared to go back to monopoly.
Except what we are discussing here, wholesale ASDSL2+ pricing is NOT regulated, is NOT a declared service under ACCC jurisdiction and is NOT a monopoly as there are multiple wholesale suppliers servicing the vast bulk of BB fixed line exchange customers in Australia.
What Internode and others really want is for BigPond to increase its prices to the level of the ‘good old days’ where ISP’s could poach from the BigPond customer base with ease.
You are correct that DSL2+ is not a declared service, however, all of industry falls under ACCC regulation. I did not say that Telstra currently had a monopoly on those services, however, the provision of them necessarily involves negotiating with Telstra for access to infrastructure it DOES have a monopoly on. You can’t just plop a cabinet with a DSLAM in it on the nature strip, you have to go through a quite lengthy and costly process (TEBA) to even set foot in an exchange, before you even think about putting any gear there, let alone actually rolling services out to customers. And that’s IF Telstra decide it’s “feasible” to let you in, a decision based on a feasibility study that you pay for, regardless of outcome. The ACCC (rightly) gave them a belting over this – do you recall the photos posted of exchange buildings deemed to have “insufficient space” to let competitors in that quite clearly had sufficient space to park a cargo jet full of DSLAMs?
Telstra have none of these difficulties because, well, they’re the former incumbent.
I find it interesting that you use language like “poach” to describe customers leaving Bigpond for other customers of Telstra Wholesale in the “good old days”. When were those, exactly? The margin between TW rates and Bigpond headline rates, once you factor in backhaul and transit, even done as cheaply as possible, has always been stuff-all. Maybe rather than Bigpond prices increasing, TW rates could go down? Bigpond lost customers because it overestimated its ability to retain customers on overpriced plans (charging uploads in particular was a killer) and terrible customer service that it assumed had held-over brand loyalty from Telecom while simultaneously trying to squeeze the competition with TW rates. Too many of the competitors survived (albeit via mergers and acquisitions that could fill a wall if you tried to chart them) despite the razor-thin margins and too many of the Bigpond customers became fed up with the service (supported by many, many surveys over many years).
Nah, I think “poach” is a verb much more suited to the process of an end user failing a service qualification for DSL, and then magically passing when initiating the sign-up process with Bigpond, while we’re talking about “good old days”…
Well it’s not just customers of BigPond leaving for ISP’s that resell Telstra Wholesale, they leave BigPond to ISP’s that have their own DSLAM rollout as well.
The ‘good old days’ is every year up until about March this year when BigPond decided that it needed to do something about the loss of the customers to other ISP’s, up until then competitor ISP’s did not have to work too hard to get disgruntled BigPond customers at end of contract, it was a ‘no brainer’ when it came to value for money comparisons.
This subject matter is not about the Telstra Wholesale pricing it’s all about BigPond pricing and having to compete with the Telco that has the biggest exchange spread, I suspect also for the first time some ISP’s maybe losing customers from their own retail plans on their own DSLAM ports to Bigpond.
Latest indications show that BigPond has manged to stem the flow of customers from their fixed line BB service, some ISP’s hate that because in a virtual fixed line BB saturated market that’s where the easy pickings used to come from.
Telstra were served a Competition Notice back in 2004 over insufficient margin between TW rates and Bigpond headline rates, and even since then there’s been very little margin there. Have you ever seen a side by side comparison?
The article is very much about TW pricing and how it relates to Bigpond pricing. If your options to compete with Telstra are a) install your own DSLAMs, if you can survive the red tape and costs of associated administrative nonsense, and if Telstra lets you in, or b) buy DSL services from TW at a price that makes it impossible to retail for less than the Bigpond headline rates, what sort of competitive environment is that?
What you call “easy pickings” were only easy pickings because Bigpond offered a terrible service, not because there used to be huge profit margins in TW DSL that aren’t there now. There never were.
You overlooked my opening sentence in my last response re ISP’s with their own gear taking customers away from BigPond which they still do of course, because even with the latest price cuts from BigPond the likes of TPG, iiNet, Internode and Optus still offer better value than BigPond.
BigPond still place onerous conditions on their cheapest value plans before you are able buy them such as 24 month contract, a Homeline fixed line service a post pay mobile or Foxtel plan with a combined value of $89!.
I bet the complaining ISP’s don’t mention all those ‘other conditions’ placed on the value BigPond BB plan that is supposedly less than what they can get TW port pricing for in their complaint to the ACCC.
You would hope the ACCC will be able to see what is actually happening in the market, especially when they look at which exchanges have multiple ISP gear in them and what percentage of the Australian population are serviced from these multiple choice supplier ADSL2+ exchanges.
alain,
I noticed your comment about ISPs with their own gear. Regardless of who entices customers where, such ISPs still pay TW for TEBA to get into the exchange, and for LSS (Line Spectrum Sharing) or ULL (Unconditioned Local Loop) for each end user. It’s still not quite the same as Telstra deploying their own DSLAMs.
Whatever conditions Telstra want to impose on Bigpond DSL plan is pretty much their own business. There’s no reason they couldn’t, if they weren’t relying on tying the customer down for 24 months, offer month-to-month DSL, or 6 or 12 month contracts at the same price. It’s a decision all ISPs have to weigh up. The point of the regulation is not to guarantee anyone’s bottom line or retainment of customers (as evidenced by the many, many TW DSL customer ISPs who have failed over the last decade or so) but to attempt to address the situation of one retailer being an arm of the same company that owns and operates infrastructure that must necessarily be accessed by competitors for competition to be possible.
In fact, Telstra has used long contract terms to circumvent the Bigpond vs TW rates requirement in the past; they offer the first 12 months at below TW rates, then the second 12 as per normal, as a “special offer” (and therefore exempt from the normal requirements), but run the “special offer” for months on end. So 24 month contracts aren’t all gloom and doom for Telstra.
As you stated;
“Regulation is necessary to maintain competition in any environment where the playing field is not level”
Exactly, & this is the underlying issue here. Competition for competitions sake.
The smaller players in the market are not able to compete with Telstra’s financial might so what we do is effectivly hobble the incumbent to give them a chance. The size of our population/ market is simply not big enough to support the existing number of companies vying for a share of the market.
Singtel/Optus & Vodafone & moreso the latter, companies that financially dwarf Telstra, could have done an enormous amount of damage to Telstra’s bottom line were they to aggressivly commit resources when they 1st entered the Aust communications market. The fact that they did not would suggest that 1. the regulations imposed on Telstra allowed them entry with relatively little financial pain & 2. the size of the market did’nt warrant the significant initial infrustructure investment required to compete on a level field.
Regulations need to be in place for sure, but allowing companies to survive that otherwise would not is neither effecient or effective competition.
Although theoretically, with enough money, anything is *possible*, for the playing field to be as level as you imply it could or should be, would require government (all levels) to ok the necessary acquisition of land (and not just anywhere – specific locations) to build duplicate exchanges, cabinets for multiplexers, pillars, dig duplicate trenches and pits, and run duplicate copper to everyone’s premises. We’d have exchange precincts where Telstra, Optus, AAPT, Primus, etc. are all present on the same block, just like McDonald’s, Pizza Hut, Hungry Jack’s and KFC, but in virtually every suburb. That would never be approved and nor should it be. So in that sense, everyone except the incumbent is “hobbled” by never being in their privileged position of being able to build the network from scratch, “on a greenfield site” in the modern nomenclature.
That’s DSL and PSTN, obviously – mobile might be different, I don’t really know much about it.
Other than Internode and Westnet (an iiNet Subsidiary I believe), who else is reselling Telstra ADSL2+? I see from previous comments that TPG don’t and as an iiNet ADSL1+ home user, don’t believe these guys do either.
One of our businesses in a small town of 2000 punters use Internode’s resold Telstra ADSL2+ ($79 for 20Gig on a SOHO plan) and the other has Telstra Business ADSL2+ hooked on ($100 for 50Gig) for historical/bundled reasons I believe.
2c worth of observations are that Telstra’s online portal is an ugly piece of crap…Internode is good all round, but it would be nice if they upgraded you automatically when new plans come out instead of requiring the user to log in and do this themself, ala iiNet who email you periodically to say you have more data for the same price – no action required.
Internode does this because customers don’t enjoy having plans changed on them suddenly.
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