Telstra’s been squeezing prices to its wholesale customers for almost a year now — and the national competition regulator’s taken zero action in response, according to Internode managing director Simon Hackett.
After unveiling a substantial revamp of his company’s broadband plans yesterday, Hackett posted a lengthy blog post detailing some of the background behind the changes. A number of customers have already begun debating online whether the new Internode plans which use Telstra’s wholesale infrastructure actually represent better value for customers.
“Why have these changes happened?” asked Hackett. “Since mid-2010, a powerful monopoly service supplier has been engaging in a ‘price squeeze’ that has been described in previous blog posts on this site.”
The Internode chief said during past price squeezes, the Australian Competition and Consumer Commission, which keeps a close eye on the wholesaler concerned, Telstra, had ultimatedly acted to remind the telco of its obligation to “play nicely”, with the result that “positive and appropriate” changes had been made to wholesale access costs.
“Unfortunately, for this current price squeeze, no ACCC enforcement action has yet been undertaken and so (not surprisingly) the price squeeze remains in place (indeed, it has in fact become more intense in the last few months),” said Hackett.
Telstra and the ACCC have been invited to respond to Hackett’s comments, but had not done so by the time of publication.
Hackett last complained publicly about Telstra’s prices in September 2010. At the time, the Internode supremo speculated that Telstra’s wholesale division was giving some retail ISPs better deals because they hadn’t build out their competitive broadband infrastructure as some like Internode, iiNet and TPG had.
In response to Hackett’s complaints, Telstra chief executive David Thodey said the Internode CEO had not contacted him directly about the matter. “We will continue to be absolutely vigilant in being fair and equitable in that wholesale environment,” he said at the time.
But yesterday, Hackett said Internode’s most recent wholesale pricing negotiations had failed to yield “any effective improvement” in its access costs. “In fact our effective wholesale access costs have actually risen in some geographic areas despite movement in the opposite direction in applicable retail pricing conditions,” he said, noting Internode’s Telstra-based broadband plans had changed as a result.
Ultimately, the buildout of the National Broadband Network is slated to resolve Internode’s complaints in the long-term, with NBN Co committed to providing services to each competing ISP on an equal basis. However, Hackett noted that he hoped the ACCC decided to take action on the alleged price squeeze eventually — especially in rural and regional areas.
“These services are ultimately to be replaced by (far better) broadband services based on the National Broadband Network (NBN),” he said. “However the NBN is a ten year project, so it is clearly important that the ACCC does take some action to encourage appropriate market behaviour in monopoly areas in the meantime!”
Image credit: Internode