Telstra still a major headache for iiNet


news National broadband provider iiNet this week opened fire on Telstra on a range of fronts, accusing the telco of causing trouble with its new fibre rollout in South Brisbane, jacking up the price of accessing its wholesale ADSL broadband service and biting off more than it deserved in the first draft of its NBN structural separation undertaking filed with the competition regulator.

Telstra is replacing its copper network in the South Brisbane area with optic fibre, due to its telephone exchange in the area being shifted to make way for a new hospital. But iiNet chief executive Michael Malone told journalists in a financial results briefing call the big T wasn’t precisely playing fair with telcos who had their own customers in the area.

“In South Brisbane, we largely have a gun to our head on this,” Malone said. “Telstra is saying, we’re going to be switching off this network shortly: Are you willing to sign this contract?”

Malone said iiNet wasn’t particularly happy with the pricing or the feature set which Telstra was offering wholesale customers in the region, as it was “going back 50 years”. In one example, iiNet would not be able to offer its FetchTV IPTV service through a multi-cast distribution option, despite the fact that NBN Co is planning to offer a multi-cast version for its own national fibe network.

“We’re exploring all of our options there,” Malone said.

On another front, Malone appeared to back comments by Internode chief Simon Hackett that Telstra’s wholesale pricing on ADSL services in general was uncompetitive. Hackett said in mid-July that Telstra had been squeezing prices in the ADSL arena for almost a year now, forcing his company to raise its own prices in response — but the national competition regulator hadn’t taken any action, despite complaints.

Malone said Telstra was charging wholesale customers more for ADSL services than it was charging its own retail customers, highlighting regional Australia as a particular issue.

The iiNet chief also took aim at the structural separation undertaking (SSU) which Telstra has recently lodged with the Australian Competition and Consumer Commission. The document commits Telstra to full structural separation of its wholesale and retail business units by July 2018. In practice, this separation will take place through the progressive disconnection of fixed voice and broadband services on Telstra’s copper and HFC networks and migration of those services onto the National Broadband Network fibre network as it is rolled out.

In addition, the SSU sets out the measures which Telstra will put in place to provide transparency in the supply of services to its wholesale customers during the NBN transition period over the next decade, as well as providing equivalence in the delivery of services — for example, allocating the same terms to rival ISPs such as Optus, iiNet, Internode and TPG as it does its own retail division, which typically operates under the ‘BigPond’ brand.

“No surprises there that we think it’s completely inadequate,” said Malone, noting that iiNet believed there were a wide range of areas which needed to be addressed, ranging from the appointment of “supposedly independent” oversight by Telstra itself, pricing and so on. “There’s a ream of things that we think are inadequate,” said Malone, noting iiNet would be making a submission to the ACCC in response.

Telstra has been invited to comment on the matters in response.

iiNet’s relationship with Telstra is a complex one; in the same financial results call, Malone slammed Telstra on one hand, but – as we noted yesterday in a somewhat flamboyant opinion piece – is interested in working with the company in other ways.

The complaints which the iiNet executive has detailed above are what we would describe as ‘normal business’ for the telecommunications sector in dealing with Telstra. Because of the depth of interconnection and business which iiNet, Internode, TPG, Optus and others have with Telstra, it is possible that they can be close partners in some areas and bitter rivals in others. Telstra is just that huge, and its influence that pervasive.

Over the years, there is no doubt that the ACCC has gotten tired of dealing with these ongoing complaints, and we’re betting that it is the ongoing nature of these sorts of run of the mill issues that has led the regulator, in part, to strongly support the Federal Government’s NBN policy, which should resolve these issues once and for all.

Of course, only time will tell whether in ten years’ time, we start to see the same sorts of border disputes between companies like iiNet and Internode and NBN Co itself. Or, irony beyond irony, between Telstra (as a retailer) and NBN Co as a wholesaler. Now that would be something to see.

Image credit: Bob Smith, royalty free


  1. The real problem that is illustrated here is that if the Liberals and Nationals get back into power at the next Federal election, it is likely that Telstra will be offered, and buy, the NBN assets at a fire sale price and be meaner and nastier than ever. And guess who will suffer most…….?

    • What is it with you and Telstra, Tosh? Do you work for them? Or are you just a shareholder?

      They are a company, no more and no less. They are no more or less “evil” or “good” than any other. They hold their current monopoly position over so much of the telecommunications infrastructure, not because of their inherent nimbleness and competitiveness, but because of the historical legacy of the Howard Government.

      Why then is it “Telstra bashing” to point out the salient problems caused by the monopoly control?

      • My guess is he owns Telstra shares. He doesn’t seem knowledgeable enough to actually work for them.

        • The key phrase in that statement is ‘My guess’, after that it deteriorates into the usual merlin BS troll.

    • I’ll be happy to publish some iiNet-bashing from Telstra’s behalf, but David Thodey is normally way too polite ;) I did publish quite a bit of Optus-bashing when Sol Trujillo + the amigos were in town, of course.

  2. Blind freddy could see this happening. Telstra gets to make hay and hold the market to ransom until the NBN takes over the area.

    Fortunately it’s not going to be that profitable to do too many other rollouts like that one unless of course the coalition wins government and halts the NBN, in which case it’s the perfect strategy to kill all those pesky ADSL2+ installations while there is a regulatory void.

  3. Anyone who wants to be a fan Telstra or a Telstra shareholder is beyond me. Competition is great for the consumers except when Telstra is playing with the strings and making it hard for the competitors and means makes it harder on the consumer.

    Can’t wait til Telstra has been split and hopefully as the consumer gets a better deal in telecommunications and the internet.

  4. I been waiting for the accc to explain why is iinet allowed to get away with anti competitive behaviour,

    they have brought out westnet,netscape and others which is making it hard for competition, if the accc was for competition why are they letting a competitor buying out competitors.

    And giving a misrepresentation to customers they are not all one company until you ring up and find out its iinet

    • That doesn’t prevent other ISPs (like TPG) from competing.

      If Telstra raises their wholesale pricing, *every* ISP (other than them) has to pay more. If these costs are higher than their Bigpond retail costs (as iiNet and Internode claim for regional areas) then it is impossible to match or beat Bigpond’s pricing.

      There is a difference between less competitors and competition being impossible.

      • But it is giving the consumers less choice , not everyone wants to join iinet ,

        iinet also wholesales its own network

        so there is competition , telstra isnt stopping it as iinet

        iinet must not be doing too badly , for it to be buying out its competitors

      • Ah yes, but Telstra is under no obligation right now (until its migration plan comes in) to offer the same wholesale pricing to everyone. As I understand it, everyone negotiates separately above a certain baseline.

        • That’s terrible for competition. I wonder how Turnbull’s broadband “plan” would solve these issues?

          • If it’s terrible for competition how come there are 195 ISP’s in Australia all selling resold Telstra?

            Let’s see how many ISP’s there are post NBN, then we will see what was actually ‘terrible for competition’.

  5. Meh, iiNet are turning into telstra yet cry when they don’t get their own way lol

  6. iiNet are able to place their infrastructure in their ‘cherry picked’ locations and make their profits. For the rest of us in ‘non proftable’ locations, Telstra is the only choice for wholesaler, and yes, iiNet and other ISPs have to dance to the big T’s tune, and make a song about it. They make less profit, but who really suffers in this action? The poor bloodied consumer in outer surburban/rural/regions, thats who. Telstra jacks up their price, and so must the others.
    I weary at the constant misrepresentation of information regarding fibre access networks, and I welcome Conroy’s comments about stamps and ATMs and the benfits of equal wholesale access for non metropoliton users. Turnbull takes one item and distorts it for his own ends. Exhorting friction between city and country users on costs, is just a low blow, as country users have paid through the neck for their STD phone and Internet access forever. Country people, generally (except those on the rabid right) see finally the possibility for equalisation of both, for all parts of the nation.

    • I thought that Telstras internet plans were available for the same price regardless of where you lived! ie.If you live in CBD Sydney or Alice Springs you pay the same for a 25GB plan.

    • Why are right-wing zealots so rabidly masochistic? In the US here the most right-wing corporate states have the worst health, education, and income level outcomes.

      • Why do you keep changing your name Merlin? as per usual you talk rubbish, how about some statistics to back your crap up?

        Not likely eh? – shoot from the hip lay low for a few days, change your name don’t answer any questions, and start again.

  7. I agree with Regional_User here, but I would like to add my own caviar (might be incorrect term there!) here.

    Why is iiNet bitching about Telstra? If NBN is ramping up over the next two years, shouldn’t it be racing out to get onto the NBN sooner? rather than later?

    Yes, Telstra getting the better end of the stick right now, but unless NBN is still here in say 5 years time, let Telstra get their money, then when NBN comes into an area, grab all of the customers they can (this is including any ISP/RSP), and put them onto the NBN.

    Why continue to whinge? seriously?

    • Probably because NBN will soon die with the Labor government, its incredibly unlikely that the Labor government will get re-elected, and the coalition stated that would freeze the NBN and sell it off

    • Because iiNet will depend on customers they’ve accrued on ADSL to switch to their NBN service. If Telstra is squeezing them out now, in 2 or 3 years they’ll be at a severe disadvantage in terms of customer base by the time the NBN rolls around the areas they serve.

  8. Nothing stopping iiNet rolling out exchange gear into areas it uses Telstra Wholesale for.

    It doesn’t because it is not financially viable, so it’s ok to cherry pick the lucrative exchange areas and leave Telstra to pick up the tab in the low yield low population density areas.

    Also there are ISP’s that resell Telstra Wholesale ADSL2+ cheaper than what iiNet and Internode do – funny that.

    • There is something stopping them. Many regional areas are RIM-only zones. Most exchanges around here are basically just an aggregation point for CMUX connections. Most of these are large-scale RIMs, each servicing hundreds of premises.

      Since Telstra refuses access to the CMUX cabinets, the only option is to sign up with a Telstra port. Even if competitors rolled into town, they would have no customers, as they are not allowed to install their equipment in the CMUXes.

      That’s not competition at all. And it is the norm in regional NSW.

      • “There is something stopping them. Many regional areas are RIM-only zones.”

        Yes and that’s also the case in urban areas also, but many is not all, it doesn’t explain the full story of why many bog standard regional and rural exchanges have only Telstra ADSL available, and ISP’s that have exchange gear in other areas are quite happy reselling it.

        You cannot glibly explain away that competitors stay away from low population areas because everyone is on a RIM.

    • It’s also funny that ISP’s that resell Telstra services cheaper then the Internode’s and iinet’s of the world happen to not have invested in their own DSLAMS in Telstra exchanges. Like Exetel and Dodo for example and it’s no secret that those same cheaper/budget ISP’s would have got very favorable wholesale contracts from Telstra Wholesale for not investing in their own DSLAMS, especially in metro exchanges.

      ie: I’ll scratch your back if you’ll scratch my back ie: says Telstra Wholesale to Exetel during negotiations.

        • As long as it’s all fair and above board I take?? Doesn’t make it that it doesn’t happen hey Syd

      • “those same cheaper/budget ISP’s would have got very favorable wholesale contracts from Telstra Wholesale for not investing in their own DSLAMS, especially in metro exchanges.”

        You know this how?

        • Alain, I take you know this is not the case? ie: the opposite of what I’m saying.

          • Oh that old dodge, first of all I didn’t make the assertion in the first place you did, I just asked you for something more substantive to back that up than ‘gut feel’.

            If you don’t have any facts preface your original comment with ‘I guess’ or IMHO instead of posing the negative question to me as if me not replying somehow magically endorses what you said in the first place as being true.

            You would have no idea what the Telstra ADSL2+ contract is between different ISP’s and it would depend a great deal on what other Telstra products you take, Telstra love bundling discounts, both at the retail and wholesale level.

            In the same way you have no idea what Optus or iiNet wholesale charge their ISP resellers either for ADSL2+ and Naked DSL, and if one ISP gets a better deal over others and why.

          • I never said I knew the inner workings of any deals done between the various ISP’s wholesaling from Telstra Wholesale. What I’m saying is that the ISP’s that have invested heavily in infrastructure (DSLAMS) tend to charge (usually by a fair margin) more reselling TW services then ISP’s that have invested very little (or nothing) in infrastructure (DSLAMS)

            It’s no coincidence, even blind Freddy can see that.
            Thus it’s in Telstra’s interest as a business to favour ISP’s like Exetel and Dodo by “rewarding” them with great deals on the condition those same ISP’s don’t invest in infrastructure (DSLAMS). It’s only common business sense (right or wrong) that Telstra takes this attitude only because they can do it.

          • “I never said I knew the inner workings of any deals done between the various ISP’s wholesaling from Telstra Wholesale”

            Good I’m glad we have that out of the way.

            Your point about non DSLAM ISP’s having better resold Telstra ADSL2+ deals than those that roll out there own doesn’t pass analysis either, because within those ISP’s that have their own exchange DSLAM’s there are better deals than others.

            I’ll look at the cheapest plans in each category of resold TW ADSL2+ from ISP’s that have their own large DSLAM rollouts.

            Internode 5 gig $39.95 with a $29.95 Phone service.

            iiNet 5 gig $49.95 with a $29.95 Phone service.

            Primus 40 gig $39.95 with a 29.95 Phone service.

            Primus Zone 2 40 gig $49.95 with a $29.95 Phone service.

            TPG 50 gig $49.95 no bundling.

            To then single out Exetel and Dodo as examples of being cheaper is spurious because those two ISP’s tend to be the cheapest across the board for all plans irrespective of wholesaler, including the NBN, perhaps they are cross subsidising their Telstra plans from other areas or are content with smaller margins than the likes of Internode and iiNet are.

            To single out their Telstra ADSL2+ plans as being a example of ‘favorable Telstra treatment’ is ridiculous, why don’t you say the NBN Co is giving them favorable treatment because they seem to be favoring ISP’s that don’t have their own DSLAM’s because their NBN retail plans are cheaper?

  9. Telstra is Australia’s largest brothel it screws everyone and charges like wounded bulls.

  10. alain, The Easy Reach 5 (5 Gigabytes) is $59.95 Unbundled + $30.95 Phone service ($31.95 on 1st October 2011 Got a letter from Telstra today) and if you live in a zone 2 or 3 area you cannot bundle. In zone 1 it’s $39.95 plus the cost of NodeLine, but zone 1 is where Internode have their own DSLAMS installed. You only go with TW through Internode in zone 1 areas if no Agile ports are available due to exchange constraints and waiting for a port to become vacant.

    Exetel it’s TCV20-50 $39.50 (50 GB) or TCV20-200 $49.50 (200 GB) And both plans you can bundle for $25 a month extra for the phone service regardless of what zone you are in. Foe Exetel zoning does not apply because they have no DSLAMS installed anywhere, where as Internode are heavily penalized in zone 2 and 3 because of the installed DSLAMS in zone 1.

    So Internode’s Easy Reach 5 (5 Gigabytes) is $59.95 Unbundled + $30.95 = $90.90 in zones 2 and 3 where’s Exetel it’s TCV20-50 $39.50 (50 GB) + $25.00 = $64.50 everywhere or for an extra $10.00 you get 200GB a month regardless of where you live.

    So 5GB Internode vs 50GB or 200GB Exetel (extra $10.00). And you’re saying that Internode aren’t being penalized by Telstra Wholesale

    • Whoa hang on a sec have you nothing whatever to say about Telstra ADSL2+ price differences between ISP’s that have their own DSLAM’s, what’s that caused by AG?

      Why is TPG and Primus cheaper than Internode or iiNet? – don’t give me the BS about the number of DSLAM’s theory because both TPG and Primus have more exchanges enabled than Internode, so under your theory (and it IS a unsubstantiated theory) they should have higher Telstra ADSL2+ prices than Internode.

      If you going to make a case stop selectively picking just two ISP’s one of the cheapest budget ISP’s for most products not just Telstra based and the other one of the most expensive ISP’s, ignore everything else I stated especially about retail margins as if it is of no consequence or it is written in invisible ink.

      Why is TPG, Exetel, Dodo and Primus cheaper than BigPond with Telstra ADSL2+, is TW ‘playing favourites’ ?


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