iiNet, Internode double-team Telstra on South Brisbane


news National broadband providers iiNet and Internode have joined forces to escalate their ongoing complaints about Telstra’s fibre rollout project in South Brisbane, filing a joint submission with the competition regulator demanding that Telstra’s wholesale fibre services in the area be subject to regulation as the previous copper services were.

Telstra has chosen to replace the copper connections to about 20,000 premises in the region as its South Brisbane telephone exchange — where the copper cables terminate — is being closed in order to make way for the new Queensland Children’s Hospital in the area. The region is one of the first in Australia to receive fibre services to the home — but is not part of the Federal Government’s flagship National Broadband Network project, although the long-term plan is for the infrastructure to become part of the NBN.

The first customers recently went live on the network — including customers of ISPs who had gained wholesale access to the network.

iiNet has previously expressed its dissatisfaction with how Telstra is handling the switch for wholesale customers, with the company’s chief executive Michael Malone complaining in mid-August that Telstra wasn’t offering a multi-cast distribution option for IPTV, despite doing so on its copper network, for example.

In a joint submission to the Australian Competition and Consumer Commission published this week (PDF) filed by law firm Herbert Geer, news of which was first published by Communications Day, the two ISPs went further, arguing that wholesale fibre services in Australia should be included in the definition of what is known as a ‘Bitstream’ wholesale service, with particular reference to the “unacceptable” situation in South Brisbane.

The pair argue that the previous copper network was regulated, while Telstra’s new fibre network in South Brisbane is unregulated.

“As a matter of principle, it should follow that if a copper-based regulated service is unilaterally withdrawn due to the deployment of a fibre to the premises network, access seekers who were in recept of that regulated copper service should be entitled to receive a regulated fibre service as a replacement for the regulated copper service,” the two ISPs stated, labelling this as a “fundamental principle”.

However, the pair added, this fundamental principle was in danger in South Brisbane, as prior to the likely declaration of a regulated bitstream service by the ACCC, some ISPs will already be using unregulated Telstra wholesale fibre services in the region — and Telstra may not provide a migration path from its existing wholesale fibre services to any future declaration of an equivalent bitstream service.

The pair of ISPs noted that as part of the ACCC’s existing investigation into South Brisbane, it already had the information it required regarding the matter.

Telstra’s wholesale division has been invited to respond to the ISPs’ comments this morning. However, in its own submission to the ACCC (PDF), the telco argued for caution in declaring a regulated bitstream service, in the light of the NBN construction. The South Brisbane fibre rollout is eventually likely to be part of the NBN. Any ACCC bitstream declaration should await NBN Co’s own definition of fibre services, Telstra said.

Update: We’ve received the following statement from Telstra:

“As explained in our submission, our view is there’s no need for the ACCC to make a decision on the Layer 2 Bitstream service description now, as it would make sense to wait until NBN Co has properly developed its suite of NBN products, which will be highly relevant to the ACCC’s consideration.

We don’t see declaration of the Fibre Access Broadband product as necessary. It is a one-off unique situation and the prices we are offering for the FAB product allow wholesale customers to be competitive. We have also offered transitional assistance to ease the migration of wholesale services onto the fibre network. We have worked very hard to meet our customers’ needs in SBE and so far, 18 customers have signed up to FAB.”

Wow. What a bunfight. I can see arguments on both sides here. Of course, iiNet and Internode have a very valid point — replacing a regulated wholesale service with an unregulated one is not entirely fair, and there is some urgency to the South Brisbane issue. However, Telstra also has a point. In the long-term, this is all going to be a matter for the National Broadband Network, and the ACCC needs to take that into account as well.

To be honest, I wouldn’t be surprised if the ACCC took a tactical approach to South Brisbane, resolving the issues there while holding off a long-term decision on this one until NBN Co gets a bit more organised. Of course, for actual retail customers in South Brisbane, the issue may end up being moot anyway.

Are retail customers going to complain about the specific details of how they’re getting 100Mbps fibre to their house or business, as a replacement for copper? Not that likely ;)


  1. Are they likely to complain? Very likely, if they had Fetch TV or AnnexM or NakedDSL or a high quota ADSL service.

    • I don’t believe there is any reason technically why FetchTV can’t be delivered over the Telstra platform — and as for the price — while it is an issue, I’m not sure I would complain about having 100Mbps fibre to my house.

      • No multicast, which is what Fetch uses for video. Even if they try to do it via uicast (aka the way Internode have announced they’ll deliver it over the NBN until NBN multicast is availible), its too expensive at $60/Mb right in peak AGVC usage in the evenings.

      • I’m quite surprised at this comment Renai. FetchTV could be delivered (the NBN are testing it) but that would compete with Foxtel. Telstra won’t want things like FetchTV because that would be a competitor.

        If you wanted 100Mbps fibre at your house, would you choose the RSP that offers 100/5 Mbps with 200Gb data (and that crap mandatory phone service) for $88, or would you choose the RSP that offers 100/5 Mbps with 100Gb data (and mandatory phone service) for $140? That’s 60% more price for 50% of the data! Of course the first example RSP is Telstra Retail and I expect that you would choose that (wouldn’t you?). Build the retail customer base for the area by ensuring the competitors can’t offer the same deals, lock those customers in to 24 month contracts, then sell the network and all the newly acquired retail customers (@ $1000 each isn’t it?) to NBN.

        Maybe you would settle for a 30Gb data plan (which is perhaps where Telstra try to convince us that they are offering other RSPs competitive prices). If you want to get the benefit of the high speed (stream high def video as well as all the other nice things), 30Gb could easily disappear in 5 to 10 days without doing anything special.

        Fancy sharing data with friends and family, or accessing your data remotely? What is it with choices of 30/1 and 100/5 for speeds. Those uplink rates compare to the 25/5 and 100/40 (and others) that NBN negotiated with the RSPs. That makes much more sense.

        I think the South Brisbane retail customers should be really p*ssed off if they have other than basic browsing/email/facebook needs.

        • “Telstra won’t want things like FetchTV because that would be a competitor.”

          So what? There is no way Telstra can prevent companies like iiNet or Internode providing whatever services they want over its wholesale pipe.

          • But they are. If they refuse to support Multicast in their network, that prevents FetchTV being offered, does it not?

            Do you agree that the pricing is substantially different and unfair based on the example I gave? The retail customer who actually wants to use the new features should be unhappy. The RSPs other than Telstra Retail should be very unhappy (which clearly they are).

            We haven’t even mentioned that the RSPs can today on ADSL access tools to help them test problems and support customers, but on this FAB Velocity network, they are shut out.

  2. They might complain at having to pay Telstra prices until the NBN rolls up the Telstra deployment..

  3. Likely to complain? Yup. As I’ve voiced here and elsewhere, I’m currently receiving an unlimited ADSL2+ service with IPTV for $60/month which I will loose to a more expensive and inferior product.
    What use is a 100 megabit connection when you can’t afford to use it?

    I support iiNet’s and Internode’s submission and hope the ACCC resolves this situation rapidly.

  4. The main issue is, Telstra paid for the replacement of the copper based service to FTTP completely out of their own pocket (the government did pay for the land though). This means they do have to recover the costs for the FTTP installation

    Obviously Telstra is not going to overcharge themselves for a network they built out of their own capital, so they are undercharging their own vertically integrated company (which is why you can Telstra plans on their FTTH for same price, duh!) and overcharging their wholesale

    If iiNet, Internode wan’t Telstra’s FTTH to be the same price as the copper ULL/LLS, then the government will simply have to provide subsidizes for Telstra, else Telstra will simply not be able to make a profit or any decent return

    • Why should Telstra get any subsidies for South Brisbane? It is the epitome of the high density, high profit zone. In the NBN world, it is the area that subsidises the regional rollout.

    • Charging much lower rates to themselves compared to what the wholesale customers get is pretty well a definition of anti-competitiveness.

      Telstra are being well compensated by the sale of the land $45 million and another $27 or $28 million in “loans”. Then of course they get to sell their network to NBN eventually. By then, they will have used the pricing game to extract a high percentage of the customers from their competitors. As I understand it, they then get a large fee for every Telstra customer that they transfer to the NBN.

      • They get a fee for every Telstra ‘copper’ customer. Not for Telstra fibre customers.

        And there’s no deal in place for selling it off to NBNCo either. There’s a everychance that NBN will just overbuild the Telstra fibres (eg, maybe they want everything to NBNCo standards).

        So from the point of Telstra, they’re contractually stuck (with Qld Govt) to build an expensive new Fibre network with a likelihood of a very short life (a couple of years). It makes sense for Telstra to try to maximize revenues as much as possible, I mean its not like low prices would deter competitors from putting in alternative solutions (thats going to happen anyway with NBN !!)

        • How are you certain that there is no “per customer” migration deal for this special case even though it is not copper? I don’t think anyone believes that NBN will put their own fibre in so at the very least they will buy the fibre, if not also the connected network equipment either end.

          If they are allowed to effectively steal a large percentage of customers back from the other RSPs through uncompetitive wholesale tactics, that is a very bad thing for the ACCC to ignore.

      • Charging your own company lower rates is not anti-competitive, every company in the god damn world does this. A company that makes shoes will not charge the same price for people getting shoes internally compared to that company doing wholesale

        • so you don’t have a problem with telstra undercutting their wholesalers throughout australia and it’s not anticompetitive?

          • uh, thats the definition of competition

            Samsung, for example, when selling their memory, will charge extra when wholesaling their memory then when they use it internally for their products

            Every single company does this

          • you missed the question

            so you don’t have a problem with telstra undercutting their wholesalers throughout australia and it’s not anticompetitive?

          • Which Telstra ACCC declared service is being sold at retail by Telstra less than the wholesale price?

  5. I am getting sick of iinet and internode going to the accc all the time to lift their profit taking

    • Then you are ignoring most of the background to this and how they have helped broadband move out of the dark ages in this country.

        • By putting ADSL2 DSLAMs into exchanges and by doing so forcing Telstra also roll out ADSL2. Also they let ADSL run at full speed. Telstra was arguing that ADSL wasn’t capable of more than 1.5Mb and they needed to be paid to roll out VDSL FTTN to get higher speeds.

  6. Telstra’s handling of South Brisbane is indefensible, in my view. They know the situation is untenable, so the prices they’re charging wholesalers is blatant opportunism. A quick cash grab before the NBN comes to town.

    This is all the evidence you need that Telstra cannot be trusted with rolling out Fibre to the country.

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