Telstra playing favourites, Internode claims


Internode late last week speculated that Telstra’s wholesale division was giving some retail internet service providers better deals because they hadn’t built out their own competitive broadband infrastructure as some like Internode, iiNet and TPG had.

In a lengthy blog post on what he described as a “price squeeze” by Telstra’s wholesale division, Internode managing director Simon Hackett said Telstra may be playing favourites.

“It seems logical to believe that some other industry players, who have not competed as vigorously as Internode by building their own competitive infrastructure, may be being offered better pricing than that offered to Internode, in exchange for agreeing not to engage in investment in their own ADSL2+ infrastructure,” wrote Hackett.

“In other words, we must speculate that ‘favourites are being picked’ here in a way that is not respecting the concept of a ‘level playing field’ in the manner that it previously was respected by Telstra Wholesale.”

A spokesperson for Telstra has not yet responded to a request for comment on Hackett’s claims. A number of ISPs — such as Dodo, for example — have eschewed the widespread DSL multiplexer (DSLAM) rollouts which some like Internode have pursued over the past decade, preferring instead to use others’ wholesale infrastructure. Dodo in particular is known for its low prices in the broadband marketplace.

Hackett’s comments were part of a lengthy post in which the Internode chief attempted to explain to customers the current state of its complaint with the Australian Competition and Consumer Commission over recent changes to Telstra’s wholesale pricing — which its rivals claim has not been accompanied by a subsequent change in the prices Telstra charges retail ISPs.

In his post, Hackett reiterated that if Internode were to attempt to compete with Telstra on pricing in certain areas, it would lose “a substantial amount of money on every customer for which that service was provided”.

The Internode chief said the ACCC was currently working through Internode’s complaint, as well as those of other providers.

Internode is arguing that access to the Telstra wholesale broadband services that it needs to provide services in certain areas should be “declared” — which means the ACCC would be able to set pricing and delivery rules on how Telstra provides the services in a much more direct way than it currently.

Hackett also speculated that some other providers were able to provide cheaper prices in areas served by Telstra because they were actually making a loss to provide those services in the hope they would be profitable in future — an approach Internode has rejected.

In the meantime, Internode has published an updated list of broadband plans which it is proposing to sell in areas where it has to use Telstra infrastructure. The new plans are slated to be released in the next three to four weeks.

Image credit: Internode


  1. If the ACCC had of set prices and regulations when Telstra offered to build the NBN several years ago under a Howard government we would all have fast broadband now and not in another 8 years or longer if the current scam is ever achieved.

    • “the ACCC had of set prices and regulations when Telstra offered to build the NBN several years ago under a Howard government we would all have fast broadband now” Say whaaaaaaaaaaat??? The Howard government with ol broadband is just for porn senator Richard Alston? Are you on meth? The howard government built Telstra in to the monster it is today. And Telstra offer to build an NBN like network in the past? I dont think so. As I recall until it had competitors in the provision of ADSL it locked the maximum speeds at just 1.5Mbits. Under a Howard government we would probably still be faxing documents to each other.

  2. Telstra should just pay out the contracts and stop offering adsl2+ to isps like internode , then they can offer what they like without isps like intenrode,and particular iinet who is buying out its competitors to reduce competition for themselves , also has thier own wholesale of adsl 2 arm

    • Henry if you understood reality you would not be making this comment. Reality is Telstra has a monopoly and as such MUST provide access via wholesale to other ISPs this is the first level of competition. Telstra as a monopoly are trying to play the game. Just as Internode are. Telstra drop their prices below the value they sell just the connection(not the internet access) to the customer to Internode and you think this is ok some how? Imagine this. There was one electrical company it sold full service from the power plant to the home. another company cam into the market and were granted access to the power lines only. (no power) but the connections were charged at $5 a month more then the average house hold bill. This is means their is no business case for the company and it folds. Because in the telco industry they want competition they ONLY way to get this is by using Telstra Last mile. To allow this you MUST legislate for competition. It’s that simple. Can you remember having a telephone line with Telecom? At least now Telstra know they have to pick up their customer service game to compete!

  3. This is ridiculous and totally not acceptable, the ACCC need to move faster ISPs like internode are getting steam rolled by this highly illegal wholesale pricing move by telstra..

    Bigpond is a sick joke, their service is crap, customer support is crap, i will never go with them, even if they are offering the ADSL2 bait.

  4. So henry, you’d like us all to be on 256k dsl, since thats all telstra would be offering, with 200M quotas, if it wasnt for competition. You must work for telstra with an attitude like that. And you always cant help but have a shot at iinet, even though this article had absolutely nothing to do with them. Go get a life.

  5. so again we have whiny little bitch Hackett shedding some tears hoping everyone will feel sorry for him and his business, cant be doing too bad, got some nice toys there Hackett

    so Hackett wants telstra to drop the wholesale price so he can drop his price and then be cheaper than telstra and then brag about what a wonderful company he has and how cheap it all is when most of it would be because telstra would be forced to charge him less and he use their service, nice work , the term sponge comes to mind

    Telstra arent my favourite company but i dont give a shit as long as i can get a good deal and it works which telstra services do ( bring on the mine dont stories )

    hackett must be feeling the pinch, good i say, maybe time to merge?? maybe sell off to telstra and they can resell it back to you? now that would make my day

  6. oh and these accusations of telstra charging other isp’s less, truth or another attempt for sympathy?

    • Truth.

      I’ve worked in the industry – (including for ISPs) – for long enough – (almost 16 years) – to have seen many examples of Telstra “behaviour” in wholesale pricing structures.

      What Simon is saying is completely accurate in my experience.

  7. The pattern of comments is so predictable; Telstra are allways wrong & their competition are allways right, credit is never given when due & their monopoly must end at all costs etc. The reality of the business dealings of large corporations is that they are all ultimatly tarred with the same brush & are all vying for market share, including your beloved Internode ceo, Simon. (Internode’s service is 1st rate by the way)
    Anyone who shows even the slightest support for Telstra is criticized or labled a Telstra employee to possess such views. Whilst, like all companies, Telstra have made their fair share of screw-ups, the blatent, anti Telstra, near sighted & mostly unqualified rhetoric, is getting lame.

    • Structural separation is ok on the proviso that the company does’nt get screwed in the process but that wont happen so structural separation now post sale is a poor choice. Separation should have happened pre sale. Remember, Telstra did’nt privatise themselves & regardless of wether they wanted it or not had no choice in the matter. (Privately, many within Telstra’s management & senior tech ranks predicted the it industry would be the mess it has become)
      Now we have a new Gov’t putting a gun to their head because they have been ruthless in business & ultimately successful as a result. If it was,nt so serious it would be laughable.

  8. Good on Internode and to other ISP’s are persuing the ACCC and telstra wholesale.
    Telstra has had it way too good for too long now its time for Telstra to play a decent game and stop screwing around.

    • screwing over australia, they just recently bought out a fantastic bundling deal, i am australian i no longer feel ripped off in fact quite the opposite

      if isps are feeling the pinch well tough titties basically, any business owner is aware of the ups/downs, deal with it

      i am un caring of the inner workings i just want a good decent reliable affordable service and i have that with telstra/bigpond

      • you only have your so called well priced service now because of these competitors who you seem to like bagging. If it wasnt for them, youd still be on 256k with 200M quota for $100.

        • Actually, to be fair, we would be stuck on 1500kbs, not 256k……….. which isn’t even full ADSL1 speed of 8m. :)

          And had Internode not introduced ADSL2+ on their DSLAMs, T$ would have never ever done it, would have never upgraded their core networks and international links and left Australia exactly in the middle of the Internet back waters of the world’s global ecommerce market. Awesome! Let’s play a game: Which nation-wide monopolistic carrier claimed ADsL2+ was vapourware and could never be used in Australia, but some how managed to upgrade several hundered Exchanges to ADSL2+ in the weeks following Internode’s implementation of ADSL2+?

          • Sorry, Game 2: Which nation-wide monopolistic carrier will now only upgrade exchanges in Zones 2 and 3 to ADSL2+ only if a competitor has equipment in that exhange as well………. Apoligise for that please.

    • All the while Telstra is the only ISP in Australia that does the rural areas.

      Yeah they sure are screwing over Australia.

      • It sure is. I am only 150km from Brisbane and Telstra wirelss is the only decent thing that will reach. I have repeatedly asked Internode to put a DSLAM in our town and they consider us Area 2 or something and will not install anything, but Telstra did.

        So internode should put it’s money where it’s mouth is and install in regional areas and see how long they whinge about pricing.

      • Telstra are the company responsible for the costs that make rural access unworkable for the competition.

  9. WOW!

    Who could have thought that a competitor (that will be wiped out when the NBN comes in) would have it’s own wholesale prices lower for it’s own retail arm.


    It’s like Internode wants free wholesale ports all the while not doing any wholesale scheme on it’s own DSL network.

    Won’t really matter much anyway, once the NBN is in there won’t be any ISPs in Australia, just piggy back retail companies.

    • Yes it is quite shocking, especially since it’s illegal, anti-competitive behaviour for a monopoly like Telstra.

    • makes a nice change to having to listen to internode fanboys beating , well i wont say it but you get the picture

      funny how people who dare defend the company that is damned if they do and damned if they dont suddenly are any worse than those who defend their favourite isp

      i sit here with my reliable, well priced service oh and a company that when things dont go right dont suddenly dismiss all responsiblity

  10. just another example highlighting the need to separate telstra wholesale and retail divisions. there also needs to be some major consequences for pulling this, its no good for the accc to just say “naughty naughty” 12 months later. When retail prices are under wholesale telstra should be fined $1m a day or something to discourage the under-handed practice.

  11. Telstra isn’t denying access to internode in these exchanges, they are just charging what they feel is a fair price to use THIER (DSLAMS not COPPER) infrastructure. This has nothing to do with Telstra and has has everything with Internode wanting to use their infrastructure where it suits them and Telstra’s when it is cost prohibitive. Internode should not have a leg to stand on!!!

    When Telstra wanted to have averaged priced ULL services the ACCC and ISPS jumped up and down and complained that it wasn’t fair, forcing telstra, with approval from the ACCC to issue 3 classes of ULL access charges, now the country/rural is unprofitable to serve, but hey lets blame it all on telstra they are big, ugly and a faceless company, unlike the loveable internet companies like inernode and IInet! what a Joke!!

    IINET, Internode, and TPG have installed DSLAMS in all the exchanges where they pay less that $14 for a copper line each month and by passed all the exchanges where it is more expensive -as they don’t want to work with averaged prices, but then turn around and expect because telstra IS averaging prices for it’s retail offerings they should be offered the same price? You guys are seriously dreaming!!!

    • Funny, take a look at TelstraClear in NZ and what T$ are complaining about there, talk about the shoe being on the other foot. Through some significant lobbying, T$ have managed to get the NZ Govt. break the nation-wide monopolistic carrier into Wholesale and Retail yet won’t accept it here……Pot, Pot!

  12. I think it’s quite funny that people are whinging about Telstra.

    Yet are looking forward to the government to doing the NBN and running the pricing on the NBN.

    When Telstra prices are dictated by the government.

    • Under the NBN, the price “dictated” by the government will be exactly the same for all ISPs. Telstra Wholesale do not, and will not ever provide that level playing field.

      • The ACCC controls Telstra Wholesale pricing and access on the copper local loop and the exchange, it also controls backhaul pricing in the absence of competitor backhaul also, this very same ACCC will also control NBN pricing in the exact same manner on the exact same playing field.

    • “When Telstra prices are dictated by the government.”

      Hmmmmm, T$ are selling their Retail plans for less than they are Wholesaling their plans to other ISPs…..Given that their is meant to be legislative structural separation of T$W and T$R, this does seem to be a little anti-competitive…….even cartel orintated. Execs go to jail for Cartels under the TPA.

      I can’t see the government dictating that sort of behaviour.

  13. So…sure, Hackett has a few toys…but then, compare that to the likes of the coffers that the big wigs at Telstra are getting and Hackett all of a sudden has nothing on them.

    Is it a crime to offer service and support to customers that is better than Telstra can offer? Not to mention that maybe part of putting in their own DSLAMs is to assist with not letting prices get to high. They can then help keep some costs down, but obviously it’s not viable to run at a loss.

    It’s just more of the Telstra crud that I dislike. I lived in the country, Telstra wouldn’t even give the town the liberty of ADSL. Nope, they believed that their NextG offerings were an ADSL equivalent or something. As if it was, at about four times the price, and about a quarter of the data offerings, it was nowhere near comparable. I had to move back into one of the more major regional centres to get ADSL, and even now I’m still getting done over by Telstra. I’m behind a RIM, so theoretical max of 8Mbit, but of course I’m more realistically only getting 2-2.5Mbit.

    • your right, Hackett has nothing on anyone.

      Its not a crime to offer something that is better what is a crime is whinging when Telstra starts to be competitive and suddenly the free ride is over

      funny how telstra always got bagged for not providing good quotas, good pricing and when they do they are the bad guys???? damned if they do damned if the dont

      its not viable to run at a loss which internode have said countless times they wont, good,great,fantastic who cares.

      so telstra didnt give you adsl in country, sorry to hear that. did any other provider offer you the service? why only bag on telstra?

      • I’m all for them being competitive, if it’s going to be fair for the competition too. If prices could be the same, then that would be great, but they aren’t allowing that, just using their power to bring more people to them.

        Telstra get all this money from people, but they hardly seem to put it back into the services they provide, other than maybe right in the city, leaving the country behind. All this while they were saying they would be bringing broadband (or “comparable”) services to what…95% of the country or something…fat chance of that happening anytime soon until the NBN finally came along. They were happy to try to charge me $100 a month for about 2GB of data, meanwhile, everyone else in town on ADSL2+ was getting 20GB for half the price. But that must be fair, I mean…they’d never choose to live in the country, so why support the country?!?!

        It would have been cheaper to go with another satellite or wireless provider actually, but still not comparable to ADSL/ADSL2+ rates. Why bag Telstra for it? Because they said they would offer it, they agreed to it under that bs broadband scheme or whatever they had.

        As for bundling, I’ve got the base home line with them. Can’t bundle that (not going to go any higher because it’s not used for anything but internet). Never want to get Foxtel because that’s an even bigger waste of money. Mobiles are on a separate business account, so they won’t bundle them. Therefore I’m left bundling what…Home Line Basic and the internet…which don’t bundle, which means there’s no reason to do it.

  14. I don’t see how you can say your Telstra service is fairly priced. Look at what you’re getting from Telstra on their hardware, then look at what you can have from any other ISP on that ISP’s hardware. A terabyte with TPG or iiNet costs less than 200GB with Telstra.

    But if you’ve only got access to Telstra hardware in your area (i.e. the vast majority of places outside some of the capital cities) then the recent price changes mean you either get Bigpond or you get another ISP that has to charge 50% more just to stay above Telstra’s wholesale cost. Looks like our only option as consumers is to hope the NBN pricing is more in line with the current decade.

    • for me it is fairly priced, i dont need a Terabyte for gawds sake i do like to go outside occasionally. maybe standalone adsl prices might not be all you desire but for people like myself who have other services the bundling packages are very good.

      do you think for a minute my elderly neighbour really cares that one provider has to pay telstra x amount of $ to use their equipment or is just happy that they only have one price for all their services and its affordable? or would you like to come over and show them how to have 4 different providers with 4 different bills having to contact 4 different companies just to save a few bucks ( if they even could )

  15. Telstra enjoys keeping technology back to the stone age whilst raking in the cash.
    Oh and their use to plastic bags as maintenance on their lines what a joke.

    People can change the colour of Telstra turds but they will remain turds.

    Can’t wait for their seperation and hopefully Telstra fan queens buys enough tissues so you can sob your eyes out.

    • Jim

      If telstra was separated they could offer lower prices then the competition,, and the competitors will still try to complain because they will their profits in competiting with telstra

      So its the competition what is playing the anti competition card as well

  16. I have a few key questions for Mr Hackett.

    1. How much does Internode pay for Optus Wholesale product that he resells and is this the exact same pricing that Optus charges their other ISP client’s, and if he ‘speculates’ it may not be where is the ACCC complaint?

    2. How much does iiNet/PowerTel Wholesale charge their ISP clients and is this the exact same pricing for all of their ISP clients, and if he ‘speculates’ it may not be where is the ACCC complaint?

    3. Before Telstra released wholesale ADSL2+ to ISP’s they were after firm assurances from the ACCC and the Government that ADSL2+ would not be a declared service, this assurance was given by the ACCC and Coonan in the Howard Government, and also later again by Conroy when Labor got into power in the Rudd Government.

    Why does Mr Hackett believe these assurances given to Telstra before they made their commercial decision to release wholesale ADSL2+ and is why they did it mean nothing?

    4. If Internode do not like TW ADSL2+ pricing why don’t they pressure their main wholesale partner for this product Optus to start up their DSLAM rollout again? – Optus stopped their exchange rollout late in 2009.

    5. If the main concern is that Internode requires a better exchange spread than what their own limited exclusive ’boutique’ exchange ADSL2+ rollout can provide, why don’t they buy product from other ADSL2+ wholesalers other than Optus?

    The problem is BigPond is fighting back and trying to stop the exodus of their customers to better value ISP’s at end of contract, up until recently Internode and others have had a honeymoon poaching from the BigPond client base, now that BigPond are playing them at their own game plan they don’t like it.

    It’s called competition and trying to retain your client base.

  17. At the end of the day all this banter for & against Telstra serves no purpose. Those that are extreemly anti Telstra will never concede that Telstra have done any good just like those that are blindly pro Telstra rarely see fault.

    I remember my father, a tech employee with Telstra for over 40 years & considered within the industry as peerless in his field, saying to me when the idea of selling Telstra was 1st put on the table, & I quote “this is going to be the mother of all f#@k-up’s”. The private view of many within Telstra at that time was to sell the retail arm & retain the infrustructure to “keep the bast#@%s honest” in reference to Optus et al. As a direct result of the sale ,Telstra’s focus, as a publicly listed Co went from service to profit.

    Subsequently, mainly due to the accc’s ever present quest for competition, investment & maintainence expenditure was re-focused to areas that were not deemed to be declared services. (hence lack of investment in regional & rural areas) & Telstra’s plans to replace the copper network with fibre, with the aim to be a full FTTH sercice were shelved.

    Personally, I have used Telstra sevices for the best part of 20 years & whilst I will concede that I could have saved money by switching my mobile & internet to the opposition, I am ultimatly happy with the reliability & price of the service provided. Tech & service problems I have experienced can be counted on 1 hand & my existing cable, wireless & mobile service’s can’t be faulted at this point in time.

    My point is that Telstra, a company that has made some very poor decisions, is not responsible for poor decisions of previous Federal Governments in respect to its sale & the resulting position it now finds itself in ie; a publicly owned monopoly.

    Whilst I am all for competition, as it improves effeciency & puts downward pressure on costs, I do not want to see it at the expense of Telstra. They have made mistakes & been punished, but to break them up for political, or worse, personal gain & petty spite, which by the way seems to be an ever present part of this debate, is short sighted & not the solution.

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