news National broadband provider TPG has broken what has appeared to be a long-term policy of not criticising the nation’s largest telco Telstra over its supply terms to rivals, slamming the big T’s wholesale approach in a new submission filed early this year with the competition regulator.
Over the past half-decade and before, it has become common for Telstra rivals such as Optus, iiNet, Internode and others to regularly criticise Telstra, due to what they saw as ongoing uncompetitive behaviour by Telstra in giving customers of its wholesale division less favourable terms and pricing for access to its infrastructure than its own retail division. All of these major ISPs — and others such as Macquarie Telecom — have employed regulatory staff to engage directly with the Government and the Australian Competition and Consumer Commission over the issue.
However, in that period, TPG has notably been absent from the debate, despite being one of Australia’s top four ISPs and a major buyer of Telstra wholesale services. Some in the telecommunications industry have speculated that the ISP’s silence on Telstra’s terms has led to it receiving more favourable commercial deals from Telstra, compared with more vocal ISPs such as Internode.
However, in a major submission filed with the ACCC early this year (PDF), TPG appears to have dramatically changed its public stance on Telstra. The submission comes in response to an ACCC discussion paper seeking comment from the telecommunications industry on whether a wholesale ADSL service should be ‘declared’ (regulated more strictly than it currently is).
In TPG’s discussion paper, the ISP maintained that a wholesale ADSL service should be declared, due to Telstra’s uncompetitive actions in the marketplace.
“Telstra has repeatedly obtained advantage for itself over competitors like TPG, both by pricing its wholesale services at a rate that make it extremely difficult for competitors to compete and by creating unnecessary business constraints around the supply of the service,” TPG stated in its submission. “TPG does consider that Telstra’s terms and conditions of supply inhibit competition.”
TPG criticised Telstra in a range of areas in its submission, raising the following issues:
- Telstra does not permit TPG to use its own network for connecting rural broadband services back to the city (known as ‘backhaul’)
- TPG argues that “the price Telstra charges for backhaul does not appear to bear any correlation to actual cost”
- A “price squeeze” by Telstra with regards to regional wholesale prices between July 2010 and January 2011 saw many customers churn from TPG to Telstra
- Telstra does not allow wholesale customers to access a so-called ‘multi-cast’ facility which would allow TPG to supply Internet video (IPTV) services
- Price discrimination between companies seeking to use Telstra’s infrastructure
- TPG considers it “highly likely” that it will use the $11 billion payment it will receive from its contract with NBN Co to market its services to customers heavily with the aim of locking them into long-term contracts
TPG also reveals in the document that it had been arguing with Telstra “for years” on some issues.
Many of the same issues were raised in other submissions to the ACCC by ISPs like iiNet, Internode, Primus, Adam Internet and TransACT (which filed a joint submission (PDF)), Optus and Macquarie Telecom. “Our clients firmly believe that Telstra’s [wholesale DSL] terms and conditions inhibit competition, the joint submission stated.
In its own submission (PDF), Telstra argued that there was no need to more heavily regulate wholesale ADSL services. “Such declaration would neither promote competition nor encourage efficient investment in infrastructure, and would not be in the long-term interests of end users,” the company wrote.
The telco said Australia’s broadband market was “already highly competitive”, pointing out that substantial facilities-based competition, particularly in CBD and metropolitan areas, already existed, and other ISPs already “actively and aggressively” compete with Telstra nationally using other types of broadband services — such as the Unconditional Local Loop Services (ULLS) and Line Sharing Service (LSS) — both of which have already been declared by the ACCC.
“Declaration of the wholesale ADSL service would only serve to limit the incentives for access seekers to invest in [ADSL infrastructure] and other alternative infrastructure,” Telstra stated.
The difference between declaring the ULLS and LSS services and declaring Telstra’s wholesale ADSL services is a subtle issue, but important to ISPs. Declaring a wholesale ADSL service would mean that Telstra would have much more controls placed on how it sold a higher-level package of its network infrastructure to other ISPs — while the ULLS and LSS services are component parts of supplying a broadband service.
opinion/analysis
It’s fascinating to see TPG come out of the closet with its true feelings about Telstra in this manner. The ISP has largely abstained from the ongoing criticism of the big T over the years. One wonders whether this is the start of a more open and transparent TPG in general.
One wonders whether this is the start of a more open and transparent TPG in general.
which might go some way towards them not losing a large chunk of customers when they finally take over iinet. :)
lol a valid point ;) although a takeover is far from certain …
There’s a few hurdles for that takeover I think :-) Surely the ACCC will have to consider that one closely? I can also imagine the outcry from Internode and iiNet customers at being taken over buy a budget off-shore ISP. iiNet taking over Internode is one thing but TPG taking over the pair of them would be a whole fireworks display!
Precisely :)
Accc are still looking closely at iinet anti competitive of reducing competition with buying internode, the accc were quick in reply to the complaint i made about iinet
stopping companies like westnet, internode in under cutting them by offering competition
asking them to rule is it collusion
@Bill
Sorry to disappoint Bill. But no – Those dishes have been washed, dried and put away.
TPG buying iiNode is so 2011, I am putting forward a new option… Vodafone will buy iiNode when the NBN really starts to get coverage. Vodafone have waaay deeper pockets than TPG. :)
ooh i like that theory very much.
I think that there would be a similar mass-exodus from iiNet/Internode whether it was TPG or Vodafone that made the purchase. Neither of those two discount providers really represent the standards of customer service and network strength/innovation that these customers would value.
Just goes to show that an ISP can take only so much grief from Telstra before something gives. ADSL should have been declared a long time ago. The ACCC has been remiss in allowing the ongoing Telstra price squeeze for all this time. Hopefully this will all change next month, and not before time!
+1 100%
+1
Finally TPG stick their head up out of the trench. Perhaps TPG should also start deploying their own fibre all over the place (eh Michael_1)? A few networks running everywhere in parallel should make competition much better and lower prices for all (NOT!).
Conroy and the ACCC have been disgraceful with the environment that they have allowed to develope in fibre and remote areas. When I had to make a decision regarding the South Brisbane migration back in July/August last year, there was hardly any (real) choice. Now I am locked into 24 months with Telstra with no chance of IPTV and a crap phone service that I never use.
Now I have the decision coming again for the migration of the business services in a couple of months under the same project. I hope there is better choice this time.
You may not know that TPG purchased PIPEnetworks a few years back:
http://www.arnnet.com.au/article/325874/soul_tpg_buys_pipe_networks_373m/
Probably one of the reasons TPG was complaining about not being able to run backhaul for Telstra-connected ADSL customers.
Yes, I did see that they bought Pipe Networks. I was more referring to that regular silly suggestion that the other ISPs should deploy their own “last mile” networks rather than relying on getting proper access to a wholesale network. Particularly this week, that rubbish came from Michael_1 in the South Brisbane Telstra thread.
It’s interesting to read the positions put forward and how self-serving they can be. As always I think the true reality of the situation rests between the two extremes presented. I hope the ACCC can remain level headed. :)
I agree — all the submissions are incredibly self-serving, and transparently so. It’s like having your head dipped in muck.
Self-serve transparent muck? That’ll never take off.
And now the self interests of private enterprise are coming to the fore.
Surprised ? No.
To be recognized, acknowledged, and allowed for? Of course.
Just as allowance should be made for end users benefits, interests of the country, etc. And on these two points those interests should be prominent in any considerations by the ACCC and Govt. This new network isn’t being built for private enterprise, it’s being built for the country and consumers. Put them first. No more, no less.
it is best private sector totally cut out of telco service providing equation. micheal quigley already told australia parliament nbnco ready to operate 14 POI or (operational POI at each capital city with redundant backup backhaul) no problem. there is no need to use telstra, optus, tpg or aapt local backhaul. under expert quigley nbn design, private company’s backhaul are complete worthless, not one cent. ACCC decide 121 POI only to save worthless assets of greedy private companies. truth is with POI in each capital city, nbnco can provide all local backhaul requirement with no extra cost. instead with stupid ACCC decision, companies like internode and iinet have to pay the ticket gatemasters to use unnecessary backhaul.
but government should go further and cumpolsorily acquire private companies’ international transit assets too (including internode guam link) and make nbnco the National Internet Service Provider. this will bring most benefit to end consumer by cutting out unnecessary greedy fat profit margin of middleman such as symond hacket and michael melone and lower internet prices by most extent. with 14 POI, there is no need for so many middlemen ISP who buy wholesale and sell retail (take their fat margin) to exist. let nbnco sell retail direct to australian people instead of selling to these middlemen who only care about ripping out as much profit from australian consumers as possible and then buy personal jet plane. by eliminating unnecessary middleman retail margin, internet prices will drop by a lot!
let nbnco provide basic internet connection direct to retail customers. cut out these greedy, worthless middleman ISPs. and then the digital economy value creation and real competition will take place in service layer on top of basic network service provided by good monopolist nbnco. why consumer should waste money paying unnecessary retail margin to middleman such as internode when the money can be spent on actual services such as live sports broadcast on IPTV, home base medical consultation with best specialist surgeon in the world?
in new brave nbn world, internode, iinet and tpg are no long needed, no more reason to exist. why? because nbnco can replace all their functions and more give consumers cheapest price than ever before in history by getting rid of greedy middleman and operating with lowest ROI. if only conroy brave enough to take this next step and push self-serving middlemen ISP aside, then australia will call in new era of fastest cheapest internet the world will see
@ NightKhaos and Renai
Of course the submissions are self-serving. That’s the whole point. The ACCC has invited us to comment – from our point of view.
We have an obligation to run the business as efficiently as possible and that includes trying to influence the external forces that affect our business.
You can put a submission in, too – if you have the inclination.
If you think we’ve missed a few points, drop them a line. Sitting on the sidelines and criticising those that make an effort to improve the situation is pretty lame.
If it wasn’t for iiNet and others pushing the line, you would still be paying $75 a month for 256kbps fraud-band, there wouldn’t be an NBN on the way and the only choice of supplier you’d have is your beloved Telstra.
The only thing that would be the same is that you’d still be criticising everybody else.
With respect this article is over a year old. If you truly want user engagement comment on something a little more recent please.
Without any further info given, I would assume that things like universal service obligations are behind some of the wholesale prices Telstra charges having not much to do with competitive pricing by other companies :\
“One wonders whether this is the start of a more open and transparent TPG in general.”
No need to wonder, the answer is already established.
The submission comes in response to an ACCC discussion paper seeking comment from the telecommunications industry on whether a wholesale ADSL service should be ‘declared’ (regulated more strictly than it currently is).
That will be the reason. TPG is in the same proverbial boat as most other ISPs. They procure services from Telstra and at present as ADSL services are not declared, there’s no predictability in pricing.
The recent price slashing occurring at Bigpond (spurred on no doubt by the CEO calling all to roll up sleeves and aggressively gain market share back) is probably the last straw.
Everyone has their tipping point. We’ve just discovered TPG’s.
this is landmark speech by tpg. it is industry knowledge that tpg has been getting even better terms than other isps that have no dslams at all because telstra has been illegally bribinng them with cheapest wholesale prices. (why do you think tpg dsl is cheapest?) this is why tpg has kept quiet about how greedy telstra really is and defending telstra reputation as fair player. this protest marks abig change in tpg public position on telstra real behavior and character as greediest monopolist. the ACCC must instantly declare wholesale services, also should have done that ten years ago.
it is well known telstra always lie about their true wholesale costs. they claim that operating in regional band markets cost more money than in big cosmopolitan cities. because the ACCC allow isps to access LSS at same 3dollars in all parts of australia, telstra instead try to earn higher revenue from regional customers by forcing isps to use telstra backhaul and then charging big money for this service into far out region. this way, they can earn more money from bush even though LSS is same in big city and bush.
but telstra’s cost claims are total falsity. kpmg report has already shown the cost of building or operating fixed network is the same up to 90per cent of residents. this is because australia is actually highly urban with most people living in packed towns even in bush. so telstra has been lieing all along about their real costs faced in regional markets. the cost of servicing and doing maintenance is same in sydney or albury. why do you think ACCC set LSS the same in all zones? why do you think NBNco offer same 24dollar AVC in all areas? it is time telstra’s many lies are exposed. when telstra lose its best friend in tpg, you know the game is almost finished for telstra
even if ACCC do not declare wholesale dsl, ACCC must make sure Telstra allow isp which have mostly metro customers maintain same average cost when these isps move into regional markets and acquire new subscriptions. so, if metro isp’s average cost is 16dollar ULLS and this isp want to serve new customers in regional zone 4, telstra must wholesale adsl at no more than 16dollars so that isp’s average cost does not increase. otherwise telstra is immediately guilty of price squeezing and metro isp is stuck serving big cities only like how iinet and internode complain and cannot expand into more rural areas
also ACCC must make new rule that telstra must offer same price to all isps. telstra must not offer cheaper wholesale prices to isps which do not own equipment in exchange. this will force all the stingy dodos and exetels of australia with no dslams (or cheap 16dollar copper leases) to instantly roll out their own dslams and lower their average cost to same level as tpg or iinet and stay competitive ,or go bankrupt in time for surety. these companies like dodo and exetel rely too much on telstra and third party equipment and dont deserve to survive on basis of getting preference deal from telstra without own dslam. this is good for tpg, internode, iinet and australian people using internet
also telstra must always put isp customers interest first. currently only 3 or 4 fttp velocity estate out of many hundred is resold to other isps. but telstra must immediately as primary priority invest time and resource to introduce multicasting IP on a few velocity network to satisfy isp customers. if need to, telstra must instantly overhaul all IT, administration and managerial systems for all hundred(s) velocity estate to facilitate multicasting for tpg and iinet on point cook and southern brisbane only. this is only reasonable practice and expectation. customer cant do anything, all power is in telstra because they control velocity. so telstra must act to protect isp customer business interest first. please ACCC listen to knowledgable hacket. hacket only speak for long term consumer interest always
gillard government must not allow telstra to spend 11billion on marketing telco services in australia. conroy must pass new law saying 11billion can only be spent on telstra overseas businesses to offer cheaper services to foreign customers in overseas markets for long term contract. symond hacket already correctly warn many times. will be big disaster for long term interest of consumer if telstra is allowed to offer cheap telco product to australian businesses and houses. please conroy, listen to hacket’s wise words of free advice. hacket always speak out to protect australia and australians’ consumer interest only
shown the cost of building or operating fixed network is the same up to 90per cent of residents.
If this was indeed correct, why is that all these whinging ISPs don’t install their own hardware and backhaul. The fact is it’s bloody expensive and it is cheaper to use Telstra Wholesale and whinge like shit to the ACCC in a hope the ACCC will give them access for next to nothing.
When ADSL was released in Australia it was pretty much a level playing field, ie everyone started with 0 DSLAMs at the same time. I certainly hope the ACCC doesn’t give into these whinging pricks as all they are looking for is a cheaper option than dipping into their own pockets for a capital outlay. The sooner all these whingers realise this, the better competition will be.
It makes perfect sense that most would rely on a wholesale infrastructure to some extent at least. Duplication of everything is just stupid to even suggest. In the case of South Brisbane, there is no chance for ISPs to connect their own equipment to the customer as they have no access to the street fibre.
The problem is that the wholesaler needs to be a genuine wholesaler. Without internal bias towards it’s own retail services and providing the best services fairly to its customers. Telstra should not be allowed to control networks like South Brisbane because they manipulate the wholesale offerings (price and features) to steal customers from their competitors and to artificially protect their offerings such as foxtel.
@stupidcommentoftheday ( تعليق غبي من اليوم )
tl;dr
why are we suprised by Conroy’s approach. He is ignorant on how communications work as seen by his Australian government broadband censorship scheme. Telstra have friends in high places in Canberra as befitting an ex government enterprise. I would not be suprosed to find out that Telstra have wined and dines Conroy on may occassions.
The ACCC are completly impotent to Big Business. Woolworths and Coles pratically own the ACCC and there anti competitivness abetted by the ACCC has created a supermarket duopoly of the worst kind. Do we expect Big Telstra to be any different .
similar to the complaint i made about iinet which the accc is looking at iinet
@Bill – if you’re the same person responsible for this thread over on Whirlpool – http://forums.whirlpool.net.au/forum-replies.cfm?t=1851470
then it’s already been pretty well established that your ACCC complaint will come to nothing. Once we all finished providing you with countless examples about why you were mistaken you got personal and started attacking posters and mods alike.
Micheal D
No im not the same person :)
wasnt aware of that matter
@ Bill.
Sorry mate, that was over quite a while ago.
The ACCC had a look at iiNet’s acquisitions each and every time we made a purchase. Each and every time they also said “Nuthin’ to see here”.
After the purchase of Westnet, Netspace, Internode and TransACT, iiNet group’s total market share was still only around 15%. Compare that to Telstra’s market share (over 50%) and you can understand why the ACCC has no issue with our mergers and acquisitions.
I totally and utterly agree. I have yet to see the ACCC successfully support consumers. Fuel price and collusion, banks collusion, grocery markups, farm gate prices, Telstra, Coles, Woolworths, power etc. etc. etc. etc. They are a joke amid the Australian consumers.
Cant wait for TPG to buy out iiNet.
I as a TPG subscriber welcome our new minions.
When will the Australian ISP’s actually focus on the rural areas of Australia? I want Tpg or Telstra to provide ADSL2+ from Telstras Kelsey Creek exchange.
Telecommunications haven’t been updated in the bush since the old Telecom days.
Telstra has been simply doing band-aid patchwork fixes for years since its privatization.
The only hope for regional and rural customers is to wait for NBNco, as no other telecommunications company will bother.
when I compare the various ISP’s and plans speeds to my neighbours in the street, even now the non telstra ISP’s are slower
What street is that? I don’t understand your point. Certainly as a generalisation, I can’t agree with you if your are suggesting that the average service from iiNet, Internode, etc is slower than Telstra’s services.
Some ISPs are slower, some are faster, some (particularly Telstra resellers) are the same. To suggest that Telstra is somehow the fastest in all cases is just wrong.
Pfft TPG pity they cannot put as much effort into their service and customer service.
Lame as hell TPG.
The battle isn’t for assess to bandwidth, the real upcoming battle will be for content – who has the most cable channels etc, and TPG doesn’t look like it has any current access with the multicasting limitations and so that will limit it’s client base come the roll out. With your NBN box you can have 4 ISPs so the only battle to retain customers relies on some other differention.
تعليق غبي من اليوم, As for Telstra having $11billion which you say say the government should mandate being spent overseas is rather like saying BHP should be forced to spend its profits overseas. There are small mining companies that would dearly welcome that approach but it won’t happen.
South Brisbane is a 1 off, due to hospital planners thinking they could just move an exchange down the road a bit, and 10 years ago that would have happened, now with an impending fibre rollout the QLD state gov gave Telstra a few extra $mill to have a practise run.
I live in the boonies(comparitively) in Tas and use Telstra 20M/1M, TPG not avail but have used it in QLD same speed just cheaper.
And people thought the NBN would be easy… its a minefield of vested interests vehemently defending there territory while aggressively looking for an advantage in the new landscape. Think of the playground as school, we are laying new down new astro turf with no markings… the bullies are coming out, staking their claim, laying traps for unwary players and charging per mm for walking on their turf. Look at the trolls who were guarding the bridge (Southern Cross)… when the second one was built they realised no one was going to pay their toll any more and dropped it %40… it was always us, the public who had to eat what we are given. At least in the new world order we get to pick and choose, far more than ever before and it looks like services will become the new norm.
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