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.
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.