Telstra playing favourites, Internode boss claims

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

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.

Tags internodeTelstrabroadband

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Renai LeMay

PC World

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