Local ISPs target Telstra broadband

INTERNET service providers in Western Australia have condemned Telstra BigPond’s new entry level pricing for ADSL broadband, with some filing complaints with the Australian Competition and Consumer Commission, and legal action discussed.

But the good news for consumers is that basic, low-cost broadband is now significantly cheaper, with WA ISPs rushing to match or beat Telstra’s price cut.

The problem for ADSL providers is that Telstra’s $29.95 BigPond plan is cheaper than the wholesale price ISPs are charged for using Telstra’s network infrastructure, understood to be around $40 per month.

It is also understood that ISPs in regional WA are charged an additional $13 per month, per customer.

While Telstra’s retail division (BigPond) and its wholesale division are run as autonomous business units, many see the situation between the two entities as problematic.

“Telstra is both a retailer and a wholesaler [of broadband] and while that is the case this situation is likely to continue,” WestNet managing director Peter Brown said.

WestNet recently announced a $29.95 entry-level broadband plan, while iiNet has introduced a similar $24.95 broadband plan. Both plans, like Telstra’s BigPond $29.95 plan, allow 200Mb download before additional charges apply.

WestNet and WA’s largest ISP, iiNet, have both individually lodged complaints with Telstra and the ACCC, but when contacted by WA Business News were yet to receive a response.

iiNet managing director Michael Malone said that while iiNet “would like to give Telstra wholesale a chance to respond”, he also expected the ACCC to consider forcing Telstra to decrease its ADSL wholesale prices –  reflecting an order from the watchdog two years ago that led to a significant drop in Telstra’s ADSL pricing.

Mr Malone said lower ADSL prices driven by lower wholesale prices would make ADSL more accessible for Internet users, encouraging them to switch from dial-up.

“The price point is excellent if we can drop between $10 and $12 [from wholesale prices] to reduce the monthly fee and the set up fee,” he said. “You push into the mass market once you get it [ADSL] down to dial-up cost.”

Meanwhile, Telstra spokes-person Rod Bruem maintained that Telstra’s ADSL pricing was competitive.

“What we’ve seen is that other ISPs have adjusted their prices, so the claim that they can’t match Telstra’s prices don’t stack up,” he said.

However Mr Bruem said the telecommunications giant had been in “daily discussions” with the ACCC and that it was “waiting for the outcomes of those discussions”.

More than 30 ISPs from across the State gathered at a meeting of the WA Internet Association (WAIA) last week to discuss a joint approach to the introduction of Telstra’s $29.95 plan, which the WAIA termed “anti-competitive”.

In a statement, WAIA said that a broadband Internet account for a monthly fee of $29.95 was a “devastating blow to competition in the Internet industry because it is cheaper than the wholesale ADSL service Telstra sells to its competitors”.

WAIA spokesperson Charlie Stephens said there were two key issues to be considered: “Fair competition by the incumbent telecommunications provider and also fairness to the consumer”.

“The cheap ADSL account offered by Telstra has a sting in the tail – free downloads cease at 200 megabytes per month, and all traffic thereafter is billed at 15 cents per megabyte,” Mr Stephens said.

WAIA president Kimberley Heitman said Telstra had a divide and conquer policy when it came to ADSL broadband.

He said while several complaints had been filed with the ACCC, the watchdog was “unfortunately, moving pretty slowly”.

“ISPs at all levels of the market – from home businesses to the largest ISPs in the State – all are affected by this pricing by Telstra,” Mr Heitman said.