Taken to task on broadband

WA’S Internet service providers have continued their criticism of Telstra for alleged anti-competitive behaviour despite the telco responding to regulatory and market pressure to cut its wholesale prices.

While welcoming ongoing investigation by the Australian Competition and Consumer Commission into Telstra’s BigPond pricing of ADSL broadband, ISPs contacted by WA Business News say the new price structure by Telstra wholesale is not significant enough to reduce pressure on margins.

Matching moves by other providers across the country, several WA-based ISPs lodged complaints with Telstra wholesale and the ACCC following a dramatic price cut by Telstra for its entry level broadband plan.

At $29.95 a month, the price was significantly lower than Telstra’s wholesale rates for the same services, with many ISPs saying they could not compete.

However, Telstra bowed to pressure last week, dropping its wholesale prices after the ACCC issued an advisory notice to the telco after numerous complaints.

In the meantime, several ISPs announced similar entry level broadband packages in a bid to maintain their market share of the low end of the ADSL market, despite the likelihood of making a loss on some accounts.

But consumers are being warned to read the detail on low-cost ADSL broadband plans, as there may be a risk of hefty bills at the end of the month for exceeding set downloads on uncapped plans, such as Telstra’s $29.95 plan.

Most of the new low-entry ADSL plans announced by ISPs in the past fortnight allow for around 200MB of downloads, with any additional downloads charged at between 10-15 cents per megabyte.

In a statement announcing wiink – iiNet’s new $24.95 ADSL plan – managing director Michael Malone said.

“Just because it’s got a low headline rate doesn’t mean it’s the right deal,” he said.

“Customers aren’t stupid.

“Plans like this are a good start, but customers know the devil is in the detail.

“On the plus side, the wiink plans are capped, so customers don’t get completely torched.

“The most customers will pay for their Internet connection on the wiink 256k plan is $59.95 a month. The speed of the connection may be shaped to 72kbps after 6GB.

“We don’t want people getting billed for hundreds of dollars.”

WestNet is another WA-based ISP to have announced a similarly priced, capped plan.

Telstra’s price cuts are expected to make ADSL more attractive to existing dial-up customers, but are also expected to test the viability of smaller ISPs in the competitive ADSL market.

Telstra has already announced that, since the new retail prices were announced this month, the rate of new retail applications has jumped by 85 per cent compared with last month.

Telstra said it would reduce its wholesale prices for its 256kbps end-user access charge so it would be available to wholesale customers at a rate lower than the post-GST $29.95 price that applies for retail customers.

Telstra also said it would also reduce its wholesale rates for broad-band access in non-metropolitan areas.

“Telstra believes that the overall margin previously existing will apply when these wholesale price changes take effect,” group managing director Telstra Broadband, Bruce Akhurst, said.

However, the ACCC remains concerned that Telstra may be engaging in anti-competitive behaviour.

ACCC chairman Graeme Samuel said the ACCC was very concerned that Telstra’s price drop for its retail price was not matched by a similar reduction in its wholesale price for similar services.

Mr Samuel said that, while the ACCC was pleased with Telstra’s announcement that it would cut wholesale prices, the full impact of the changes on the level of competition amongst ISPs would need to be assessed.

“Accordingly, the ACCC will continue to investigate the matter to determine whether Telstra has or is still engaging in anti-competitive conduct,” he said.

 
ADSL CONNECTION

Telstra BigPond: Monthly charge; $29.95; download speed, 256Kb; download limit, 200MB; additional fees, 15c per MB.

Optus: Monthly charge, $39.95; download speed, 512Kb; download limit, 300MB; additional fees, none.

iiNet: Monthly charge, $24.95; download speed, 256Kb; download limit, 200MB; additional fees, 15c per MB.

WestNet: Monthly charge, $29.95; download speed, 256Kb; download limit, 200MB; additional fees, 10c per MB.

Swiftel: Monthly charge, $39.95; download speed, 256Kb; download limit, 1GB; additional fees, 5c per MB.

EFTel: Monthly charge, $48.95; download speed, 128Kb; download limit, 500MB; additional fees, 9c per MB.

Note: Other conditions apply to ADSL plans listed.