ISPs lock horns over ACCC pricing intervention

Australia On Line claims the submission from Internode does not demonstrate its case

Internet service providers (ISP) have locked horns over the Australian Competition and Consumer Commission’s (ACCC) proposal for revamped pricing structures for Telstra's broadband wholesale offerings, with some questioning the need for tighter regulation of the incumbent telco.

The industry watchdog's proposal initially released in September, was met with acceptance by Optus at the time of its announcement, but subsequently slammed by Telstra (ASX:TEL) due to the undervaluation of the telco's copper assets.

Competing service providers iiNet, Internode and Adam Internet welcomed the proposal as a response to their ongoing complaints about anti-competitive pricing from Telstra, strengthened by the ACCC's recent admittance of a potential case for tighter regulation, of Telstra's ADSL broadband services. The three providers did, however, argue in their public submission that the proposed pricing structures appeared "generous" to Telstra, and failed to properly estimate the telco's operational and capital expenditure.

However, smaller ISP Australia On Line rejected the providers' submission as failing to demonstrate their case in favour of regulation.

"I do wonder if this is another case of some ISPs attempting to wind the regulator up so as to gain an edge in negotiations with Telstra,” chief executive, Michael Bethune, said in a statement. "You certainly get that impression with this sense of crisis and daily breathless dispatches from Internode's situation room about the progress of its negotiations with Telstra."

Bethune also said he was “concerned” at the prospect of the ACCC serving Telstra with a competition notice, claiming it would favour some players rather than increase competition.

"My view is that this price squeeze argument has more to do with some industry players attempting to gain advantage than with promoting competition for the consumer," he said.

"It's clear the game plan for some ISPs is to try to use the Regulator to muscle in on Telstra whilst in turn using their own lack of regulatory oversight to keep their non-facilities competitors at bay."

When contacted by Computerworld Australia, the ACCC refused to comment on the claims made by Australia On Line.

Nevertheless, the opposing views on the topic indicate division in the ISP sector over whether or not Telstra's wholesale pricing has become anti-competitive to access seekers. Commenting on the issue, Dodo chief executive, Larry Kestelman, told Computerworld Australia he had no “huge” issue with Telstra, but said it was merely a case of the commercial market in action.

“I think that from [Internode managing director, Simon Hackett's] point of view, he like most people have chosen to roll out his own network and I wish him luck and hope he gets the right deal out of Telstra, but Telstra is a commercial company as well,” Kestelman said.

“Where it suits him he rolls out a network and pays $2.50 for a spectrum share and expects the absolute rock bottom deal from where he doesn’t have a network.”

“In true commercial reality Telstra is a public company looking after its shareholders’ interests so until someone tells them that they have to be equal; until they tell us we’re equal, we’re not,” he said.

Internode has furthered its negotiations with Telstra for cheaper wholesale pricing, although Hackett maintains that pricing is still “nowhere near equitable”.

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Tags TelstraiiNetinternodetelstra wholesaleAdam InternetAustralian Competition and Consumer Commission (ACCC)Australia On Line

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