ISPs hit out at ACCC report on Telstra’s wholesale prices

Following the release of a draft report into Telstra's wholesale ADSL prices, some ISPs are unhappy with how long it has taken the ACCC to release a review

ISPs have hit out at the Australian Competition and Consumer Commission’s (ACCC) draft report on Telstra’s wholesale ADSL prices.

On Tuesday the ACCC released a draft report detailing price drops of 84 cents from $25.40 to $24.56 in zone one (metro areas) and a 99 cent drop of $30.80 to $29.81 in zones two and three (rural and regional areas) for Telstra’s wholesale ADSL services.

But Steve Waddington, CEO at ISP Exetel, said the decision has come too late.

He estimates the cost to provide DSL services to any premise from a Telstra exchange is less than $10 per month, possibly even $5.

Waddington based those estimates on how much it costs to run a network and by looking at countries where retail prices start at $10 per month, such as Thailand, Sri Lanka, India, China and Russia, where consumers can’t afford to spend a large amount of their disposable income on broadband.

“Telstra for decades have spun a long, complicated story of how expensive everything is for them. I am sure a lot of their staff, even quite senior managers, believe it,” Waddington told Computerworld Australia.

“I have had Telstra account managers and ops managers complain to me on more than a few occasions when trying to place an order [about] how much it is going to cost Telstra to deliver it, upgrade their infrastructure, buy extra equipment, etc.”

Waddington has called for a $10 price drop in metro and regional prices.

“The last price revision was good, another one like that would be fine. But $1 is just boring,” he said.

When the cost of backhaul is factored in, Waddington said this price drop is actually as little as 50 cents, with Telstra charging one of the highest backhaul rates in the industry.

“No one seems to ask why Telstra charge more than three times as much to get data from Chatswood to Pitt Street [in Sydney] than we can buy bandwidth from Australia to the US for,” he said.

The ACCC declared an interim wholesale price in February last year in an effort to eliminate competition issues.

iiNet has criticised the length of time it took the ACCC to release the draft report and said it was disappointed with the review.

“The wording of the draft is not altogether clear and the wholesale pricing suggests less than efficient costs when compared to iiNet’s own cost for the provision of DSL ports,” it said in an ASX statement.

However, the ISP said the draft determination would not impact on its financial results if the draft determination becomes the final access determination.

The ACCC inquiry into setting a final access determination will consider the structure and level of pricing for wholesale ADSL services and whether the determination should limit the application of the declaration to certain carriers in certain regions.

It will set out pricing and other conditions until 30 June, 2014.

Follow Stephanie McDonald on Twitter: @stephmcdonald0

Follow Computerworld Australia on Twitter: @ComputerworldAU

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Tags TelstraiiNetExetelAustralian Consumer and Competition Commission (ACCC)Steve Waddington

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