Telstra backs down in BB pricing row

Fair dinkum

Telstra has buckled to industry and regulatory pressure and slashed the cost of its wholesale broadband service.

Australia's dominant telco had faced the threat of legal action and the possibility of multi-million dollar fines after being accused of anti-competitive behaviour. But today it announced that broadband punters would benefit from low prices as a result of its new wholesale access packages.

The telco is introducing two new options that it claims will result in lower retail prices for consumers.

And in a sideswipe at the competition watchdog, Telstra said its announcement would "bring stability and predictability to the market place, and help avoid distracting and expensive regulatory intervention".

In addition to current charges, Telstra is to offer its wholesale customers a new 'Protected Rates' package with wholesale charges at a 40 per cent discount off effective retail prices across all plans, including entry-level broadband plans.

Wholesale customers will also be offered a 'Growth Option' package that offers wholesale ISP customers further price reductions on higher-speed plans.

Said senior Telstra exec Bruce Akhurst: "Telstra's new broadband wholesale pricing packages avoid retail price increases, preserve the benefits of competition, and offer our wholesale customers rate security and stability.

"As a result of listening to our wholesale customers, Telstra is announcing two innovative broadband wholesale pricing packages that will simultaneously promote sustainable competition and expand the overall market over the long-term," he said.

Exactly what ISPs and other operators make of Telstra's climb down remains to be seen.

However, in an interview with Dow Jones the head of the Australian Competition & Consumer Commission (ACCC) said that it might be prepared lift the competition notice slapped on Telstra.

"Our preliminary analysis of what they've proposed suggests that they've [Telstra] now reached a competitive wholesale pricing structure," ACCC boss Graeme Samuel told the newswire service.

The ACCC is to seek comment from the industry on Telstra's move before making any decision.

Telstra said it introduced the new plans "voluntarily" after taking into account feedback from wholesale customers and the ACCC.

"Telstra has always believed that its position has been legally and commercially justifiable, but we have been willing to listen to our wholesale customers and the ACCC to address their concerns." ®

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