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Telstra: gouging the customer « Previous | |Next »
April 18, 2007

It would appear that a rattled Howard Government's response to the ALP's broadband policy is to bunker down with Telstra to develop its own broadband policy. The Government doesn't really have one. An election looms. So why not a cut a deal with Telstra to come up with a plan that would trump Labor's? It looks to be a plan to counter the ALP, which is developed behind closed doors and cuts out the ACCC.

Remember it is Telstra that has consistently blocked the development of high speed broadband in Australia Even where it has installed high-speed broadband equipment in its exchanges, it won't allow it to run at full speed until another company puts in competing equipment. So the 20 Mbps service is limited to exchanges where competitors are also offering those speeds.

Why is Telstra is playing a spoiler role. Regulatory constraints says Telstra. So what does 'regulatory constraint' mean in this context apart from less constraint?

Peter Martin at the Canberra Times describes the situation clearly:

What it means is that if it does turn on its high-speed equipment it will be forced to allow other internet companies to buy the high speed service from it at wholesale rates and compete against it. If it doesn't turn up the speed it won't have to give what it sees as a leg-up to a retail competitor. But where a competitor goes to the expense of installing its own competing equipment, it will turn up its speed in order to match the competition. It's the commercial equivalent of a strike..

Telstra, it would seem is demanding access charges as $90 a month a customer to proceed with a fiber-to-node roll out. It's called gouging the customer. Telstra is not even considering fiber to the home.

Telstra's competitors would prefer to pay something closer to $20 per month, which they say would represent the actual cost to Telstra of adding them on to the service, and in any event they would like the ACCC to adjudicate, as the present law requires.

It's Telstra preventing the development of high speed broadband because it wants monopoly pricing power.That's what regulatory constraint is designed to prevent. It is designed to ensure competition in the telecommunications industry. So will the Howard Government, that is under political pressure, cut a deal with Telstra on Telstra's terms and condemn consumers to price gouging?

| Posted by Gary Sauer-Thompson at 8:40 AM | | Comments (1)


This sort of stuff makes me really mad. Peter Martins article showed that Telstra were making exactly the same argument that the competitors are making here in Australia in New Zealand, where they are not the monopolist.