Telstra’s ADSL long-overdue price cuts mask their predatory pricing that will force ISPs competing against Telstra Big Pond to go broke.
In an extraordinary statement yesterday, (New prices stimulate broadband boom 26 Feb 2004), Telstra laid out their outrageous predatory pricing strategy. The Telstra statement said, in part:
“Telstra will adjust the pre-GST wholesale price for its 256k end-user access charge so it is available to wholesale customers at a rate lower than the post-GST $29.95 price that applies for retail customers.”
The ACCC response to this statement should be fast and succinct: this is proof that Telstra wholesale have been for years, and continue to charge Telstra retail (Big Pond) less than they are charging wholesale customers (ISPs) for access to their network.
Why? Because it is clear that when GST is added (as it must be) to the wholesale price Telstra is touting, it will be higher that the Telstra retail price.
Simplified, it looks like this:
The wholesale rate (no GST) would need to be say 27.20 to allow ISPs to add their mandatory 10% GST (eg: 27.20+2.72 = 29.92) and match Telstra, However even this wholesale rate does not allow for any margin for ISPs and ignores additional costs to aggregate and deliver the individual services that Telstra make wholesalers pay.
The con is that Telstra are touting a pre-GST wholesale price only marginally below (rumoured to be 29.75 – 20 cents less) their retail rate of 29.95.
How stupid does Telstra think those who report on these matters are? I bet Telstra is working really hard with the minister’s office at spinning their big con into a “happy-broadband-on-the-rise” story.
All this announcement proves is that Telstra have deliberately suppressed broadband by over-pricing for years and the Howard Government has been complicit in their con-job by allowing these games to be played, and this damage to be inflicted.
Media contact: Adina Cirson ‑ (02) 6277 3334 or 0418 488 295
