Telstra u-turns on wholesale ADSL2+ exchange bounty

In an about turn from previous avowals not to wholesale ADSL2+ internet at a number of exchanges, Telstra is now looking to resell the high-speed service.

Telstra objections to being compelled to wholesale its ADSL2+ saw the telco hold off greenlighting over 900 exchanges which had been enabled with the high speed connectivity since 2006, saying it feared the ACCC would force it to resell the connection to competitors.

The company only changed its stance when it received a letter from Broadband Minister Senator Conroy, stating the government "did not consider a compelling case had been made for regulating third-party access" in the 900 exchanges.

Following the Minister's comments, Telstra switched on the exchanges and which covered over two million Australians, saying the threat of mandatory reselling had been removed.

At the time, Telstra said there were no current wholesaling agreements and that competitors could access ADSL2+ if they installed their own DSLAMs in exchanges or extended their networks.

Now Telstra has said it is ready to enter into agreements with wholesale customers who want access the newly-switched on ADSL2+: "Telstra is planning to sell ADSL2+ and, as such, we are talking to our wholesale customers about it," the company said.

Telstra added it had always said it would consider selling ADSL2+ if it made commercial sense.

Assurances from the regulator played a major role in enabling the wholesale agreements to be considered, according to the company: "Since we received assurances from the ACCC that they won't interfere we were more confident about taking a look at our commercial options," Telstra said.

The decision makes perfect sense, according to David Kennedy, Ovum telecommunications analyst: "Telstra is pretty happy to wholesale. What they don't like is regulated wholesale," he told ZDNet.com.au.

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What about subexchanges?Jongleur -- 11/06/08

All well and good saying other ISPs could always install their own DSLAMs in exchanges, but my understanding is Telstra does not allow ISPs to install hardware in subexchanges. What about the rest of us who Telstra won't connect to a main exchange? And then also refuse to allow us to connect to ADSL2 providers, and also Telstra to not provide ADSL2 themselves to us as well!

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What about subexchanges?Anonymous -- 12/06/08 (in reply to #320103845)

In response to your comment regarding, "Telstra does not allow ISPs to install hardware in subexchanges", this comment is true, though it is my understanding that there is no Telstra restriction on Access Seekers/ISPs installing their own subexchanges.

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Blow me doneAnonymous -- 11/06/08

Is this an April Fools day joke or what.
I guess it makes more sense to voluntarily flog wholesale at ridiculous prices than to be regulated. Maybe I am just too jaded to expect something like this to happen without a catch.

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BroadbandNoel Jones -- 11/06/08

With the current delay in building FTTN it looks like Telstra are getting set for further delays. Once FTTN is up and running ADSL2+ is obsolete. With the ridiculous demands from Terria/G9 about structural separation of Telstra, the ACCC 's unrealistic wholesale pricing and the Government's FTTN part ownership stipulation it looks like it will be a long time before we see FTTN.

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Noel JonesAnonymous -- 11/06/08 (in reply to #320103853)

You have Telstra shares, dont you?
Telstra shareholders will be the only people to benefit if Telstra is able to build the NBN and use its monopoly to set prices, at a massive cost to the rest of the economy.

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dream onAnonymous -- 12/06/08 (in reply to #320103862)

you have shares in optus or are an employee aren't you? see it works both ways.

just keep dreaming about terria and the fact they may eventually save you a few cents?

i for one prefer reality!

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FTTN and ADSL2/2+ will coexistPeter -- 11/06/08 (in reply to #320103853)

ADSL2 will not be obsolete if FTTN ever happens. There will still be a copper link between the node and your house, and (in Australia) it is likely that DSL technologies will fill this role.

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Not enough money in being stubborn ay Sol!Lord Watchdog -- 11/06/08

I knew it would happen one day. Another case of the dog chasing its tail.

It will be interesting to see if Sol's generosity extends to pricing and features.

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Unhappy Shareholder.Anonymous -- 12/06/08

Considering the bitching and moaning that Telstra and their fanbois have made about "bludging off of Telstra infrastructure" this reinforces the fact that wholesaling is profitable to Telstra.

It also shows that the current Telstra board will jeopardise profits (ADSL2+ enabled Telstra exchanges have been available for how long now? And they're just getting round to wholesaling it?) just to prove a point.

I say bring on the shareholder lawsuit. No wonder my Telstra shares are so devalued if the Telstra board can't even be bothered to chase down opportunities to make more money! If they spent less time trying to force the Government and the Australians into believing their lies and got on with the business of making money this announcement would've been made months (or depending on the area - years) ago. Sol and Phil should spend more time working with the industry and generating a better share price then trash talking everyone else letting the share market further push our shares to oblivion!

Maybe things will get better when Telstra is finally separated - then I can get some Telstra wholesale shares whilst the fanbois can get some Retail shares rotfl.

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What's so hard to comprehend?SJT -- 12/06/08 (in reply to #320103933)

What's so hard to comprehend?

1) Regulated wholesale = being told by a bureaucrat, that you "will" provide access of your costly (new) investment/product, to your demanding, non-investing competitor, at minimal/below cost, simply so that this non-investing competitor can profit at your expense. Which Telstra (and let's face it, you and I too, in our line of work) don't or wouldnt want, happen to us. Telstra have an undertaking that this won't occur re: ADSL2+. So then have...

2) Non-regulated wholesale = the owner of the costly infrastructure and non-investing "customer", commercially, contractually agreeing, to a mutually beneficial situation, whereby the access seeker is able to avoid costly upfront costs of construction and the owner of the costly infrastructure can received a further return, to help recover costs. I.e. win/win! This is what wholesaling is meant to be and why it can be advantageous!

Here's what one expert says. MIS Fin Rev 10/6. Ovum research Director David Kennedy said he was not surprised at Telstra's move. "TELSTRA HAVE NEVER SAID THEY WOULD NOT WHOLESALE ADSL2+" he said. "WHAT THEY HAD SAID IS THAT THEY DID NOT WANT THAT WHOLESALE PRICE TO BE REGULATED"!

Non-regulated wholesaling is a simple, fair and universally recognised commonsense approach. Although I do not know for sure, I would assume the other bigger telecoms players like Optus, would already be doing this, when negotiating access with their smaller customers, to their own network?

As such, I'm actually quite stunned that a forward thinking company hasn't aggressively pushed Telstra and said, "We'd like to commercially negotiate access to all your networks". We will reject the ACCC's ridiculously low access fees for fixed, if we can negotiate an across the board wholesaling agreement for your entire suite of products! If the price was right, why wouldn't both agree?

Seems to me that although guys like Simon Hackett of Internode, have suggested they have tried, the competitors want their cake, so to speak! They want to "commercially negotiate" only in particular unregulated areas (like say Next G) but still want to keep their snouts in the trough, in regulated areas (which admittedly there is legislation to ensure).

However, what about looking outside the square, even just once! Who knows what you might find?

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Share priceAnonymous -- 12/06/08 (in reply to #320103952)

Who cares what the competitors want, I want the share price up again. If making money means wholesaling on the terms of someone else then Telstra should be doing it. Its certainly better then the whinge-fest coming out of the fanbois and the Telstra leadership and the massive waste of money fighting stupid, pointless fights or for funding the fanbois to spam forums pushing their crud.

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Sell Optus sonny!Anonymous -- 12/06/08 (in reply to #320103953)

Why don't you sell your Optus shares shill?
It may help you wake up!

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Huh?Anonymous -- 12/06/08 (in reply to #320103959)

Sell Telstra shares to get delisted Optus ones?

Oh, you're just another fanboi that can't read..

If you had Telstra shares you'd be concerned about how the current leadership is running our shares into the dirt!

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really?Anonymous -- 12/06/08 (in reply to #320103952)

why the hell would Simon Hackett be interested in NextG? strawman argument there as mobiles and HSDPA is not his market. the closest he gets is fixed wimax setups in the Coorong.

I do actually believe Simon on the issue though. A year or two ago hed commented on attempts at communications with Telstra with the intention of offering various options not currently available. each attempt was in writing about once every 6 months and at the time there had been at least 4 attempts.

this is for things like SST, SSM, naked DSL (which he finally found; albeit with Optus instead) and so on. Yes, naked DSL was requested at least two years ago.

Simon isnt the only one to reqest negotiations that has been turned down, but he is the one most on record about it. how aggressive can you go anyway? if they say no who else do you go to? Do you incur repercussions for aggressiveness?

im sorry, i have to disagree. if anything im stunned that a forward thinking company like Telstra sat on it hands and a consumer desired (clamoured for!) tech for 18+ months. me included in the consumer clamour incidentally.

this is the first it has even SUGGESTED it is considering wholesaling such services - regardless of regulated or no! - and it might yet internally decide against the initiative. which i would personally expect the outcome here to be.

IMO its only a bait really, a teaser, to see if anyones biting. the decision for sticking with the status quo may yet be taken.

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Yes really!SJT -- 12/06/08 (in reply to #320103976)

No disrespect intended, but I'm sorry, I have to disagree.

As usual the Hackettpool (sorry, I stole that from a humorous Whirlpool comment today) experts know better than the actual experts (no not me - see below). But granted you are entitled to your opinion, my friend.

Firstly, Simon was just a quick example, so no need to get too protective. But let's take your comments on face value.

Ok, so when Simon finally found what he was after with Optus, did he then have to "commercially negotiate" an amicable wholesaling agreement with Optus? Or did he (as he and his cohorts, or dare I say, "Amigos", always do with Telstra) simply run to the ACCC to demand cheap access to/wholesale of, Optus' network/product, at an "artificially regulated price"? I think we both know the answer! So all I'm saying is - what's good for the goose?

But is it any wonder Telstra don't lay out the red carpet for the likes of Simon, when he uses one set of ACCC dominated rules with Telstra and much more appropriate, business like protocol, with Optus? But I guess the easy answer is, it's all Telstra's fault - yes, thats it...

So once again just to refresh what those in the business of knowing, know - MIS Fin Rev 10/6. Ovum research Director David Kennedy said he was not surprised at Telstra's move. "TELSTRA HAVE NEVER SAID THEY WOULD NOT WHOLESALE ADSL2+" he said. "WHAT THEY HAD SAID IS THAT THEY DID NOT WANT THAT WHOLESALE PRICE TO BE REGULATED"!

I have simply brought this information to people's attention. As such Anon, please feel free to continue to attempt to disprove not me, who probably doesn't know any better than you, but Mr Kennedy!

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..Anonymous -- 13/06/08 (in reply to #320103983)

thats the whole point - this communication was direct and not involving ACCC. the whole notion that the ACCC is the only route to Telstra is a furphy.

again; not requested at an ACCC artificially set price - it was a direct request to Telstra for a potential product Telstra would have had a legitimate right to set the price on. In any case, is there *even* a determination on Naked DSL yet? correct me if im wrong but if there is no ACCC determination extant there are no ACCC set costs.

In any case Simon is really just an example, one could just as easily have said M Malone, but Simon gets all the column inches - journos love a good soundbite. That love seems to have gotten some peoples hackles up going by the hackettpool comment? anyway i digress...

So; discounting the ACCC set cost rules argument, and discounting the "ACCC is the only route to Telstra" argument, i think the fact that a deal was struck with one company, and not the other - after similar business to business requests i.e. "will you sell us this product?" (again, a process not involving the regulator) - says more about the attitudes of those wholesaler businesses towards those who would buy from them than you ascribe.

I dont expect future behaviour (say, with DSL2?) to differ much, but im open to being proven wrong.

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..Anonymous -- 13/06/08 (in reply to #320103996)

excuse me i should have edited that further - it should read "was there any ACCC determination on naked at that time? "

The ruling is extant now but at the time we are talking about it was completely up to Telstra to make the pricing rules.

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You digress indeed.SJT -- 13/06/08 (in reply to #320103996)

Without wishing to protract too much further, this will be my last correspondence to you on this topic. I have enjoyed corresponding with you and look forward to doing so again, at a later date, cheers.

But I agree with you, yes you did digress indeed.

The above article was about ADSL2+ exchanges (and wholesaling customers vs. leeching competitors) now being considered by Telstra for wholesaling. Yet you keep harping on about Naked DSL - go figure?

So back to the actual topic. Fact is Telstra were given an undertaking some 18 months ago from the ACCC, that ADSL2+ would not be regulated. However, following the ACCC's track record these assurances were seen as somewhat hollow by Telstra and as such, a business decision (as is made by every business, everywhere, everyday) was made, that it was still too risky to chance it. A bit like some ISP's deciding it's too risky to invest their own $'s, so they simply leech from Telstra - a business decision. But when the new government came to power, Telstra were then able to cross the t's and dot the i's, making it possible and vouila`

However within hours of the announcement to switch on ADSL2+ exchanges and a reaffirmation from the ACCC/ Gov. that regulations would not be applicable, guess what happened? Primus, Internode etc "ran, at break-neck speed, as usual, to the ACCC demanding access anyway" - deny it all you like but that's exactly what happened and happens all the time! Don't get me wrong, I don't blame them for doing so. These stupid regulations are there and these competitors will (as I would in their position too) bend these regs to all but breaking point, to milk every last cent from Telstra, to put into their own pockets, whilst ever they can (and do - imho)!

Here's what another telecoms expert Grahame Lynch said, late 2007: - "Access seekers, who can cherry pick markets, avoid the real costs of universal and national service provision obligations and buy inputs such as line sharing service at their marginal cost, can thus likely make a business case out of offering services based on Telstra unbundled and wholesale inputs.... Practical experience shows that many of them do just that and that their modest levels of profitability are more a function of scale and an unwillingness to consolidate, rather than any issue of discriminatory treatment on their wholesale inputs".

So now my friend you can argue with 2 experts Mr. Kennedy and Mr. Lynch - lol. Again whilst I recognise your right to an opinion and welcome debating it with you, why is it that all you Telstra bashers, all believe you know better than these experts - curious?

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