John Linton .....if Internode's recent statements are correct?
As a matter of course, and like all commercial entities operating in all markets, we have constant/continuing discussions with all of our suppliers of whatever size on the cost of the goods and services they supply to us. Our objectives, like all other buyers is to reduce/improve our purchase of services while, equally obviously, our suppliers position is to maintain, sometimes increase the prices they charge us but at the very least increase the volumes we buy from them. In this aspect of commerce nothing has changed for 4,000 years. So I was surprised to read this earlier this morning:
http://www.theregister.co.uk/2011/07/14/internode_under_wholesale_price_squeeze/
I, of course, cannot possibly know what prices Telstra extract from any other company other than Exetel but I do know in my quite long 'history' in buying from Telecom Australia and now Telstra that I have never seen any price of a commercial service rise. In those instance, ADSL services in Zones 1,2 and 3 the pricing has fallen slightly for Exetel on three occasions over the past year and from what I know to be the fact for some other wholesale customers say has fallen far lower than Exetel currently pays. So I did wonder why Internode made these statements blaming Telstra price increases for its decision to 'raise' its retail prices - it almost certainly isn't true. Using words like "remaining financially viable" is a very strange statement indeed.
What could be true, and appears more likely, is that Internode is being forced to 'raise' its prices because it is making less profit these days than it is used to, perhaps needs, to maintain its comfortable life style.....something it shares with every other company that Telstra Retail has assaulted with its ongoing programs of massive give aways to increase its market share.After two and a half years of these assaults by Telstra Retail life is very difficult for most if not all of the ISPs that use Telstra Wholesale services. Doubtless Internode find it as difficult to deal with the constant churn aways that most other ISPs have been subjected to over the same period as every other provider.
Our current view is that Telstra Retail will continue with their 'win back' programs for the forseeable future and that Telstra Wholesale will continue to lose ADSL circuits from the wholesale customers who still buy from them. Companies like Internode that 'cherry picked' (to use a favourite Telstra expression) the major city exchanges to provide their own DSLAM connections are not 'loved' by Telstra Wholesale (for the obvious reasons) and whining about port pricing in Zone 2 and 3 exchanges is kind of infantile. If Internode et alia are feeling any 'price pressure' it is simply because Telstra Retail is taking back some percentage of their lost customers from the exchanges where other ISPs have installed DSLAMs in enough numbers to start making the ROC in some of those exchanges less attractive.
In Exetel's case it seems that Telstra Wholesale is very 'anxious' to make it worth our while to sign up customers from exchanges where AAPT/Optus/Internode/iinet/TPG etc have their own DSLAMs rather than from Telstra Retail. I suppose that is a logical thing for Telstra to do but it seems to be far, far away from the actuality of an 'independent' wholesale arm.....targeting Telstra Retail's competitors hardly seems even handed - at least to me, it seems the direct opposite....but then so many of my views seem that way these days. So it appears that times are tough at Internode. It appears they are tough at other Australian communication providers. I know they are tough for Exetel. But, if you look again as I have done - I can't blame that on Telstra Wholesale pricing which certainly hasn't gone up for Exetel in any area of our business (not that it has fallen that much either - except when taking customers from non Telstra DSLAMs).
Copyright © Exetel Pty Ltd 2011
ABN 350 979 865 46
12 - A number much used in religious tracts and used to arbitrarily divide the calendar year in to meaningless one twelfth segments instead of meaningful one thirteenth segments.