John Linton .....perhaps the only solution is to do a "Qantas".
I have mentioned, more than once, recently that we continue to struggle to find ways of providing low cost ADSL2 plans that achieve at least a break even financial situation. This is still possible to do with Optus and, to some extent, with AAPT but unless we sell our soul (commit to things that just make no commercial sense) we can't find a way to offer Telstra based ADSL services that make any sort of 'profit' at all. Our problem is that we don't sell enough Telstra based services to qualify for the discounts they offer to larger ISPs and we won't sell out our other long term carriers to qualify for the huge 'special' discounts that are offered for mass migrating other carrier business to Telstra.
Effectively continuing to deal with Telstra on the current terms is ruining our residential business (even ignoring that Telstra Retail has targeted our customers (and of course those of other ISPS for over three years with offers lower than they sell to us). It is a crazy situation for any company to find itself in - to have a major supplier do everything possible to destroy its business and even crazier for the company to continue to do business with such a predatory supplier without doing something about it. The problem is, of course, that we have tens of thousands of customers on the Telstra wholesale service who have no other option as only Telstra provides services in the overwhelming number of regional areas of Australia.
However we simply can't continue under the current Telstra pricing and business practices as provided by Telstra Wholesale today which, within a few months, will result in us making a loss on all Telstra based services. So when confronted with the inevitable for long enough, even the thickest of CEOs (which I am almost certainly one) eventually reach 'breaking point'. There is simply no point in continuing to sign up new customers that will simply join our current customers in a Telstra Retail data base of prospective customers to be offered incentives (including cash to cover the customers early termination fees) to cancel their Exetel contracts and re-sign with Telstra Retail. So on Friday we began the process of working out the financial cost of offering all of our Zone One Telstra based ADSL customers the opportunity of moving to either Optus or AAPT.
The immediate cost is that Telstra will increase all our Zone Three and Zone Two service costs as well as the Zone One customers that decide they want to stay on the Telstra infrastructure. The immediate benefit is that we can reduce the ludicrously expensive Telstra Wholesale back hauls (more than double the cost of AAPT's for instance) and reduce the port cost by around $10.00 for those customers that move to either an AAPT or Optus infrastructure service. The financial exercise is to determine whether the cost savings are enough to counteract the immediate cost increases. It is only a simple exercise to do that with the only unknown being the actual number of customers who choose to move from Telstra to either Optus or AAPT. This is a complete reversal of anything we have ever contemplated in the past but is something like what has to be done rather than allow Telstra Retail to kill us via the death of a thousand cuts.
If the separation of Telstra does in fact go through then Telstra will be forced/agree to change its current contractual arrangements, when they expire, t some sort of generic arrangement based on some like the terms outlined in this document:
http://www.accc.gov.au/content/item.phtml?itemId=1007091&nodeId=4729a3b85d4adcb0d931c6a482ffcf92&fn=A%20Guide%20to%20Telstra%27s%20price-related%20interim%20equivalence%20and%20transparency%20obligations.pdf
Of course, as you will see if you bother to read it, there is plenty of scope for TW to do whatever it likes and it carefully prepares the ground for that by on the one hand appearing to comply with the ACCC's requirement for a retail discounted to wholesale price structure but then injected the weasel worded statement that there can never be a 'standard' retail price....nothing will ever change with Telstra - once a monopolist - always a monopolist.
It will be an interesting exercise over the next few days.
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