telstra cuts wholesale rates in dying markets

2. Telstra cuts wholesale rates in dying markets

In March 2006 Telstra announced a cut of 32% to its wholesale local call charges, to encourage people to make more use their home phones and the fixed network as part of a package of proposed wholesale pricing changes.
The pricing is proposed in a new undertaking lodged by Telstra with the ACCC.
Of course, there is no such thing as a free lunch, so, at the same time, Telstra is seeking an increase to 2.18 cents per minute on fixed network cost recovery to terminate a call on its fixed network in 06/07.

The wholesale discount is quite a clever strategy from the incumbent, and it has used it successfully in the past. The discounts it is providing are on services that are rapidly dying out, so maximising any revenue out of an asset that is already written off makes sense from its point of view.
Furthermore, by dangling this carrot it also has, in the past, successfully prevented others, such as Optus and AAPT, from moving more quickly into building their own new networks. This is one of the main reasons AAPT has been caught, and why Optus is suffering. By falling for the inducement of more attractive resale margins in the past, and of even further discounts now, these companies were able to obtain some easy revenue.

The future, however, is in broadband and applications – not in voice. This is where Telstra is fighting with the government, the regulator and the industry, and this is where the real action is.

So we shouldn''t fall into this trap. I don''t think that the companies will be caught twice. They, of course, will grab the extra discount, but this will not affect the plans they have currently set in motion to become independent from Telstra faster by installing DSLAMS.



In any case, that is what I hope:)



Paul Budde