Telstra has shocked ISPs by suggesting it might be willing to offer ADSL2+ to wholesale customers.

The move is surprising, because Telstra denied a significant part of Australia the opportunity to get ADSL2+ speeds for almost three years while it waited for assurances it would not have to wholesale it.

The about-face comes as there is increased pressure on the government to investigate splitting Telstra into retail and wholesale parts before giving it the FTTN deal — something that Telstra is vehemently opposed to. This move could be intended by Telstra to allay fears that it will not play nice when forced to wholesale FTTN ports.

Internode managing director Simon Hackett said that Telstra's recent assurances that it would operate fairly in an FTTN environment constituted empty promises, pointing to Telstra's current decision not to wholesale ADSL2+. "Had Telstra not started this intentional discrimination earlier this year, it might have been hard to argue against their assurances of fairness - but instead, today, their actions speak far, far louder than their words - and show their true colours."

But Hackett welcomed Telstra's decision to investigate wholesale ADSL2+ ports, believing it would open up a number of new customers that can currently only be served by BigPond's ADSL2+ products, even where competitors have installed ADSL2+ equipment. "I call on Telstra to immediately end the discriminatory practice of withholding the ADSL2+ speed from its wholesale market while retailing that service via BigPond exclusively to thousands of RIM-served distribution areas around Australia."

But while Telstra is now looking like the good guy, some ISPs quietly fear that it will not be a straight up offering of ADSL2+ ports. Rather, the pricing could be made unattractive unless ISPs move a significant number of ports to Telstra and away from infrastructure competitors like Optus and iiNet/Powertel.

In early 2004, Telstra was in a similar situation, having just been served with a competition notice by the ACCC for selling its retail BigPond ADSL product for less than the price a basic port was sold to its wholesale customers.

Rather than simply lowering the prices on its existing wholesale products to appease the regulator, Telstra chose to introduce a new separate set of products that allowed ISPs to compete with BigPond's pricing, but with two catches. Firstly, it forced ISPs to offer the same plans as BigPond, which were poor value at the time. Secondly, and most importantly, it dictated that ISPs could only use these new products if it did not purchase any of the existing (raw) wholesale ports. So an ISP could choose to either emulate BigPond and make a meagre profit, or stick with the existing unfair pricing. Ultimately, no notable ISPs took up the offer.

Without knowing the whole story of what Telstra plans to do with ADSL2+ wholesale, it is hard to see whether it will be a good thing for the industry or not. But Hackett remains optimistic, demanding that Telstra immediately offer wholesale ADSL2+ ports "on pricing and access terms no worse than it uses to supply its existing 'Up to 8Mb/s' service to the market".

Links:

• ISPs want ADSL2+ via Telstra Wholesale  (Whirlpool, 25 Feb 2008)
• Telstra releases ADSL2+  (Whirlpool, 10 Nov 2006)
• Telstra caves to ACCC pressure  (Whirlpool, 1 Apr 2004)
• ISPs react to Telstra's latest offer  (Whirlpool, 1 Apr 2004)