TELSTRA THE GOLD MEDAL PRICE GOUGER ON BROADBAND

Telstra had the most expensive, or second most expensive, consumer DSL broadband pricing plans of incumbent telecommunications providers in eighteen OECD countries, according to an international study which has just been completed.

Spectrum Value Partners were commissioned by Optus to carry out the study, under which they reviewed the consumer DSL pricing of eighteen incumbent telecommunications providers around the world.

Telstra ranked as the second most or most expensive provider, compared to its peers, at all usage levels greater than 500MB per month.

"Our analysis used a standardised methodology to determine the 'total cost of broadband' based on advertised speed and usage levels. The approach included start up costs, headline monthly fees plus any usage charges, all averaged over a 12 month contract period," Justin Jameson, Spectrum Managing Partner said.

Spectrum calculated this cost at five levels of usage: 'Ultra Low' (200MB per month), 'Low' (500MB per month), 'Medium' (2GB per month), 'High' (10GB per month) and ‘Ultra High' (30GB per month). At all but the Ultra Low level, Telstra's plan was the most, or second most, expensive.

"We knew Telstra was charging high prices for broadband - but we did not realise they were gold medallists," Maha Krishnapillai, Optus Director Government and Corporate Affairs, said.

"This is one international contest that Australia definitely does not want to win. Telstra's prices are so high because Telstra has enormous market power in broadband and uses it ruthlessly.

"With the Government shortly to call for private sector proposals to build a new National Broadband Network, it is critical that this process does not make things even worse in Australia.

"It is clear from Telstra's public comments that it sees the new network as a way for it to regain a broadband monopoly and charge sky high prices.

"The Spectrum survey shows that Telstra is already sticking it to Australians with the world's most expensive broadband. Imagine the prices Telstra will charge if it gets its way on the new National Broadband Network," Mr Krishnapillai said.

KEY FINDINGS
SPECTRUM SURVEY OF TELSTRA'S BROADBAND PRICES COMPARED TO INTERNATIONAL PEERS

• Telstra ranks as the second most or most expensive provider, compared to its peers, at all usage levels greater than 500MB per month. Of the 72 plans surveyed, 68 offer data caps greater than 500MB.
• Only seven of the eighteen surveyed providers offer capped plans (under which the monthly amount of data that the user may download is capped at a specified amount, with any downloads beyond that cap either charged at an excess data rate, or 'throttled' to a lower speed). All of Telstra's plans are capped. Of those that charge excess usage, Telstra has the highest rates of any provider, six times more than the next most expensive provider. All other Telstra plans throttle excess usage back to dial-up speeds of up to 64kbps.
• Telstra's initial DSL modem and connection fees ranks as the second highest of all surveyed plans. The most expensive modem and connection fee is charged by Alice, (the retail brand of Telecom Italia); however this includes modem rental and free Alice TV with access to more than 200 channels as part of the package.
• Only three of the seventy two plans analysed offer advertised speed of 256kbps or below; two out of the three are from Telstra.
• Over 90% of plans analysed offered advertised download speeds of greater than 1Mbps; 78% of Telstra's plans offer advertised download speeds of greater than 1Mbps.

In order to compare pricing plans across operators, Spectrum has determined the provider's most economical ("best value") broadband offering based on Total Cost of Broadband for each usage level. Spectrum recognises that at a given usage level users will not select plans that would incur unnecessary excess usage charges. As such, for a given usage level, Spectrum disregard all data capped plans that are less than 75% of the given usage level (uncapped plans are still included). The chart below shows the best value package for a 'Low' (500MB per month) user. On this basis, Telstra is the second most expensive of the eighteen carriers analysed.

Most economical 'Low' usage (500MB per month) package (AUD$ per month, at 1 June 2008)

Media contact:
Melissa Favero
Optus Corporate Affairs
Tel: (02) 8082 5030