Better wholesale margins for new Telecom DSL plans

Other ISPs more likely to resell plans with a better margin

ISPs other than Xtra are more likely to offer the new Jetstream DSL plans announced last week by Telecom, following indications yesterday that margins won't be squeezed as much as originally thought.

Although Telecom initially said wholesale pricing for the new plans will be almost the same as retail prices, Computerworld understands that the margin will be better than that.

The Commerce Commission issued a determination earlier this year that Telecom must offer a range of retail services at wholesale rates to access seekers. For Jetstream DSL the margin is 16% and for voice lines, 2%.

Reselling Telecom’s retail products requires the ISP to sign the master Wholesale Services Agreement, however. Unlike the Unbundled Bitstream Service DSL, an ISP reselling Telecom’s Jetstream DSL retail plans will have to take over customers’ voice lines plus their toll calls and handle billing and credit management.

TelstraClear earlier announced DSL plans for its Paradise Net and ClearNet customers, based on the WSA resale of retail Telecom products. The top of the range of TelstraClear’s plans has the same download speed, 2Mbit/s, as the new Telecom offering, but higher upload speed at 256kbit/s compared to 192kbit/s. A much lower 1GB monthly data allowance applies for the TelstraClear plan with $18.50 charged per 100MB block of excess data, whereas Telecom offers 10GB and no excess charges with its plan.

Telecom spokesman John Goulter confirms that ISPs would have to resell voice lines and associated items under the WSA. However, Goulter says that non-WSA ISPs can resell the new plans under the Jetstream Partnering Profile, which will now no longer be withdrawn.

Goulter was not able to confirm that the new plans would be available wholesale at 16% margin, saying instead that the profit for ISPs lay in the $10 including GST fee on top of Telecom’s charges.

An email message from Telecommunications Commissioner Douglas Webb forwarded to Computerworld states that ISPs can in fact resell the new DSL plans at a 16% discount.

ISPs that Computerworld contacted refused to speak on record, citing pending negotiations with Telecom over broadband access. However, the ISPs are cautiously optimistic about the prospect of a 16% discount on retail pricing plus earning the same fee as Telecom Xtra does on top, making reselling the new DSL plans about as lucrative as UBS.

Key issues identified by ISPs as anti-competitive include the $10 monthly penalty charge for customers not using Telecom for toll calls, and the much larger fiscal threat of the “TSO Tax” being applied to them for reselling voice lines with DSL.

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