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TELSTRA has ramped up its fight for the retail broadband market, jacking up prices for wholesale DSL by almost 100 per cent in some areas.

It has also shut down its Network Design and Construction business, which has supplied services to its rivals, including helping them deploy their own broadband networks. iiNet chief executive Michael Malone said Telstra had indicated it would force the company to use its "rack rates", which were well above the current prices it paid.

Mr Malone said Telstra offered iiNet discounts on a bundle of DSL products and that a move to rack rates would increase the prices it paid Telstra by "about double".

DSL technology uses Telstra's copper wires to provide high-speed internet or broadband services.

Telstra offers the service as a resale, or wholesale, product and the competition watchdog - the Australian Competition and Consumer Commission -- has also forced the company to offer its competitors raw copper wires on which they can install their own DSL products.

Last week, Telecom New Zealand chief executive Theresa Gattung attacked Telstra for its new attitude that wholesale was helping to wreck its business. She said Australia was the only place in the Western world where wholesale prices were going up.

Telstra spokesman Rod Bruem said: "I can't comment on wholesale price negotiations. We remain in earnest negotiations with iiNet and other players.

"The real uncertainty facing Telstra and our wholesale customers is due to the ACCC dragging its heels on setting ULL (unbundled local loop) prices, a process that began three years ago and is still a long way from conclusion.

"Why would any wholesale customer want to lock in a contract price for 12 months or two years, when the ACCC could decide tomorrow to bring out yet another draft price, 40 per cent below the last one. Given its track record, that is not an impossible scenario. We share the concerns of our customers - it impacts on Telstra as well. The blame lies with the ACCC."

The move to shut down NDC is part of plans by Telstra chief executive Sol Trujillo to exit loss-making and low-margin businesses. Further decisions across the company will be unveiled when Mr Trujillo announces the results of his strategic review next week.

A handful of NDC staff would lose their jobs and the rest would be deployed back into Telstra's business, Telstra said.

Telstra will continue to offer NDC-type services to its large corporate and government customers through its Kaz technology services division.

Four senior managers from Telstra's wholesale division have already moved to their parts of the business, including the group's pricing function, which has been joined with Telstra's retail pricing group.

The wholesale moves have come as Telstra launched a fresh assault on the retail broadband market, offering 12 months' half-price access to new users.

The Australian

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