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Analsys & Opinion The Right Angle Telstra makes first move against VoIP
Analsys & Opinion The Right Angle Telstra makes first move against VoIP | Telstra makes first move against VoIP |
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| by Stuart Corner | |
| Tuesday, 11 April 2006 | |
  
After Telstra's new bucket plans for fixed line services (offered only to a select group of its customers) were reported on the front page of the Sydney Morning Herald on Saturday 8 April a PR company asked me if I would like to interview one of its VoIP service provider clients about "Telstra's aggressive entry into the VoIP market". Well not quite. Telstra may well be acting aggressively, and its target is certainly Australia's myriad VoIP service providers, gnawing at its revenues. But this is not a VoIP offering from Telstra, it's the PSTN that we know and love. "When will Telstra offer VoIP" is a question that has been asked many times in recent months, but really, it's the wrong question. Telstra already offers VoIP, as hosted IP telephony services (aka IP centrex) for corporate customers. The question really is "when is Telstra going to try and squash all these pesky VoIP services that are bit by bit nibbling away at its PSTN revenues?" For Telstra the problem has always been that any move to try and match the prices of VoIP services will inevitably cannibalise its PSTN revenues. But it's also inevitable that it will have to move eventually, and this week's bucket plans would suggest it is taking its first tentative steps in that direction. But why should it offer VoIP to the consumer market? VoIP requires a new platform: it means integration with existing OSS and billing systems, it has to be provisioned, billed and supported, staff have to be trained, etc, etc. All that means additional capex and opex. While all the time Telstra has a perfectly good and functioning PSTN system that is unlikely to be operating at anywhere near capacity: because some traffic has migrated onto VoIP networks, onto competitors' DSLAM networks, onto the Optus HFC network, and onto mobile networks; and because lots of exchange ports that were being used for dial in Internet access have been freed up by the move to broadband. In short, whatever boost Telstra can achieve in PSTN lines and traffic is almost certainly supportable with almost zero capex and with minimal opex. Of course, the problem with cutting prices for PSTN services as opposed to offering a cut price VoIP service is that the VoIP services is inferior and is perceived to be inferior. So while it would be a very targeted attack on the new VoIP players, it might not cannibalise existing PSTN revenues too much. But offer the standard PSTN service at a reduced price and the impact on revenues will immediate and significant. It's always going to be a tough decision for Telstra: when to act and by how much, hence not doubt these first tentative steps. There is probably little Telstra can do to slow the general downward trend in PSTN prices that is being driven by VoIP, but of equal concern is the erosion of its customer base. Customers are expensive to acquire and Telstra is hoping they will become more valuable as it develops is future range of converged services. Today there are many small VoIP providers: not all will survive and when the failed ones go under the hammer Telstra might well be able to outbid others not only because it has the deepest pockets but because, as the carrier with the greatest range of services offerings it will be able to extract greater value from each customer in a 'converged' world The SMH article described the offer as "a significant shift in Telstra's strategy" saying it was the first time it had offered subscription pricing (fixed fee regardless of call volumes and duration) and it also claimed that "Telstra believes it customers use its fixed line services they are more likely to buy its mobiles and sign up for broadband". So why not encourage this with a bundle that spans all three services" The offer as it stands is really not that spectacular: $90 per month on calls would be more than many people spend. But it will certainly creates plenty more uncertainty in the market. What other carrier could get a new tariff plan that it is offering only to a few thousand customers the lead story in a major daily newspaper" You can't buy advertising like that. In short, don't expect anything too radical from Telstra: it would be too risky and it doesn't need to. When the giant stirs, everybody sits up and takes notice; and everybody gets nervous. {moscomment} |
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