Telstra drops broadband prices, but is it enough?!

Alex Zaharov-Reutt
Thursday, 26 November 2009 08:34

Opinion and Analysis

UPDATED: Telstra, Australia’s dominant telecommunications company, and admitted serial overcharger, has finally delivered some of the price cuts its CEO, David Thodey, recently promised, and while any price cut is always welcome, has Telstra really done enough?

UPDATED: Telstra has finally delivered new cable and ADSL broadband plans and bundles, some of which include Foxtel IQ (sic) boxes, and is delivering “savings and value”, as Telstra puts it.

I go through Telstra’s latest announcement in more details shortly, which include the introduction of 100GB and 200GB plans, but it’s very interesting to see that this announcement comes just two days after the launch of Telstra and Netcomm’s brand new “BigPond Elite Network Gateway”, which, as described, “turns a single Next G  network wireless broadband service into [an 802.11n] Wi-Fi and [4-port] Ethernet hotspot providing internet connectivity to users throughout the home”.

It also provides that same wired and wireless Internet connectivity anywhere it’s connected to a power socket and in range of Telstra’s Next G phone towers. In major metropolitan areas, consumers and businesses can expect wireless broadband speeds from 550kbps and “up to 8Mbps”, and upload speeds around 1Mbps+.

Telstra clearly wanted to get news of its Next G home gateway strategy out the door first, before unleashing new ADSL and cable plans.

Consumers and businesses wanting effortlessly shareable wireless mobility at Next G speeds, and are happy to pay for it, and those who don’t have access to Telstra ADSL, cable or the services of another ISP, but are in range of Next G, now have a fast wireless alternative that, while still expensive compared to competitive 3.5G telco pricing, delivers consistently faster speeds and quality voice and data performance.

Speed tests of the Elite Network Gateway using Speedtest.net at the launch event showed download speeds from 7.5Mbps to 10.4Mbps, although as everyone knows a speedtest result does not a consistently fast experience make, as service depends on many different factors beyond the size of your bandwidth.

Regional areas not yet upgraded to Telstra’s HSPA+ Next G upgrade will see users experiencing speeds from 550Kbps and “up to” 3Mbps as is the case with Next G USB and PC/XpressCard with modems in those areas today.

There’s still no word on when Telstra will launch a battery powered Next G modem that then broadcasts Wi-Fi, as is available in the UK, nor when it will provide the option of an ADSL or cable wireless broadband router with a USB slot for a Next G failover service, but presumably Telstra will get there eventually as it has with its admittedly needed price cuts.

Telstra’s CEO David Thodey told an investor briefing very recently on pricing that: “In some parts of the market we've gone too far out of line and we need to come back. We must focus on our core business and our customers, this is where we create value for shareholders. At its simplest, the next stage in Telstra's long-term strategy is to focus on satisfying customers, invest in new capabilities, and drive growth in new businesses."

Well, the money to “invest in new capabilities and to drive growth in new businesses” has to come from somewhere, and that somewhere is largely from customers, or you and me, among other investment income that large corporations can generate.

Telstra does make billions of dollars each year, like the banks, so it’s not struggling by any means.

That said, the Federal Government threat to break it in two has brought even more uncertainty into the equation than there was before Kevin Rudd put away his 12Mbps broadband plan and said “that’s not a knife – er… broadband plan. THIS is a kni – er… broadband plan!!” and whipped out his massive 100Mbps National Broadband Network nation -building, economic-stimulus delivering, and working family-friendly plan and started waving it around.

So, looking at Thodey’s quote that “In some parts of the market we've gone too far out of line and we need to come back”, let’s analyse part of Telstra's press release.

First up we’re told that the “new consumer broadband plans that will offer many customers faster speed plans and higher data allowances for the same price with excess usage charges removed on most plans.”

Most plans. Why not all plans? You’re slowing someone down to an essentially unusable 64Kbps anyway, and dial-up plans became unlimited because there’s only so much you can truly download at “56Kbps” and it’s pretty much the same tortuously slow download story with 64kbps.

Continued on page 2 - Telstra upgrades to 2GB and 12GB plans at the minimum and increases speeds to 1.5Mbps minimum - but the low prices come with a catch...