Wednesday, 07 November 2018 11:28

Telecoms, energy companies converging a ‘sign of change’ in communications services: analyst Featured

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Telecoms, energy companies converging a ‘sign of change’ in communications services: analyst Image courtesy of Stuart Miles at FreeDigitalPhotos.net

The trend of telecoms and energy companies converging could be a sign for telecoms that communications services are well on their way to becoming a utility, according to one global analyst firm.

Analyst GlobalData made the observation in the wake of the deal by telco Optus and Australian-based gas and electricity retailer Sumo, for a range of telco products which will allow Sumo to offer NBN and broadband services to eligible households and small businesses.

Under the agreement, Sumo will introduce a “whole of house” offering which bundles Internet, telephone, gas and electricity for the home owners or small business operators and, in turn Optus Wholesale will provide Sumo with residential broadband services over NBN, mobile broadband and home wireless broadband.

According to data from GlobalData Research, demand for energy services in Australia is expected to grow at an average rate of 1.6% over 2018 to 2020, faster than that for mobile communications (1.4%) or fixed communications services (1.3%).

The company also noted that, meanwhile, churn in the energy space is incredibly high, with retail energy providers constantly changing pricing schemes to lure new customers.

Malcolm Rogers, Telecom Technology and Software analyst at GlobalData, says: “The shift for telecoms companies into the energy market comes as competition is driving down communications services prices and margins. Several telecoms providers have seen margins on core businesses like fixed-line voice and basic broadband decline as consumers increasingly see communications services as a basic utility like electricity or water.

“Utilities by their nature fetch lower margins as customers see them as easily interchangeable substitutes, fuelling the process of commoditisation. Commoditisation of telecoms services has been a topic of concern in the industry for a while, with many telecoms companies investing in other industries like software or entertainment to try and diversify their revenue.”

GlobalData notes that Optus is competing with Telstra and TPG for market share on Australia’s government-owned national broadband network, and Optus and Telstra are looking into ways to secure as many customers as possible ahead of the merger between TPG and Vodafone Hutchison Australia.

“As part of the deals, Origin Energy and Sumo Power will sell Optus NBN home broadband, voice and Optus mobile fixed broadband in a bundle with residential energy services. Both the companies hope to add postpaid mobile services from Optus to their bundling options in the near future,” GlobalData says.

“The deals seem to benefit the energy companies and Optus, as increasing competition from disruptive players is a challenge for both industries. If all goes well for Optus, making deals with energy providers to resell Optus NBN broadband will help to increase its NBN market share."

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Peter Dinham

Peter Dinham is a co-founder of iTWire and a 35-year veteran journalist and corporate communications consultant. He has worked as a journalist in all forms of media – newspapers/magazines, radio, television, press agency and now, online – including with the Canberra Times, The Examiner (Tasmania), the ABC and AAP-Reuters. As a freelance journalist he also had articles published in Australian and overseas magazines. He worked in the corporate communications/public relations sector, in-house with an airline, and as a senior executive in Australia of the world’s largest communications consultancy, Burson-Marsteller. He also ran his own communications consultancy and was a co-founder in Australia of the global photographic agency, the Image Bank (now Getty Images).

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