Australia - Effect of Telstra's campaign on other telcos

Synopsis

Expect telecommunications price wars running up to Christmas.

The next three months will be critical for competition in the Australian telecoms market. We have seen Telstra clearly marking out its position and the early results of their campaign, now known as Project New, are already visible for all to see. For the first time since the Telstra Country Wide era we here at BuddeComm are receiving positive comments from Telstra customers about some of the new products and the competitive prices that Telstra is putting out in the market.

In the end, telecoms access is a mass market product – a vanilla product – and the only survivors will be the largest companies and those who can differentiate themselves through better customer service, better products, etc. However very few of the telcos can actually rightfully claim to belong in that second category.

The industry does not like to be seen in that light, but that is the reality. Especially under pressure will be Optus, Primus, TPG and iiNet.

A key outcome of this price war will be a further significant drop in telecoms revenues. This will apply across the board; fixed and mobile, voice and broadband.

The industry is desperately awaiting new legislation that will allow it to compete on a level playing field with Telstra; however the legislation process has been hijacked by for political purposes a decision about its future will be known by November Another major factor that will decide the future of this industry is the negotiations that are currently taking place between the facilities-based telcos and NBN Co.