Long a PC, can Telstra become a Mac?

Long a PC, can Telstra become a Mac?

Summary: Last year I opined that, even if Telstra did launch Apple's iPhone 3G, conflicting goals meant it couldn't afford to seriously back the product. This year, Telstra proved me right, and the reason is simple: Australia's biggest telco just wants to be a Mac.


Last year I opined that, even if Telstra did launch Apple's iPhone 3G, it couldn't afford to seriously back the product because it conflicted with Telstra's own content strategy.

A year later, one of the world's most popular smartphones is but a footnote to Telstra's mobile strategy. Telstra doesn't even include the iPhone on its smartphone page, with competitors like the HTC Touch Diamond and Sony Ericsson XPERIA X1 given a high profile; those interested in the iPhone must go to its separate page, which steers them towards a Telstra retail shop where they can presumably be convinced to buy another phone.

Optus, on the other hand, features the iPhone 3G on the main page of its mobile page, right there under the HTC Dream Android-based phone. Vodafone features the iPhone 3G on its main home page. By all appearances, Optus and Vodafone want customers to buy the iPhone but Telstra just tolerates it. If you want to buy an iPhone from Telstra, it can provide one — but if you want a smartphone, Telstra prefers to sell other models.

Telstra doesn't want to sell Apple; it wants to be Apple

The extent to which the iPhone didn't rate with Telstra became clear last year, when iPhone 3G users were singled out as being unable to access Telstra's mobile coverage from the Beijing Olympics. But Telstra's endgame became glaringly obvious at last month's World Mobile Congress, where it confirmed for the world exactly why it has been less than rigorous in its spruiking of the iPhone.

The reason is that Telstra doesn't want to sell Apple; it wants to be Apple.

More than any other carrier, Telstra is positioning its mobiles not as flexible wireless computers that happen to fit into your pocket, but as branded access points to a massive range of Telstra-provided content. Promoting the iPhone 3G puts revenue from that content into Apple's pocket and makes Telstra just a conduit — which is a low-margin role Telstra has no interest in playing.

This puts Telstra — whose status as the 800-pound gorilla of Australian telecoms would seem to make it the mobile world's spiritual equivalent of much-maligned Microsoft — in a somewhat bizarre position where it must discourage customers away from the world's single most popular smartphone, and onto a rival unit that can steer customers (and their wallets) into a parallel universe where Telstra-owned properties like mobile Foxtel, BigPond Movies, BigPond Music, BigPond Sport, and Sensis offer enough value to keep customers away from their rivals.

Just consider the company's launch last week of the Nokia N85, which Telstra has branded as a "mobile entertainment handset". The N85 is only the beginning, however: as revealed at the World Mobile Congress, Telstra has designed its own smartphone interface, creatively named the Telstra Interface, which makes it easier than ever for Telstra customers to get to all the anti-Apple services the company can dream up.

This approach has landed Telstra in the arms of Microsoft, which is working with the telco to deliver its media ownership dreams on the Windows Mobile 6.1 platform and — as best we can tell — by pretending the iPhone doesn't exist. One can imagine Apple might not be particularly responsive to a Telstra-branded media portal on its App Store anyways, but Telstra's deal with Microsoft is nonetheless an interesting pedigree for a company that wants to shed its big-and-bad monopolistic, PC-like image and become, if I may, a Mac.

With its sheer size and diverse mobile and content interests, Telstra is the only Australian company that has more than an ice cube's chance of making this work. Yet even it may struggle: people like the iPhone, after all, and it's going to take more than a wall of marketing denial to steer them to an incompatible, proprietary, locked-in platform just because Telstra says so.

Apple is the master of this approach, having long ago parlayed its excellent iPod lineup into a virtual monopoly over digital music delivery that Telstra and countless others have failed to even chip away at. Consider the apparently lacklustre reception to Nokia's new-to-Australia Comes With Music service, which offers millions of tracks for permanent ownership by some Nokia users but offers absolutely nothing for everybody else.

This is how Apple fundamentally works: build the access devices, control the ecosystem, make them all idiot-proof and massively appealing, and the revenues can't help but flow. The sum of the whole is more valuable than its parts — which is why people still buy iPods even though they lack common features like FM radio and voice recording.

Telstra has zero interest in promoting customers' use of its network to access the Internet at large, whether via iPhone, other mobile or even over your home Internet connection.

If I may put it bluntly, Apple has absolutely zero interest in helping its customers access any music, video or other content they haven't purchased through its stores. It makes concessions to people who want to rip MP3s from CDs, for example, but it is not giving anything away that it doesn't have to; its strategy has always been to let accessory makers satisfy those needs.

Just as MP3 player buyers complain about the iPod's lack of an FM radio, would-be Telstra customers complain about its non-competitive iPhone plans, wireless broadband and fixed-line Internet packages. But they're missing the point: like Apple, Telstra has zero interest in promoting customers' use of its network to access the Internet at large, whether via iPhone, other mobile or even over your home Internet connection.

Sure, it grudgingly provides meagre download limits in a concession to market reality. However, by keeping its bundles low-but-not-riot-inducing-low; focusing on the content value-add it wants to provide; and highlighting the fact that Telstra-hosted content is free and quota-exempt; Telstra is playing the game pretty much exactly the way Apple does.

Will content dogma ever work as strategy? Can Telstra ever be a Mac?

Topics: Android, Telstra, Telcos, Reviews, Microsoft, iPhone, Hardware, Google, Apple, Windows


Australia’s first-world economy relies on first-rate IT and telecommunications innovation. David Braue, an award-winning IT journalist and former Macworld editor, covers its challenges, successes and lessons learned as it uses ICT to assert its leadership in the developing Asia-Pacific region – and strengthen its reputation on the world stage.

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  • They already are!

    I thought Telstra already were like apple. They over charge their customers for hardware and service you can get elsewhere cheaper and better whilst giving new meaning to the phrase “vendor lock-in”. Is that not the definition of Apple?
    For screaming apple fan-bois response, see below....
  • iPhone does not support MMS

    Lets face it the Telstra network is the best in Australia. So many times my wife and friends who are on Vodafone, OPtus & 3G are not able to get reception outside the city area or in weird black spots. Also, I really wanted the iPhone but was extremely dissapointed it did not have MMS... a technology that has been available in other phones for years.. what the?
  • re: MMS

    If I read one more comment/complaint about the iPhone not supporting MMS I'm going to scream.

    Two words: Push Email.

    Blackberry have been doing it for years, and Apple offer it on their iPhone under the 'MobileMe' banner.

    Picture this. You buy an iPhone, take a picture, which looks great on it's display. You then decide to MMS it to your mate, also an iPhone user. You hit send...it reduces the size/quality until it's under 100k and shoots it off as an MMS. Your friend then gets the pleasure of looking at a 100k picture on their shiny iPhone screen...great.

    I don't know about you, but I (BB user) would much rather, and do, take a picture, email it in FULL RESOLUTION and QUALITY, and have the receiving phone receive it as push email and display it in its original form. Not to mention that the email is covered under my data allowance, and not charged at a ridiculous 50c per MMS!

    Anon, you're absolutely right, MMS HAS been available in other phones for years...years too long!
  • re MMS

    Have to agree, Push email works for me too. But Apple has listened, apparently, judging by the new SDK
  • Telstra?

    How are they even relevant anymore?
    They're a minority service provider. Once the majority of their customers start to realise this, they're gone.
  • Typical of the type of marketing used by Telstra

    It doesn't have MMS! This is one of the tactics Telstra sales staff tried to use to convince my wife she didn't want the iPhone. She had to insist on it before she got it.

    I can't remember the last time I actually received an MMS. Maybe 1 a year. As someone above said, the quality on MMS is so poor I don't know why anyone would want to use it either? The only reason I could think of is to send something to those with old technology, but thats like trying to keep floppy drives in computers just to seek compatibility with older computers...at some point you have to move forward and leave the past behind.

    Even with the current iPhone shortfalls, its streets ahead of other phones from a UI and usability perspective. Where Apple excels is giving people an interface you want to work with. You can say the Apple hardware is over priced, but I can tell you, as a recent convert to Apple, that the hardware provided by Apple is better quality. Compare the aluminium Macbook and Pro with any PC laptops and you'll be hard pressed to find something that has the same quality for the same price. Add OSX to that (instead of the miserable piece of crap called Vista) and it is streets ahead. Only a PC fanboi would ignore the failure that Windows has become and claim that the success of Apple is due to fanboi's. The success of Apple with OSX has everything to do with Window's failure.
  • really?

    I didnt realise that Asus made such high quality parts.
    And isnt the biggest selling feature on the mac that it can now run Windows?
    What happened to the PPC architecture S.Jobs swore he would stick to?
  • Olympics content

    I think you'll find that the reason Olympics content wasn't available on the iPhone was because it doesn't support Java which is necessary for video streaming.
  • The iPhone 3G is not a 3G phone

    The fundamental problem is that the iPhone is not a 3G phone - it is a 2G phone that uses 3G data services. This about it's ancestry. It was invented for the American market, a land of 2.5G. The .5G is just the data service add-on to an ordinary 2G phone service.

    3G is not just about fast data, but allows video calls and MMS (yes, available on 2.5G as well) to name just a few things. I am not going to enter into the argument as to whether these are actually useful features, but thier absence on the iPhone is understandable given where it came from.

    Apple do some pretty neat stuff on the application and data side, but at its heart, the iPhone is still just a 2G phone. If its competitors pull their finger out and combine something like Apple's application and data tricks with a full 3G phone capability, we could see a possible iPhone killer.
  • LOCKED OUT? - Comments on BB Speed Test

    3MobilePC3132: 56kbps - 1 year into a 2 year contract. Dial up speed all too common. From Max 1.3Mbps HOPE for 1.0Mbps. With 2GBpM allowance gave up after 24 hours attempting to download 450MB. Nearly completed: should have had more FAITH? TOOK JUST 17 minutes TO GIVE UP ON SPEED TEST COMMENTS! Got 104kbps on rerun. WOW - nearly 10%!!
  • A Constant Fight to Keep to Open Standards

    It is true that the closer any technology company gets to a monopoly in its segment, the more lock-in you get.

    IBM loved the days when its mainframes used EBCDIC and competitors used ASCII character-encoding... it made compatibility almost impossible,,, and IBM's proprietary synchronous communications make it harder with all other terminal makers using an open standard - asynchronous (serial ports etc).

    The Open Source push has been necessary to stop M$ from erecting permanent barriers around our IT functions. And the ACCC needs to make EU-style findings about the TPA violation of Apple Australia allowing iPod customers to access only the Apple Store (misuse of market power in one market being used to limit competition in another being proscribed under the Trade Practices Act).

    Ipods are far less friendly to use than iRiver or other MP3 players, as on non-Apple ones, you can simply drag-and-drop music with Windows Explorer onto your media player... but with Apple, you need to register it all within iTunes and ONLY iTunes can put music onto the media player. Now many claim it is all good provided you commit to being '100% Apple' - using only Apple software to organise your music and buying only from the iStore etc. That is so similar to M$' claim that if you go with .NET for development, you don't need to worry that it is not compatible with open web standards, as you will be 100% M$.

    We need to constantly fight such lock-in arrangements. You ought keep your music in MP3 format (not proprietary formats), keep your music organised in directories (not proprietary software), keep your word processing in ODT or PDF open formats (not DOC or DOCX), etc.

    And I think the iPhone will be like the iPod - a watershed product. The iPod was not the first MP3 player, but got market momentum. The iPhone was not the first PDA/phone hybrid, but will get market momentum, and standards-of-a-sort with the App Store. But like every other company, Apple needs to be kept in check by the competition regulators, to not misuse market power in this segment of PDA/phone, to lock-out alternative apps etc. The problem is that the App Store is US-based, and US regulators are quick to cite Japanese steel makers for dumping, but never find major US IT companies to be misusing monopoly power (due to the general understanding in the US that the rule of law is OK but it always is subjugated to any effect on 'US interests'). So the hard bit will be stopping Apple from using the iPhone to extract monopoly rents, in the way the iStore does with iTunes song sales.

    As to the risks of Telstra running a fully-vertically-integrated telco offering only its own song shop, own TV channels and own web-content, I think that is a much lower risk. The market is now global, and Apple are in a position to do it with this new platform (apps that run only on iPhones) but Telstra isn't as it can't tie-up enough of what people want to see. So Telstra can offer Foxtel viewing on its phones, and can make Trading Post free of download, but can't stop users from going to Ebay. Similarly, Telstra can offer a Telstra home page with news, but can't realistically stop people from going to smh.com.au/text for text-only news on any web-enabled phone etc.

    I suspect Telstra will continue to receive good returns from its Foxtel investment, and good synergies in cross-promotions, but never a lock-in. With the NBN, they could have done so, in the way Rupert+Telstra managed with Foxtel. But with the current government, NBN will be a fairer playing field, and Telstra will continue to be able to charge a premium for (exp) country users, but will always have smaller competitors prepared to undercut Telstra pricing to the 85% who live in the larger urban areas (eg naked DSL with VOIP telephony).