Long a PC, can Telstra become a Mac?

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.
Written by David Braue, Contributor

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?

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