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All I want for Xmas is Telstra pricing

Five consecutive days without broadband has led me to what seemed at the time to be an act of desperation: contemplating signing up for Telstra's 100Mbps cable modem service.
Written by David Braue, Contributor

This column was submitted using Morse code. Or, it might as well have been, as I struggled through my fifth consecutive day without broadband.

My ADSL connection ranged between non-existent and a pulse-pounding 38Kbps today, after a visit from a Telstra technician who today told me "data isn't my thing" and left me with a service that worked worse than it did yesterday (I am told the issue is some sort of area landline problem to which Telstra is dispatching the Major Cable Upgrade crews).

The net result was to push me to what seemed at the time to be an act of desperation: contemplating signing up for Telstra's 100Mbps cable modem service. Yet even my despair put me off after seeing Telstra's laughable data pricing had not changed, and that there were no details of the new service.

Sweet relief, however, came within hours after Telstra announced it was following through on David Thodey's October commitment to drop broadband prices with a host of new broadband plans. Among the changes: Telstra's ridiculous 200MB minimum plan will be replaced with a more palatable 2GB for the same $29.95, and plans will range up to 200GB for the most enthusiastic torrent-philes.

This welcome but surprising move will be critical as Telstra seeks to regain its momentum in a broadband market where competitors have out-manoeuvred the company with dramatically better-value broadband packages. Cutting prices, raising quotas and ditching its absurd $150-per-gigabyte excess charges will go a long way towards helping the company recapture the interest of customers who, like me, long ago gave up hoping for value-for-money from the telecoms giant.


Can new Telstra consumer business head Glenice Maclellan help David Thodey reverse years of consumer pricing disillusionment? (Credit: Telstra)

That's not to say the coming 100Mbps services — for which pricing has not yet been announced — are likely to be a bargain. As premium home services without any direct competition, we can expect them to sit well into the $100-plus price range, at least until Optus gets around to launching its own rival service when ongoing upgrades are complete.

To be realistic, availability of 100Mbps cable services to a small proportion of the population isn't going to turn around Telstra's fortunes overnight. However, it is symptomatic of a more powerful force reshaping the Telstra we have known for years as a premium service provider with unapologetically high prices and, as I remarked recently, no particular intent to lower them.

That force is perhaps best related to the departure of David Moffatt, the eight-year Telstra veteran who announced his departure in September after being passed over for the position of CEO for the second time.

Moffatt, whose time with Telstra began during Ziggy Switkowski's tenure and outlasted that of Sol Trujillo, was heavily focused on brand building, most notably through the creation of Telstra's successful T-Life retail outlets.

Moffatt oversaw a major change in Telstra's culture, making the word "customer" part of everyday strategy at a company that had been surprisingly removed from those customers in the past. T-Life was a major part of this, improving accessibility and doing wonders for brand-building. Yet in his quest to position Telstra as a higher-value consumer provider than its competitors, Moffatt seems to have bought into Truillo's combative, unapologetic manner and refused to lower prices even marginally, despite rapidly increasing broadband quotas and lowering prices from competitors.

The latest broadband plans are the first major announcement from Moffatt's successor, Glenice Maclellan, who has taken up the reins in Telstra's largest business unit and will clearly be charged with reinvigorating the company's presence in the consumer market. Telstra's funky T-Hub is one possible tool in this fight, but in the short term it is 100Mbps and competitive pricing that will help the company. By dramatically revamping Telstra's broadband plans and promoting bundling discount deals in the lead-up to Christmas, Maclellan may well have finally helped Telstra find a more appealing value proposition.

Or, perhaps, not. Prices for Telstra's 100Mbps HomePremium services weren't online as of the time of writing, but it's unlikely that Telstra will undercut as much as nearly-match its competitors. Furthermore, many of the price cuts Telstra has announced include bundles with home phone service and Foxtel. For example, a bundle combining Foxtel, 25GB broadband plan, phone service and unlimited-calling plans will sit at a not-necessarily-competitive $198 or $218 per month.

The real test, of course, will come when Optus weighs in with its own 100Mbps cable services, forcing Telstra to reassess its value and — as happened after its recent iPhone launch — potentially revisit its pricing so as to not appear completely out of touch.

No matter how it compares, widespread reports that Telstra is cutting its prices could be just the thing it needs to revitalise its broadband fortunes — keeping it relevant and putting new heat on its competitors. For customers struggling with ADSL over a steadily aging copper loop but unwilling to pay Telstra's exorbitant prices, the company's new consumer market positioning might be just the thing — and in time for Christmas, no less.

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