BuddeBlog

line rentals up 90% over last 2 years
mobile charges up
ADSL charges up
free easymail gone
mobile dealership margins down.

It was all so typical – and oh so predictable – in a situation where competition was initiated on the wrong regulatory footing.

Telstra not only tried to stifle competition via the legal system – it has also been, and still is, using all its market power to regain its former monopoly. The recipe is very simple: once you have eradicated your competitors, you lift your prices again. Within a few months Telstra is in a position to wipe out the few advantages that competition has brought to Australia. And they will do this with the blessing of the government. If the government allows this appalling situation to continue Telstra will certainly increase its profits towards the $5 billion (isn’t that great for the upcoming T3!).

The latest development is the end of Easymail, which was designed simply to make life difficult for the ISPs who had begun to annoy Telstra by operating competitively in 1998.

This is how Telstra promoted the service at that time:

‘A Christmas Gift to all Australians’

It said the service would …

‘break down the barriers of distance and isolation’
- and -
‘connect many Australians to the world for the cost of a local call. Telstra’s Easymail is a no-frills email service enabling users to send and receive emails for the cost of a local phone call, without paying any start up costs or Internet access fees.’

We estimated that last year some 600,000 people had an Easymail address. The service has been invaluable for people who cannot afford Internet access – especially low-income earners, job-seekers and Australians living in rural and regional areas.

See also:
Global – Analysis – Industry Analysis – Incumbent Carriers;
Global – Analysis – Industry Analysis – Infrastructure Issues.

In 1994, the government awarded Build Operate Transfer (BOT) contracts to two private companies, LibanCell and Cellis, both using GSM technology.

The contracts were to run for 10 years to 2004 with a possible extension of two additional years. At the end of the period, the networks and equipment would revert to the government. The contracts stipulated that LibanCell and Cellis would pay the government 20% of annual revenues in the first eight years of their contracts but this would double in the last two years. Under the contracts, the government was allowed to introduce a third mobile phone operator in 2002.

In mid-2000, the government entered into a bitter conflict with the two operators, claiming that the operators broke Government stipulations on the maximum number of subscribers each was permitted. Government legislation limited the number of subscribers to 250,000, a limit exceeded during 1998. The government demanded LibanCell and Cellis pay fines worth US$1billion for breach of contract and then threatened to seize their assets when the firms refused. The state backed down after the World Bank protested and the two companies took their case for arbitration but continued to negotiate the issue of the fines.

Cellis and LibanCell offered the government US$1.35 billion each to transform their BOT contracts into 20-year operating licences. The government rejected those bids, preferring to pursue the back taxes and fines it claimed the two companies owed.

In June 2001, Lebanon’s Higher Council for Privatisation abruptly cancelled the two operators’ BOT contracts following the long running feud. The termination was to take effect in December 2001, three years before the contracts were due to expire. Both companies have continued to provide services after their contracts were terminated.

The government stated that as part of Lebanon’s drive towards full privatisation of the telecom sector, an open tender would be issued internationally for the licences, with both Cellis and LebanCell invited to bid for their own networks. In October 2001 the government named HSBC Bank as its adviser for the sale of the two GSM licences

In early 2002, the government reached agreements with both LibanCell and Cellis to ‘freeze’ legal proceedings until March 31 and resume talks with the aim of reaching a settlement before the auction of new licenses.

See also: Lebanon.

The Australian arm of Hutchison Whampoa has agreed to buy the mobile network assets of failed telco One.Tel from Lucent Technologies. As part of the agreement, Hutchison 3G Australia will assume lease liabilities associated with the network, which was once valued at more than AU$1 billion. This arrangement will provide Hutchison with about 60% of the sites it will need to roll out 3G services at the end of 2002 in Sydney, Brisbane and Melbourne.

Hutchison has announced plans to spend AU$3 billion in 3G services over the next five years. In October 2001, it sold its 260,000 GSM customers to Optus for AU$43 million, thereby quitting the GSM business.

See company profile Hutchison Telecommunications (Australia) – Company Overview

Online shopping in Japan via I-mode, NTT DoCoMo’s hugely popular wireless Internet service, has become increasingly common, according to a poll receiving 888 responses and conducted in August 2001 by InfoCom Research.

Some 45.3%, of the respondents had engaged in online shopping. Average monthly expenditure rose to 2,600 yen (about US$30), up more than 45% from the previous survey in July 2000.

CDs, videos and DVDs showed the fastest sales growth, rising 16.4% above the last poll. As before, however, the main purchases included digital content (such as ringing melodies) and information available for download via I-mode.

Concurrently, users are increasingly using their mobile phones to buy standard items such as books and software. Given the huge potential of this market, mobile browsers will soon have advanced payment functions to make online shopping even easier.

Australia is in the midst of an SMS mobile messaging phenomenon, with Legion Interactive and Coca Cola South Pacific leading the charge. SMS marketing has been in the media news of late with many dipping their toes, many questioning the privacy implications and many still working out just who, how and when, they can join in with a consumer project of significance on a mass scale.

Summer Days is Coca Cola’s major summer promotion and invites Diet Coke and Coke drinkers to SMS their unique product code found on the inside of the PET bottle in order to win one of hundreds of daily instant win prizes on offer.

Each day for 89 consecutive days, instant win prizes ranging from Jet Ski’s to DVDs to Music to Money-Can’t-Buy prizes are won by consumers.

Every bottle of Coke or Diet Coke over the three month period features its own unique id code. Consumers can either SMS their entry or enter via the Web at www.summerdays.com.au.

See also:

Australia – Mobile Data – SIM and SMS

Australia – Market – Business – Customer Relation Management and Permission Based Models