The end of the Telstra narrowband portal
At the same time as it was closing down its Telstra.com portal for narrowband content services the company remained adamant about keeping its broadband portal in place. This site hosts some 20 content sites.
Within the broadband portal Telstra is trying to set up a range of ‘exclusive’ services, tying customers to the company by making these services separate from their download allowance.
The underlying strategy is simple: create this exclusive zone, get users to flock to your site and use this to attract more exclusive content. If the formula worked you can start squeezing your content providers and demand a larger share of their revenues, as Telstra has the relationship with the users and in this way a nice new monopoly could be established – which, over time, could of course blossom into the bigger broadband infrastructure and content monopoly picture.
When I first encountered this new scheme I was quite upset, as I perceived the monopolist at work. However, upon reflection, I am thinking: isn’t this the same as Microsoft’s MSN service, Optus’s @home and Austar’s chello service, all of which failed? And won’t this new effort by Telstra suffer the same fate?
The continuing quest to monopolise content
The first time that Telstra tried to monopolise content was in the early 1980s, with their public online service Viatel. Then followed a range of proprietary EDI (electronic trading), multimedia, dotcom and various mobile content services. They all failed. After twenty years isn’t it time that they came up with something else, or are they going to continue to bang their heads against the same old walls? The TV frontier is still on their radar and I have already predicted – when they made their earlier advances in this direction – that this would be another guaranteed business failure.
Killer ap is communication, not content
The killer application on telecommunication networks is communication. At present this is mainly voice, but e-mail is probably generating as much traffic as voice at the moment. On mobile networks SMS is another very popular communication tool and multiparty calls, photo- and video-based communication will follow. Telco’s should move away from content to communication.
Over the last three years we have argued that the communication facility; always on high-speed Internet access, is the key to the success of broadband – not content. Telstra has only recently begun to publicly follow this line. Yet not so long ago I had heated debates with Telstra representatives on these issues. They were adamant that my predictions about high-speed Internet were wrong and that they were correct in their focus on content as the key to broadband success. Now Telstra has indicated that it has abandoned that strategy. I have had similar conversations with Telstra representatives about their push for mobile content on WAP, 3G and m-commerce-based services. I feel justified in making the comment that a lot of time, resources and energy have been wasted in these exercises.
Telstra business model is based on penalising broadband usage
The future will lie in using communication services to maximise the use of broadband systems. But what does Telstra do? It creates the greatest broadband usage disincentive in the world through usage penalties based on volume. The more you use, the higher the penalty!
This doesn’t make any sense to me. How can you construct a business model around penalising your customers? Shouldn’t you be trying to entice them to use more?
The company should change this model and let users utilise the network with their own personalised messaging, data and video communication services. Decrease prices by, say, 10% and you will see a 20% increase in usage. In this way the operators will still be ahead. We know that there is a high level of price elasticity in telecommunications services and lower prices will stimulate usage, which will exceed the corresponding price reduction.
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Australia – Broadband – Research and Marketing