news The nation’s largest telco Telstra last week gave the first indication that it may shortly be about to release details of its commercial pricing for access to services over the fledgling National Broadband Network infrastructure, as debate continues to swirl around what exact price Australians will pay for access to the infrastructure.
So far, only a couple of broadband providers — namely, Internode and Exetel — have fully disclosed their early NBN pricing, although customers are increasingly being signed up for commercial NBN services in early stage rollout zones in locations such as Tasmania, Melbourne and rural NSW and Queensland. Others such as iiNet are planning to release their first NBN pricing plans shortly, and Dodo has also given some indication of how much its cheapest plans might cost.
Although many of the released plans are comparable in price to current ADSL services at similar speeds, the prices have already been attacked by the Coalition, with Shadow Communications Minister Malcolm Turnbull claiming Internode’s pricing, at the higher end of the market so far, undercut the argument for the NBN.
Asked about the issue during a media briefing last week (PDF), Telstra chief executive David Thodey said the telco couldn’t quite yet release its NBN pricing details — but disclosed more information might be in the pipeline.
“Look, over the next couple of months we’ll probably give some indication of pricing — but we’re not ready to do that yet,” he said.
A journalist pressed Thodey on the issue, highlighting the fact that NBN Co “seems to be counting” on gradually increasing its prices over the next several decades, and asking where that sat with a gradual reduction in prices in Australia’s telecommunications market over the past decade.
ISPs such as Internode have complained bitterly about NBN Co’s wholesale pricing schema, arguing it discriminated against smaller players, but rivals such as iiNet have described the costs of connecting customers to the NBN as being similar to that of existing ADSL broadband services.
“Well look you’d really have to ask the NBN Co about their pricing strategy,” Thodey responded. The Telstra CEO noted there was some provision in Telstra’s NBN deal that would take into account price changes along with Australia’s Consumer Price Index.
“But that’s really a question for them and it’s very hard for me to comment,” he said. “There are some areas in telco where prices are coming down, but we’ve put access prices up. So it just depends on the nature of the offer and that’s probably true around the world. It just depends on what service you’re really referring to. So sorry I can’t be much more specific than that.”
Historically, Telstra’s pricing, both on mobile and fixed services, has been broadly more expensive than that of its rivals, but the company has over the past year gradually offered customers more value on many of its services — such as extra data quota for the same price. Like rival Optus, it is currently focusing on so-called ‘bundled’ offerings which see a number of services collected together at unified pricing tiers.
When Thodey says Telstra may give some indication of NBN pricing in the next few months, I don’t personally believe this means the company will actually release pricing plans in a flat-file spreadsheet the way that other companies like Internode and Exetel has.
For starters, when major rivals such as iiNet, Optus and TPG have yet to reveal any NBN pricing, and very few customers have been connected yet to the network, it makes sense for a company as large as Telstra to play it safe and see what else the market comes up with before starting to make its own marketing push to get customers onto the NBN.
Secondly, there remains the fact that Telstra is likely to be quite a ways behind other companies in its technical capacity to connect customers to the NBN anyway. Sure, it was part of the first NBN trial in Tasmania and likely has a few handfuls of customers on the NBN right now. But building out a system to buy wholesale access from the NBN will likely take Telstra a while — its internal platforms are complex and I don’t think they’ll be up to speed with the NBN on-ramp for some time.
And of course there is no way that Thodey wants to get involved in any way in the political shitstorm of debate which Shadow Communications Minister Malcolm Turnbull has created around pricing. Better to keep out of that until it calms down.
Instead, what I am betting Thodey means by these comments, is that Telstra will take the chance to ‘position’ itself regarding NBN pricing at an upcoming briefing — likely its annual investor day held towards the end of each year.
It is likely Telstra will take this chance to highlight — without too many details — some of its NBN pricing modelling. This will likely be a bit of a ‘poke’ at the market and will see the telco position itself as being a bit cheaper than most people would expect. Of course, once you add on a bunch of services in a bundle, however, the telco will likely end up looking quite a bit more expensive.
If the telco did take this approach, it would be a classic Telstra value-add play. Test the market, get you in the door, and then get you paying more. Boom :)
Image credit: Telstra