Optus lacks vision and strategy, says Budde


news Telecommunications analyst Paul Budde has published an entry in his blog thanking Optus, Australia’s second largest telco, on its 20th birthday for its contribution to telecommunications in the country over the last two decades, but also cautioning it on its lack of a vision for the future.

Budde considers the arrival of Optus to be one of the three most significant events in the history of Australian telecommunications, along with the separation of Telstra and the arrival of the NBN (National Broadband Network).

Budde recalls that Optus began with a shaky start in 1992, reselling Telstra’s services and focusing on the small, expensive, nascent mobile market, content with a 20 per cent market share in fixed line services that was given to it by a national ballot. “This lacklustre interest in the fixed market also led to Optus being one of the last telcos to enter the Internet market, a mistake that still haunts the company, as it has never been able to bridge the market share gap that this created,” wrote Budde.

Optus’ vision of building an information super highway with its HFC (hybrid fibre coaxial) networks to deliver alternative voice services and future broadband services did not pan out as expected. However, despite the poor regulatory system during the 1990s, Optus demonstrated leadership in bringing significant reforms to the telecommunication industry. It also emerged as an innovation leader in the mobile market during that time

Budde applauds Optus’ enthusiastic commitment and contributions to Australian industry as having gone well beyond its own business. “It remains the key competitor to Telstra, putting enormous effort into all the legal and regulatory changes over the last 20 years, without which Australia would not have the marketplace that it has today,” wrote Budde.

Optus’ forays into the rapidly changing and highly competitive telecom environment have been cautious. In 2011, it launched Google Apps for Business, a new software for small and medium business (SMB) customers, and Optus TV Now, which enables customers to record and watch free-to-air TV shows on their mobile. It also launched an exclusive loyalty program with Qantas Frequent Flyer and a new Internet TV service, ‘Optus Me TV’ in collaboration with fetch TV. In November 2011, Optus launched commercial services on the NBN, and it has plans to introduce a 4G network in 2012.

Looking into the future, Budde opines that the fixed market is not Optus’ strength and the fact that it does not have a good NBN strategy in place compared to Telstra, iiNet and TPG does not bode well. With average revenue per user (ARPUs) declining in the mobile market, there is a shift in power from the traditional telcos to companies like Apple and Google. Budde feels that while the telco industry and Australian users owe a big thank you to Optus for its commitment and energy over the past two decades, unless the company comes up with a better strategy to address the current market shifts, it will be reduced to the position of a mobile infrastructure provider.

“So far I have not seen any strong future vision or strategy from Optus – Telstra has a much clearer strategy going forward,” he said. “This does not necessarily mean that Telstra will therefore be a winner, but at least it is embracing the new environment in a more strategic fashion.

I agree with Budde on most of what he has written here. Australia has a lot to thank Optus for over the past several decades. Back when the company launched, it was the embodiment of competition in a telecommunications market which had no idea what that meant. In fact, there was no “market” at that point — just Telstra.

However, over the past decade Optus has focused so strongly on competition in the mobile market — where it definitely is a strong competitor — that it has completely forgotten about the highly important fixed telecommunications market. Right now, in that market, Optus is definitely not the key competitor; that would be iiNet and TPG.

Most of my friends and family and many Delimiter readers consider Optus completely irrelevant when it comes to fixed-line telecommunications, and the fact that Optus’ HFC cable customers will be migrated onto the NBN will open up a further opportunity for the likes of iiNet and TPG to snaffle up that customer base. Optus needs a strategy to deal with iiNet, particularly, in the fixed telecommunications market. And it needs it as soon as possible.

Image credit: Optus. Opinion/analysis by Renai LeMay


  1. Umm, you guys at Delimiter did hear about the decision yesterday that Optus won its case against the AFL,NRL and Telstra about online sports rights and replays on mobile and online?

    And this is the Optus story you are running today??

  2. Optus tried the Fixed line approach with HFC remember? Telstra ran at a massive loss, destroying the Optus business case.. Optus lost a fortune too, thus no further development in that area. (No surprise) So they concentrated on Mobile instead . Optus doesnt have the capacity to duplicate Telstras last mile monopoly, nor does anyone else for that fact..
    Enter NBN, the only one with the money to take on Telstra..
    I think Optus have done all they can, considering Telstra have the last say on anything – with its monopoly on Last Mile..

  3. Yes Optus has lost its way over the last 7 yrs or so, as previoulsy discussed Renai. Unfortunately lack of vision as Paul B points out, combined with lack of leadership has led to this outcome. Unfortunately POS has surrounded himself with Yes people, although I think this is what he wants, as he has heard the truth from the floor many times, and continues to throw the same people who comment directly to the senior mgt who provide him with green traffic lights, and hide the truth.

    Another key area where Optus will fail in the future is around Customer Focus, as the key element in delivery of this is the people, and the organisation certainly doesn’t value it’s people, as it’s run on fear and retribution if you dare not support managements delivery of green traffic lights.

    However POS’s days are numbered, as evidenced by appointment of a new COO (aka CEO). Unfortunately though many good people are about to be sacrificed in Optus (the final stages of restructure is being completed).

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