From the moment the phone and internet companies started offering cheap, low-cost phones in 2013, telcos and cable companies have been trying to leverage the advantages of the new technology to push customers away from traditional cable or DSL connections.
“We’re just trying to make our customers more comfortable with their mobile internet,” Telstra chief executive Tony Fernandes said at the time.
The strategy is not new to Telstra, but with a new telco coming into the market, it is raising eyebrows.
The telcos are trying to get customers to switch to more expensive broadband networks in the hope of getting them to pay a higher price.
They are offering discounted mobile plans to customers that have already paid the price of their existing service.
But a recent report by telco consultancy Gartner has revealed that Telstra has done nothing to promote its cheaper plans to boost competition in its market.
Gartner found that Telcos and their competitors have “significant market power to make mobile broadband networks attractive”.
It noted that telcos already had over 70 per cent of the market for internet access in Australia.
Telstra’s current mobile network is a mix of fixed broadband and mobile data.
The report also said that while Telstra is trying to encourage more people to switch from fixed broadband to mobile, it may not be enough.
It said that because mobile data is cheaper, customers are willing to pay more for it because it “reward[s] consumers for moving to the mobile network”.
Gartners report noted that the most recent report from the Australian Competition and Consumer Commission found that mobile data usage was growing faster than fixed broadband.
“Mobile data usage grew by an average of 13 per cent per annum between April and June of 2020, and by 21 per cent over the same period in 2017,” the report said.
“The majority of these growth in mobile data was attributable to the growing use of the internet as a whole.”
GARTNER found that while mobile data use is growing faster, the average monthly data usage for mobile users is still significantly higher than that for fixed broadband users.
While this is great news for Telstra and other telcos, it has not helped competition in the market.
Gretchen Westcott, senior analyst at the Australian Communications and Media Authority, said that despite the industry’s efforts, there is not much competition in Australia for mobile data as a service.
“There is no real competition for that sort of data on a nationwide basis,” she said.
She said that in order for mobile broadband to compete in Australia, telcos would need to make a lot of changes to the way their network works.
“If you look at fixed wireless networks, which is what we call mobile hotspots and they’re the way it’s been deployed in the US, the cost of deploying a network is quite expensive,” she explained.
“That means you’re not getting as many users and it’s also not being deployed as quickly.”
We think that there’s a need for that to change, but unfortunately, in this market, there isn’t much competition.
It’s not necessarily good enough because if you’re going to make that claim, you have to show that it’s better than the competition.””
[The telco] can make a claim of a better network but it doesn’t actually mean much,” she noted.
“It’s not necessarily good enough because if you’re going to make that claim, you have to show that it’s better than the competition.”
Ms Westcott said that it is not uncommon for telcos to try to squeeze a little extra money out of customers.
“They can offer incentives for people to pay extra for a certain number of hours of data, for example,” she added.
“So people can get on a plan that’s going to get them to an extra gigabyte of data or more.”
The telos strategy has not been welcomed by consumer groups and others.
A recent report published by consumer advocacy group Choice pointed to a range of reasons why the telos approach is not working for consumers.
Choice found that people are not happy with how the telcos manage their mobile data, especially when it comes to data caps.
“Many people are reluctant to pay for unlimited data because they think they’ll be charged more,” Choice director of consumer affairs, Sophie Walker, said.”[But] this is not the case.
They are only charging customers for the amount of data they use and that is not an unlimited amount of the data.”
Choice also pointed to the lack of competition in rural areas where the telco’s network is being deployed.
“While it’s important for telos to offer their network in rural communities, it’s not always easy to do so,” Ms Walker said.
Ms Walker said that the lack the competition is creating a lot more confusion about the value of a mobile internet plan.
“People are trying very hard to make sure they know what their actual cost is going to be, so if