It has been a long time coming. For years, the bigger telcos kept prices high and let smaller MVNOs battle over customers in search of plans with rock bottom prices. Confident in the appeal of their brand and the extra services they were able to offer, the three major companies would rarely come up in a search for the best value mobile plan.
With mobile data usage increasing constantly, new player TPG entering the field, and consumers becoming tired of paying more without noticeable benefits, the bubble had to burst at some point. Virgin Mobile’s closure will also create a group of customers looking for a new phone company.
After recent events, it looks very much as if Telstra will be the first major telco to start slashing prices – potentially beginning a price war that will make it hard on the companies’ bottom lines but will be great for customers.
Why Telstra?
With the biggest investments in infrastructure, the largest network and the most customers, Telstra has the most to lose from a battle with the other big telcos. In addition, recent announcements of massive changes and a drop in dividends for investors saw Telstra’s share prices plummet.
Telstra needs to attract new customers and inspire some brand loyalty to win back the confidence of investors. They have expanded into areas beyond their mobile network, including sports broadcasting, 5G technologies and investing in start-ups with their muru-D program. Telstra offer smart home packages, featuring products that are early versions of technology that will become commonplace with the Internet of Things.
However, share prices are still at an extreme low and the latest announcements haven’t created the anticipated upturn. Beginning the price war will see an increase in their customer base and in revenue, which Telstra will hope to see translated into shareholder confidence and increased profit.
What Changes Are Coming
In order to attract new customers, Telstra and the other major telcos have implemented a range of strategies. Here are some plan features that have recently become available, and some that will probably become available in the near future.
- Dropping excess data charges.
Both Vodaphone and Telstra have recently dropped excess data charges for customers. This is great for reducing bill shock for customers who accidentally go over their data allowance, as excess data is charged in manageable chunks. - Streamlining plans.
In their recent announcements, Telstra revealed their strategy to offer fewer plans that offer better value to customers. They currently offer around 1,800 plans, which creates unnecessary confusion. Telstra’s plan to cut that number down to just 20 plans will help customers understand exactly what they are getting, and to choose a plan that’s right for them. - Unlimited data.
Optus, Telstra and Vodafone have all had a go at offering unlimited data plans. TPG will also begin with unlimited data when their plans become available. The system offers a limited amount of data at normal speeds and then unlimited data at a lower speed until the next bill cycle. These plans are still expensive in comparison to plans offering similar amounts of data at normal speeds, but it’s an exciting offer for customers who use a lot of data and don’t mind slower speeds. - 5G rollout.
Telstra and Optus look to be the frontrunners in this particular race, with Telstra showing an apparent lead. However, we have yet to learn what 5G will actually look like for the average consumer, with some tests of current technology showing speeds up to 30x faster than 4G, with others showing just a slight increase in speed. It’s not here yet, but 5G has the potential to be a complete game changer. - TPG join in.
TPG will soon be the fourth company with their own infrastructure. They are known for aggressive price cutting and even at this early stage are showing a disregard for how things have been done in the past, with innovative new ideas. TPG will help force the other telcos to prove to customers why their company is the best option.
The price war won’t be forever, as the arrival of 5G will likely “reset” the market, with customers once again prepared to pay premium prices for premium perks like early access to new technology. For now though, the advantages each telco has to offer looks more and more similar to the offerings of their competitors, which means that price becomes what separates the plans.
Telstra’s hints at new plans designed to attract customers with great inclusions and low prices are great for the consumer. It will be interesting to see exactly what those strategies are. For now, anyone looking to change phone companies would be wise to hold off for at least a little while.
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