Opinion: A real test of Telstra's marketing muscle

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Opinion: A real test of Telstra's marketing muscle

Can Telstra sell its customers and win them back again?

OPINION: Telstra has been delivered a golden opportunity to get paid to move customers off its ageing copper infrastructure, whilst still having the opportunity of winning those same customers over to a retail fibre plan before any competitor gets sight of them.

As part of the historic deal signed between Telstra and NBN Co yesterday, NBN Co would pay Telstra an undisclosed amount of money for every customer it transfers to NBN Co's wholesale fibre network - the sum of which Telstra expects to add up to $9 billion.

Government-owned NBN Co - that's you and me as taxpayers - would then pay to connect each of these customers to the National Broadband Network with Telstra bearing no cost.

As customer premises are being connected to fibre, the customer would be given a choice between the various retail service providers connected to the NBN Co wholesale fibre network - or for a limited time, to remain on copper or cable until these services are fully decommissioned (copper) or deactivated (cable).

Telstra, having received a payment from NBN Co for switching this customer over to the Government-owned fibre network, is therefore given the opportunity to pitch its retail services back to the same customer it just handed over - only in a slightly more competitive environment.

Telstra executives have said that the telco would be given access to the NBN "at the same price as anybody else". In other words, it won't receive favourable treatment from NBN Co.

But how much favourable treatment would Telstra need?

Telstra is likely to already have an existing billing relationship with the customer, and may have succeeded prior to the switchover in signing customers up to bundled plans of voice, telephony, mobiles and content/pay television services.

Bundles are complex products to untangle - especially over a 24-month contract. Today Telstra CEO David Thodey told journalists that while Telstra has agreed to support churning across to fibre services from a technical perspective (in terms of numbering, etc), a customer choosing a new retail service provider will be "subject to what [existing] contract [the customer] has in place.

"There's quite a bit to work through [on] this," he said.

All things being equal on price - which the NBN model just about ensures - some customers would find that being able to keep their existing billing relationship, phone numbers, email addresses, subscription television etc will make Telstra an attractive choice.

It will be the true test of Telstra's marketing team - cashed up courtesy of the $9 billion agreement - to ensure that such a message sticks - that the easiest transition to high speed fibre connectivity will be to remain with Telstra.

Telstra's retail competitors will need to invest in new products and services, or offer significant discounts, to compete.

If Telstra wins back a customer it was already paid to release onto NBN Co's fibre, this $11 billion deal is a stroke of genius for CEO David Thodey.

And if Telstra also wins a tender to build NBN Co's fibre network - which Telstra has flagged an interest in - it's a triple win for Telstra shareholders.

What do you think? Has Telstra negotiated a good deal?

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