Optus feels price squeeze on fixed broadband

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Optus feels price squeeze on fixed broadband

Eyes digital media booster.

Optus has attributed a six percent hit to its fixed-line consumer business revenues during the second quarter of the 2012 financial year to a price squeeze in the market and declining average revenues.

Despite growing its fixed-line user base by four percent to 972,000 subscribers across cable and ADSL, the unit was the only one to post a revenue loss during the quarter.

The division's $321 million revenue came as a fraction of the total $2.34 billion revenues it garnered over the quarter.

The telco said the loss came as a result of winding down its fixed resale business but that it experienced lower average revenues in its direct sale business as well, as a result of increased competition in the ADSL market.

Average revenues per user for on-net voice and broadband products dropped a dollar to $51 and $48, respectively.

But consumer managing director Michael Smith said that the bottom had effectively fallen out of the market on data quotas in broadband plans, which had increased "probably two to three-fold" over the past 18 months months.

"At the same time there's been some erosion in the price of the entry-levels so you see unlimited broadband entry points in the market at $39 today... 18 months ago it was something like $79-89," he said.

Rather than compete directly on price, the company hoped to offer tighter bundling with mobile services and additional digital media products to consumers as a "value-add" over its competitors.

The telco has ramped up its digital media offerings in recent months, launching a version of the FetchTV IPTV set-top box as well as partnering with Qantas' Frequent Flyer program.

It is believed other digital media offerings are in the pipeline, including more heavily marketing the company's SmartSafe consumer cloud storage product to fixed-line subscribers, instead of just to mobile users.

Smith said the National Broadband Network would not significantly improve the potential for greater average revenues for the telcos, echoing consensus from competitors including iiNet.


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However, Optus - which released its first trial pricing for the NBN fibre network on Wednesday - would provide a "share of wallet" opportunity for bundling mobile and digital media services with a fixed-line service

"The greater speed in the NBN world we would think would probably open utility to customers so we expect that customers will find more things to use," he said. "We know that happened with our products as we launched DOCSIS."

Newly appointed consumer fixed-line director Anthony Shiner told iTnews that many of the digital media services would be focused around compatibility with its NBN offerings.

"When you start to merge [digital media] opportunities with the NBN you get a very clear map that today's about getting the infrastructure set in place with the right kind of offers, but as you move into tomorrow a carrier like ourselves is thinking beyond just carriage and the way people are looking to interact," he said.

"I don't think anyone quite understands the magnitude of it yet."

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