Mobile operators move to lock in subscribers: analyst

Australian mobile phone operators have decided that their existing subscriber base represents a more reliable revenue stream than trying to add new subscribers, and are altering their business models to reflect that, according to independent telecommunication analyst Paul Budde.

But Telstra's latest scheme to charge subscribers $150 for moving to a different operator may breach the Mobile Number Portability Policy brought in last year by regulator Australian Communications Authority (ACA) and monitored by the Australian Competition and Consumer Commission (ACCC), Budde said.

"The associated penalty fees nullify the positive elements of the (new Telstra pricing) package," Budde said in an analysis of the Australian mobile market. "Last year I asked for intervention by the ACCC and this time they have done so. They are investigating whether the penalty fee contravenes the Mobile Number Portability Policy."

"Unfortunately, because of the lack of meaningful competition, Telstra seems to be able to get away with this negative approach -- preventing customers from obtaining the best deal in the market by locking them into contracts and punishing them if they want to leave you."

The Australian mobile market is becoming a duopoly of Telstra and Singapore Telecommunications Ltd. (SingTel) unit Optus, and that is a disservice to customers, according to Budde.

"SMS (short message service) and flagfall (connection) charges in Australia are now amongst the highest in the world and both companies have succeeded in making their charging plans more complicated than ever," he said. "We have calculated that this confusion adds between 10 percent and 15 percent, approximately, to their revenues, since it is impossible for users to select the optimum price plan."

Budde said it was unlikely that these new efforts will bring the hoped-for revenue and profit to Telstra.

"Real profits will return to the market only after new business models are implemented -- models based on customer choice and customer service," he said.

Australia, which has 65 percent penetration in its mobile phone market, needs better wholesale services where smaller mobile retail companies can build specific products and services for niche markets. Currently the networks are not open to innovative retailers for the development of such products, Budde said.

"It is unlikely that customers will be persuaded to increase their mobile usage by dint of bullying and price increases both open and covert," he said. "Add to this the absence of sound strategies aimed at bringing in new customers and it is clear that the industry is in for an ongoing period of low revenue growth."

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