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Brutal Phone War Breaking Out

A brutal data and mobile phone war is set to break out in Australia and Telstra is desperatly looking for a major slice of the action.

After years of stinging consumers for data, the big telco is now talking of free data at the same time that TPG is set to launch a cheap data pack in an effort to be taken seriously in the telco market.

Yesterday Telstra boss Andy Penn tried to declare war on Optus, Vodafone and TPG Telecom he said that mobile plans will be cut from 1,800 to just 20.

His three-pronged strategy to increase the company’s dominance of the mobile market is at this stage is just words, but he is banking on 5G to give Telstra a competitive edge over Optus who are facing their own brand and network problems with the failure of the Singapore owned telco to deliver streaming of 2018 World Cup games.

ChannelNews understands that apart from the early registration problems the core problem for Optus engineers, related to software and the inability of the software that Optus were using to talk to the Akami video streaming servers.

Telstra’s mobile business currently earns about $4 billion a year on revenue of $10 billion. It accounts for about 40 per cent of total earnings before interest, tax, depreciation and amortisation and if that gets eroded by competition some say that the mobile business could be worthless going forward.

Telco startup TPG is gunning for Telstra with some claiming that the real strategy behind TPG’s moves is to be aquired.

When TPG entered the mobile market it set a new world record for the price paid for spectrum.

Tony Boyd writing in the AFR claims that Telstra is suffering from the impact of increased competition including lower average revenue per user and lower profit margins. The situation is about to get worse with the arrival in October of TPG, which will make Australia one of the few markets in the world with four mobile operators.

Telstra is not allowed by law to call its plans unlimited so it has opted to call them “peace of mind data” packages. Call it what you like there is now a new benchmark for data consumption that will put immense pressure on competitors to maintain high levels of capital expenditure.

The move to unlimited data on mobiles in Australia is significant because, as the Optus debacle over the 2018 FIFA World Cup has shown, consumers are increasingly reliant on mobile networks for content consumption.

Don’t be surprised if Telstra turns the 5G spectrum auction into the most competitive ever. When TPG entered the mobile market it set a new world record for the price paid for spectrum.

Penn’s decision to adopt an aggressive roll out strategy for 5G plays into the established trend of greater use of mobile networks relative to fixed line, much of which is driven by the widespread frustration caused by the poor performance of the NBN Co.

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