It is clear from today’s pricing announcement by Telstra that the 4G market in Australia needs competition.
Telstra’s pricing is high and many might say it is almost opportunistic, yet the company is taking financial advantage of its leadership position in 4G networks right now and shareholders are loving it.
Today’s mobile broadband pricing shows that the telco truly believes in price premiums. Pre-Paid 4G pricing is not designed to impress teenagers who want to connect on the cheap – they’ll be stuck with Optus, Vodafone and resellers for the time being.
With Telstra now offering 4G through pre-paid we looked at their recharge options and there’s some shocks in there.
The new 4G mini WiFi prepaid modem (pictured) is $169 upfront and these things work really well (we used the old Elite 3G model on the weekend in a regional location and were impressed with the results). With 4G in over 1,000 areas in Australia the results will be even faster. That’s a good start and the beauty of pre-paid is that now with the old 3G pre-paid WiFi modem ($99) I can chuck it out, pass it on and could get a 4G prepaid modem for $169 if I wanted.
Andrew Volard, Director, Telstra Mobile, agrees.
“Telstra Pre-Paid mobile broadband offers a wide range of recharge options and customers enjoy the flexibility of not being locked into a fixed term contract with minimum spend commitments. This makes it a great solution for people who have different data needs each month,” Mr Volard said.
Yet, for a 1GB recharge, Telstra will charge a whopping $40 with 30 day expiry on the data.
Contracts are no better. I’m not an existing Telstra customer so Telstra will charge me $39.95 per month for 12 month contract for a piddly 1GB of data at 4G speeds and I’m stuck in this for 12 months. If they update the modem, I’m stuck with the old one.
However, if I’m already a customer with both my home phone and mobile phone with Telstra I’m only up for $19.95 per month.
Clearly, Telstra is NOT using their stellar 4G mobile broadband as a door in which Telstra can lure new non-Telstra customers. You only get benefits if you’re an existing customer on other Telstra services. This is great for keeping customers, not good for gaining new customers.
In comparison, with double the data (2GB per month) on Vodafone or Optus it is half the price, at $19.95 per month on a month to month plan whether you are an existing customer or not. Double the data and half the price (yet slower speeds for now).
The question is will Optus and Vodafone keep their current pricing on mobile broadband when they release their own 4G networks this year.
And, have Telstra got their positioning right come 4G competition later this year?
For this, we can get help from Marketing guru Jerome McCarthy invented the Four Ps of a marketing mix, these being Product, Place, Promotion and Price (sure, sure alliteration is uncool in academic circles, but it helped me remember these!).
From a marketing perspective, Telstra are nailing three of the four Ps of marketing right now, yet I’m not sure if they can ever nail the fourth P, price. Let’s take a look…
- Product. The quality of the Telstra network including the coverage and speeds via 4G are unbeaten at the moment in Australia.
- Place. Telstra has the largest network of stores and has rebranded them all to the much friendlier T-Life stores with the splashy new colours and the ‘it’s how we connect‘ slogans
- Promotion. Telstra latest multi colour advertisements and ‘connected home’ advertisements all talk about the sizzle of the experience with Telstra and hardly ever mention the price. Ever. That’s exactly what a market leader needs to do in any category. See Apple’s marketing for examples.
- Price. Highest in market, especially in mobile broadband. More than double in some instances as discussed above.
Sure, Telstra will never be the cheap guys. They’ll also probably never try pricing experiments like heavily dropping prices to get more customers as more customers will mean that congestion creeps in and that affects the quality of their product and those paying top dollar don’t want congestion.
Here’s what Andrew Volard, Director, Telstra Mobile says about the product.
“In 4G coverage areas the Telstra Pre-Paid WI-FI 4G provides download speeds that are up to five times faster than other Pre-Paid mobile Wi-Fi devices in Australia. The speed boost means handling large files, loading web sites and sending email is quick and effortless…When outside 4G coverage areas the Mobile Wi-Fi 4G uses HSPA+ Dual Channel technology to serve up Australia’s fastest 3G speeds. Customers can enjoy super-fast 3G download speeds ranging from 1.1Mbps-20Mbps in all capital CBDs and much of the associated metropolitan areas and many regional locations. Outside of these areas the device transitions to Telstra’s fastest available 3G speeds.
The new Pre-Paid mini WiFi modem is $169 upfront and includes 5GB of data and 5 gadgets can connect (a feature which is similar to the devices offered by other carriers).
In terms of speed, Telstra says that customers using the Telstra Pre-Paid Wi-Fi 4G in 4G coverage areas (capital city CBDs and more than 100 regional and metropolitan locations) can enjoy typical download speeds ranging from 2Mbps to 40Mbps and typical upload speeds from 1Mbps to 10Mbps.
Our rating? We’ll give this product is 3 P’s out of 4.
Compare Mobile Broadband plans here at WhistleOut.