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Telco - the industry of the future?

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Long gone are the days of Maxwell Smart’s shoe phone – as figures show upwards of nine million mobile phones were sold in Australia last year, it’s clear mobiles are no longer restricted to the elite realms of secret agents. And as the market continues to exceed what many would traditionally consider to be saturation point, it shows no signs of fatigue. So is it really a matter of call me any time?

To find out, and for the inside word on what’s next for the booming telco industry, Peter Switzer caught up with Michael Smith, managing director of Optus’s consumer division.

A growing trend

Despite being a veteran on the industry, Smith admits the figures of continued growth still surprise him.

“It’s amazing,” says Smith. “The love affair in the Australian community with mobile phones continues. Well over 100 per cent of the population has a mobile phone so what that means is there’s a few of us out there with two!”

Smith says no matter what their primary use – be they for voice or other data services – growth in the market continues to drive significantly forward. Over the last year, Optus’s overall revenue was up 12 per cent; its mobile revenue up 20 per cent.

He attributes this success to a range of contributing factors.

“People are using mobile phones in new ways,” says Smith, citing data-driven services, internet access and wireless broadband as examples.

He points out that different demographics have different needs, using his 17-year old daughter as a case in point: “She’s in love with SMS,” says Smith, adding that she sends near on 1000 SMS’s every month.

This is not to say the technology is restricted to Gen Y.

“The beauty of mobile devices is that inside the market, there’s different applications that are suitable for different people,” says Smith. There are so many different offerings on the market, it is easy to find one that best suits your needs.

Surely though, with such growth, a saturation point must be in sight? Smith says it’s unlikely.

“I think that’s going to continue,” he says. “Firstly, you’ve got devices offering more and more capability in the market today, so people are finding great new things to do with them.”

New applications and new capabilities continue to drive this growth. As an indication of the popularity of data services, non-SMS revenues have doubled in the last 12 months.

Applications personalise the technology – you can check the weather forecast, get directions, even ask your device where to have dinner.

“In the business world, accessing back end networks and email are two obvious applications that continue to grow,” says Smith.

Adding to all of the above is the rise and rise of wireless broadband.

“I think we’ll continue to see momentum as we look out.”

Add to that the rise and rise of wireless broadband and it seems little wonder that the momentum will continue.

 Market trends

Certain devices of late have dominated the market – and the iPhone is one that’s difficult to ignore. So is it a signal of things to come?

“It has been amazing device,” says Smith. “They brought together great capability in a really sleek design that people fell in love with.”

But Smith argues it’s not a stand-alone leader, pointing to the success of the Blackberry range. “Particularly in the business markets, over the course of the last two to three years, there has been very strong growth.”

Smith believes the war between the two has been an interesting one to watch, especially as other players emerge.

“The battle, I think, is only going to heat up,” says Smith.

While he says companies like Nokia and Motorola have all had their day in the sun, there is no reason they won’t continue to strive to offer the next big thing.

“That’s partly what makes the next 12 months even more exciting,” says Smith. “We’ll see more competition with even greater devices.”

Does this competition also extend to prices?

“It’s an interesting discussion,” says Smith, pointing to the current way the cost of handsets are often absorbed into the cost of a contract.

“The way we bring plans to market let customers enjoy that for no cost up front,” says Smith. “Customers already enjoy a lot of great products at an [low] entry price, but as competition increases over the course of the next 12 months, particularly from some of the emerging Asian markets, we’re hopeful of seeing some keen price positions taken.”

Important information:This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.


Published on: Saturday, March 20, 2010

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