Optus chief's warning on bill shock
Large telcos including Telstra, Optus and Vodafone are banking on more and more customers switching to 4G networks to boost their revenues as growth in mobile subscriber numbers dwindles.
The Optus boss believes the key to winning the 4G race is to give data-hungry customers certainty over how much they will pay for their data usage. He said telcos needed to put in place a plan that encouraged or allowed customers to use their smart phones as much as they wanted.
This means telcos' plans, especially when it comes to pricing, need to be predictable and affordable in order to allow customers to download or use data on the super-fast 4G mobile network.
Telstra is leading the 4G rollout. Its network is expected to cover 85 per cent of Australia by the end of this year.
Optus will cover 70 per cent of the metropolitan population by mid-2014. Vodafone launched its service in June.
Mr Russell said the telco industry ran the risk of repeating its mistake in handling the international roaming charges if it did not pre-empt the brewing concerns over 4G data usage.
"International roaming is a fascinating case study for the industry," he said. "There has been high price point, increasing customer concerns on high roaming bills. Industry has not addressed it.
"What is happening now, less and less people roam when they are overseas. I think if we don't address data breakage head-on in 4G, the same will happen in 4G."
Mr Russell, who is trying to revitalise the country's second largest carrier after a period of stagnant growth, predicted the shared data plan, which allows subscribers to use single data pact for multiple devices, was the future for the industry.
"I don't believe in a market where you have a separate subscription for every single device," he said.
"I think that is very un-customer friendly, not consistent with where the market is going to go. I think you as a customer will have a single subscription, which you will use and access from multiple devices and you will share that data plan from multiple points."
Telstra chief customer officer Gordon Ballantyne says the telco will introduce shared data plans in the coming months.
"What you haven't taken advantage of [in] total data allowance in a particular service can be used to set against another service, which you might have overrun," he said.
Frequently Asked Questions about this Article…
Optus CEO Kevin Russell warned the telco industry to tackle the problem of 'bill shock' as more customers adopt 4G. He says if providers don't give customers certainty over data costs, the industry risks repeating past mistakes seen with high international roaming charges.
The article says large telcos such as Telstra, Optus and Vodafone are banking on customers switching to 4G to boost revenues because growth in mobile subscribers is slowing. Investors should note telcos see 4G data uptake as a key revenue driver.
Russell recommends predictable, affordable pricing and plans that give customers certainty over how much they will pay for data. He argues telcos should introduce plans that encourage customers to use their smartphones without fear of unexpectedly large bills.
The article describes shared data plans as a single data pact that subscribers can use across multiple devices. Russell predicted this model is the industry's future, and Telstra's customer chief said shared data plans would be introduced in the coming months.
According to the article, Telstra is leading the 4G rollout and expected to cover about 85% of Australia by the end of the year. Optus planned to cover 70% of the metropolitan population by mid-2014, and Vodafone launched its 4G service in June.
Russell used 'data breakage' to describe the risk that customers will reduce data usage or avoid services because of unexpected or high data bills. If telcos don't address this in the 4G era, he warned customer behaviour could mirror the decline in roaming usage caused by high roaming charges.
The article notes international roaming is a case study where high prices led to increasing customer concerns and reduced roaming. Russell warns telcos must avoid a similar outcome with 4G data pricing, so investors should watch how carriers handle pricing transparency and customer protection.
Monitor 4G network coverage updates (Telstra, Optus, Vodafone), announcements about predictable or shared data plans, and how carriers respond to bill-shock concerns. These developments can influence customer adoption of 4G and, in turn, telco revenue prospects.
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