Looking back over the past 20 years in telecommunications, the arrival of Optus in the market was one of the most important events, alongside the arrival of the NBN and the structural separation of Telstra (in which Optus played a key role as well).
It also needs to be said that at the start the arrival of Optus was a bit of a disappointment. It simply concentrated on mobile, basically reselling the Telstra services and just staying 10 per cent below the Telstra – there was no sign of any innovation whatsoever.
Of course, in 1992 mobile was nowhere near as important as it is today. At that time it was an expensive premium service, available only to business people and those who could afford it.
Optus seemed content to work, in a less than energetic fashion, with the 20 per cent market share in the fixed telephone market that had been handed to it on a golden platter through a national ballot; and it has remained on that level ever since. This lacklustre interest in the fixed market also led to Optus being one of the last telcos to enter the internet market, a mistake that still haunts the company, as it has never been able to bridge the market share gap that this created.
But the company did not lack vision. On the contrary. It wanted to build Australia’s superhighway, using its HFC network – initially to deliver alternative voice services, but also with future (broadband) services in mind. However the voice service became a debacle that took several years to resolve and diverted attention away from the important broadband opportunities.
On top of that, Australia’s regulatory system allowed Telstra to overbuild the new infrastructure that Optus was deploying, demonstrating how flawed the government policies were in those days, and how weak the 1996 self-regulatory system was. It took a full decade and a new government to change that, along with significant industry leadership from Optus.
The money lost in that waste of capital did hurt Optus significantly.
However, it was in that same decade that Optus became the marketing and innovation leader in the mobile market. One could argue that Vodafone held that position for some time during that period, but the decade was dominated by Optus. It is only since 2011 that Telstra has obtained a number one position in the market.
The contributions that Optus has made to the Australian industry have been enormous; and they have gone well beyond its own business. It remains the key competitor to Telstra, putting enormous effort into all the legal and regulatory changes over the last 20 years, without which Australia would not have the marketplace that it has today.
The entire industry has profited greatly from Optus’s enthusiastic commitment, and from the resources it has contributed to achieve the market reforms that are now almost in place. And even in the final stage of this journey the company is still relentlessly leading the charge to ensure that these changes are implemented in the correct way, to secure a truly competitive environment.
The corporate and government market has also profited from Optus, since it supplied the only real alternative in this market. This has kept Telstra honest and often hurt the incumbent in its most lucrative sector.
Now, looking towards the future …….
As mentioned, the fixed market is not Optus’s strong suit and it still does not have a good NBN strategy in place (others, such as Telstra, iiNet and TPG, are moving much faster here).
ARPUs are declining (or at least not growing) in the mobile market and the market power is shifting from the telcos to companies such as Apple and Google (Android). Optus has not yet come up with a convincing strategy to address this and as a result it is being forced more and more into the position of mobile infrastructure provider.
It will be able to maintain its number two position in the market, but most of the new ‘telco’ revenues will increasingly be generated by those outside the traditional telco market – and so, a number two player in a declining market.
So far I have not seen any strong future vision or strategy from Optus – Telstra has a much clearer strategy going forward. This does not necessarily mean that Telstra will therefore be a winner, but at least it is embracing the new environment in a more strategic fashion.
There will never be a dull moment in this increasingly complex and competitive market, and Optus will need to maintain its strong levels of marketing and innovation if it is to compete.
Nevertheless both the industry and the telecommunications users of Australia owe a big thank you to Optus for its commitment and energy over the last 20 years.
Paul Budde is the managing director of BuddeComm, an independent telecommunications research and consultancy company, which includes 45 national and international researchers in 15 countries.