Service standards poor: Optus boss
Local telco providers often fell well behind technology companies and even Australian banks when it came to looking after customers, Mr Russell said.
Proof of the poor service found in complaints against telcos to the industry ombudsman reached "stratospheric" levels in recent years, he said.
"The standard of service in Australia relative to the standard of service in the UK just seems have gone backwards," Mr Russell told an Australia Israel Chamber of Commerce lunch in Melbourne.
It was important for the industry to lift its game on customer service to head off competitors like Google and Apple and recoup billions of dollars invested in super-fast 4G network and spectrum licences, he said.
"It makes me nervous that two core competitors have brand recognition with customers that is fundamentally higher than our relationship," he said. "That is a strategic risk that makes me nervous."
Optus is Australia's second-biggest telco with more than 9 million accounts linked to its network.
Meanwhile, Mr Russell said he worried about whether telcos were able to get returns on their large investments in spectrum and 4G networks in an environment where revenues were expected to decline steadily.
Australia's big telcos, including Optus, recently paid a combined $2 billion to expand their wireless data and broadband capabilities.
Telstra, Optus and TPG all bid for new licences in the auction of wireless spectrum previously allocated to analog television.
"My simple logic is if you are going to ask people to pay a bit more, your service better be good. Happy customers will pay a bit more and my experience tells me that unhappy customers will not pay a bit more."
Even so, he said telcos were likely to charge more for data in the coming months as they roll out their super-fast 4G network, which allows people to download data faster.
Mr Russell acknowledged banks had a better record in serving customers. "It is not my aspiration in life to be completely outgunned by banks but they have done a good job," he said.
Frequently Asked Questions about this Article…
Kevin Russell said Australian telcos have poor service standards, with complaints to the industry ombudsman reaching “stratospheric” levels. He warned the industry is falling behind tech companies and even banks on customer service, which is a strategic risk for telcos.
Poor customer service can hurt brand loyalty and pricing power, making it harder for telcos to recoup large investments in networks and spectrum. Russell warned that weaker customer relationships versus competitors like Google and Apple could threaten future revenue and returns — a key concern for investors.
Optus is Australia’s second-biggest telco with more than 9 million accounts linked to its network. Its scale means service issues or pricing changes can materially affect revenue, customer churn and the broader competitive dynamics in the Australian telco market.
Australia’s major telcos, including Optus, Telstra and TPG, paid a combined $2 billion in a spectrum auction to expand wireless data and broadband capabilities. These investments aimed to support super-fast 4G networks but increase pressure to generate returns amid expected revenue declines.
Russell said telcos were likely to charge more for data as they roll out super-fast 4G networks. Investors should watch for pricing moves, customer reaction (churn and complaints), and whether higher prices translate into improved margins and returns on recent spectrum and network investments.
According to Kevin Russell, banks have a better record serving customers than telcos, and tech firms like Google and Apple have stronger brand recognition and customer relationships. He highlighted that telcos need to lift their customer service to compete effectively.
By ‘strategic risk’ Russell means that if customers trust and prefer competitors (including big tech firms and banks) more than telcos, telcos could lose market share, pricing power and the ability to earn returns on expensive network and spectrum investments — all of which affect long‑term value for investors.
Investors should treat high complaint levels and weak service standards as red flags that can signal higher churn, reputational damage and pressure on margins. Combining service metrics with capital expenditure (like spectrum costs) and revenue trends gives a clearer picture of a telco’s ability to deliver returns.
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