TECHNOLOGY SPECTATOR: Can Telstra salvage the T-Hub?

Telstra's T-Hub gives landline owners all the applications of a smartphone. But after the failure of the flawed first edition, will T-Hub 2 win back mum and dad customers?

Technology Spectator

Telstra has started selling the T-Hub 2 in what is the latest move in the telco’s long running attempt to put the brakes on falling landline phone revenue.

This revenue, once the bread and butter for the company, has entered a period of steady decline as customers start hanging up on home phones. However, Telstra reckons there is still some life left in the business with the latest iteration of its "smartphone for the home" which combines a cordless handset and a 7" tablet powered by Google Android.

While the original T-Hub failed to win praise from either the critics or the customers, Telstra has at least put some thought into ensuring that the T-Hub 2 does display some improvements. But does it have what it takes to win over users?

The T-Hub 2 is a DECT phone handset paired with a 7” tablet device that’s powered by Android 2.3 operating system. The tablet docks into a charging cradle which also has stereo speakers. I used the tablet for a short while yesterday during a Telstra briefing, finding the touchscreen responsive and general use speedy thanks to the dual-core 1GHz processor.

Ditching its own proprietary operating system in favour of Android does have its advantages, especially as it unlocks a far richer app ecosystem for users. The device comes with a number of pre-installed apps including Facebook, Yellow and White Pages, T-Share, and TelstraOne. However, the real lure for users will be the ability to tap into Google Play.

So T-Hub 2’s specs are certainly a better proposition than its predecessor, but there is precious little here to indicate that the device will stem the bleeding as far as Telstra’s landline revenue is concerned.

Landline blues

According the industry regulator ACMA, "the peak number of fixed-line telephone services” in the Australian market was 11.7 million in mid-2004. During 2010-2011 the "number of fixed-line telephone services … continued to decline to 10.54 million” and by mid-2011 an estimated 2.7 million Australians were without a home fixed-line telephone service, up 17.4 per cent year on year.

Since late 2004 a decline in PSTN revenues (the technical name for fixed/landline phones) has almost become a standard expected part of Telstra’s half/full year market guidance statements, such as the latest one this February which stated "fixed line (PSTN) voice revenues declined by 9 per cent ”.

This reduction in PSTN revenue is by no means unique to Australia, it is an issue that has affected telcos around the world, especially market-dominating former government monopolies like Telstra.

In terms of mobile strategy Telstra has actually reacted quite well, making significant early investments initially in its 3G/NextG and now 4G/LTE mobile services, which resulted in it being the clear mobile telco frontrunner in Australia.

However, while the telco is kicking goals on the mobile front, the original T-Hub experience left much to be desired and Telstra may yet have to pay a price for that.

An unhappy exodus

The history of the T-Hub as a proposed solution to stop the landline exodus reveals a very unhappy story.

Prior to the launch of the original T-Hub in mid-2010, telecommunications analyst Paul Budde correctly predicted that very "few [would] actually go on to buy the device and install it in their home”.

While a Telstra spokesperson told us that the first generation T-Hub was a "success” with "over 300,000 sold”, the reality is that many Telstra customers were given one when they signed up for a bundle, whether they wanted one or not.

Those who purchased the device or received one as part of a bundle were often very unhappy with the T-Hub. As an example it received an average rating of 1.4/5 on productreview.com.au, with 49 out of 60 commenters saying it was "terrible”.

Telstra often emphasises how much user testing they do before a new product or smartphone software update gets released to customers so just how the first gen T-Hub’s combination of unreliable hardware and flaky software managed to pass the requisite tests remains a mystery.

Furthermore, once the devices started being used in homes and it became clear just how bad the user experience was, the honourable approach would have been a "stop loss” strategy, withdrawing the device from sale immediately.

To now offer existing T-Hub owners a new T-Hub 2 at half the outright price of $360 takes real chutzpah. On top of that, these users will have to pay the remaining payments on the original model, which by Telstra’s own admission needed a significant revamp.

Telstra’s decision to sell the first generation T-Hub to their core customer base of "mums and dads” was a breach of the trust placed in them as a company that could be relied upon to provide family friendly technology solutions.

There is little doubt that this decision resulted in significant loss of goodwill towards Telstra by those unfortunate enough to own a T-Hub. While the T-Hub 2 looks like a decent product that could prove value for money sitting on kitchen bench tops around the nation, the bad taste left by its predecessor will linger for some time.

For many Telstra customers this could well be a case of once bitten, twice shy.