Telstra dials up wireless price cuts

In a week in which the Australian Communications and Media Authority revealed a 162 per cent rise in the number of wireless subscribers over the past year, Telstra cut the price of packages by up to a third. It also doubled the data cap for its entry-level plan to 400 megabytes a month.

"[We] will cater for the increase in wireless broadband use by doubling the monthly data allowance on the entry-level plan to 400MB for no additional cost, catering for users who like to surf, download music and email moderately. The new allowance lets customers download up to 40 MP3 music files," Telstra said.

The company also cut the price of its 1GB plan from $59.95 a month to $39.95, and introduced a $49.95 a month 3GB plan. It has also cut the price of its existing 5GB, $89.95 a month plan to $79.95 and tacked on an extra 1GB. Prices are even lower if customers bundle the plans with other services such as landlines.

The price cuts are an acknowledgment of the explosive growth in the use of devices such as the BlackBerry and iPhone.

Goldman Sachs JBWere analyst Christian Guerra described the changes in a note to investors yesterday as "some of the most significant pricing changes from Telstra for some time".

"This is yet another sign that Telstra is: (1) back in the market competing with its IT issues resolved; and (2) embracing this shift to wireless," he said, referring to the well-documented problems with Telstra's huge information technology overhaul.

He said although Telstra's prices were still higher than its competitors, it could justify charging a premium because of its network coverage, speeds and capacity.