The telco reckons its critics have got it wrong, writes Paul McIntyre.
Telstra has used the Cannes International Advertising Festival this week to
rebut critics of its transformation into a media company, saying the
millions it is pouring into broadband and mobile content is extracting
healthy and rapidly growing new revenues from its customers.
Two years ago BigPond's group managing director, Justin Milne, told the
Herald that media content would generate 15 per cent of BigPond's revenues
by 2010, equating to at least $250 million. At the time services such as
online gambling, movie and music downloads and broadband and mobile
subscription services for BigPond sports coverage was contributing $30
million a year, or 1-2 per cent of BigPond's revenue base.
Mr Milne would not be drawn this week on the growth in BigPond's revenue
derived from media content - he says more details will made public in
Telstra's annual results briefing in August - but he confirmed the group was
on track to meet its 15 per cent target by 2010.
BigPond's content revenue had grown 90-100 per cent in the past year, he
said. Most customers were signing up to the high-value Liberty broadband
plans, which meant they were not charged when they were over their limit.
"Three years ago the majority of our customers joined up to $29.95 low usage
plans. The market is changing quite quickly."
Mr Milne said that in April a third of Telstra's 4 million 3G and NextG
subscribers were browsing content on their mobiles, up 58 per cent since
last September. And those 3G mobile customers who accessed content were
spending 45 per cent more each month than with basic 2G phone services.
Mr Milne said that on BigPond's broadband network the number of subscribers
accessing content was in the "low double digits".
"Our content strategy really is working. What we find is that if customers
use our media content we make money from them because we're selling them
music tracks and movies and games. They are then immediately more valuable
as ISP customers because they are paying us for the [data] access. And those
customers using our content are also churning 27 per cent less."
Industry estimates last year had BigPond delivering 100,000 music downloads
and 20,000 movies a month, a figure Mr Milne would not confirm or deny,
although he said music downloads had increased by 30 per cent in the past
nine months among broadband customers and were up 90 per cent among
Online advertising is also growing because of the mass numbers BigPond's
online network is attracting - in April the number of unique browsers topped
8 million, Mr Milne said.