Telstra has cut the cost to millions of mobile phone customers who exceed their monthly download allowances, offering cheaper blocks of extra data to prevent bill shock and stop rivals Singtel-Optus and Vodafone Hutchison Australia from having an advantage.
Telstra users previously paid either $15 for a 1GB data pack or 3¢ per megabyte ($30 a gigabyte) when they exceeded their monthly allowances. But the telco giant has followed its Singtel-Optus and Vodafone Hutchison Australia in charging mobile customers $10 per extra gigabyte when they go over their limit.
It will be optionally available to 6.5 million Telstra customers who have mobile handset plans on contracts with the telco .
The move to launch the "extra data" system from May 12 came days after Telstra moved to more than double the download allowances on some mobile plans in an effort to fight off rising competition from Optus and Vodafone Australia.
Telstra retail group executive Gordon Ballantyne said his version of the service was better because it would apply to all contracted mobile customers and not just users who were new or recontracting .
'PEACE OF MIND'
"Typically, 10 percent of our base at some point in time will overrun their allowance," he said. "We want to give peace of mind to customers who use data... So I actually think this stimulates the market."
Optus has publicly said about 32 per cent of customers on plans that can get extra data for $10 per gigabyte, typically do so each month.
The service could hurt the telco's revenue because there will be fewer customers paying excess data charges. Analysts have warned Telstra's launch of new mobile initiatives could hurt profits as it fights to maintain its market dominance against resurgent competitors.
But Mr Ballantyne said he expected Telstra's increase to be smaller thanks to its recent push to boost data allowances.
"I don't see this materially impacting revenue because I think it'll encourage customers and we'll see an expansion in the market of those revenue pools," he said. "If we act on what [customers] want, then revenue will follow.
"We just see exponential demand for video and those other services."
VITAL REVENUE SOURCE
Telstra's mobile division is a vital source of cash for the company. In the six months ending December 31, 2014, it generated $5.3 billion in revenue. It has been a strong source of customer growth at a time when users are switching away from lucrative fixed-line phone services.
Telstra also remains the dominant mobile player with 16.4 million subscribers on its network compared with the 9.39 million at Optus and 5.3 million at Vodafone Hutchison Australia.
But it is coming under increasing threat from rivals who have improved their networks and services to steal customers. Vodafone Australia told Fairfax Media it was aiming to get the least number of complaints per customer lodged with the Telecommunications Industry Ombudsman by the end of 2015 in what would be a major turnaround for the company.
Optus and Vodafone Australia have ramped up network investments and offered much larger download allowances in an effort to attract customers ahead of the highly anticipated launch of Samsung's Galaxy S6 device from April 10.
Mr Ballantyne said Telstra was "paying attention" to its competitors and was responding accordingly.
"Given we've grown our share consistently over the last five years I think we'll continue to pay attention to the competition and grow share," he said.
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