Thursday, November 5, 2009

Bungled computerization worsens service

TELSTRA chief David Thodey admitted at the company's annual general meeting today that the telco's multi-billion dollar IT transformation project had stymied its ability to change prices on its products.

The admission came as one angry shareholder lambasted the board for having broadband prices that were way out of whack with the market.

The shareholder said he was no longer a Telstra customer because of the high prices and the company’s policy of allowing excess data charges on some plans to be unlimited, rather than sharply cutting or ‘shaping’ data transmission rates when a customer exceeded their plan’s allowance.

Mr Thodey reiterated a statement made last week at the company's update for investors that broadband price cuts were imminent and said the company’s ability to chop and change price plans had been constrained by its transformation project that began back in 2005 under former CEO Sol Trujillo. “For 12 months we have been unable to put new prices in the market due to the transformation," said Mr Thodey.

The pricing problems have hurt the company’s ability to grow market share. Fixed-line internet sales growth dropped from 20.5 per cent last year to 13.3 per cent this year.

Broadband shoppers don’t have to do much digging to find broadband deals far cheaper than Telstra.

A broadband customer after a fast ADSL2+ link with a data allowance geared to heavy use would pay $99.95 a month under current Telstra pricing for a 25GB per month data allowance, shaped to 64K once the cap was broken. Competitors have been offering far sharper pricing. As an example, ISP TPG advertises an ADSL2+ link with a 90GB allowance for $89.99 a month, shaped to 256K if exceeded.


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