How Australia’s incumbent telco, Telstra, deals with the industry’s commoditisation is the topic of my interview in Diginomica with the company’s Hong Kong based director of Global Platforms, Jim Fagan.
The need to diversify is pressing upon Telstra with the company’s income down 3.6% in its last financial report with mobile sales, by far their biggest revenue earner, down eight percent.
Across the developed world, telcos are seeing their markets slowing with global smartphones sales largely static, formerly big profit generators like SMS declining and broadband data rates collapsing.
In the US both formerly untouchable telcos are struggling which has seen them attempting to diversify with AT&T buying Time-Warner for $85 billion and Verizon buying Yahoo! despite its problems that saw a $250 million discount after the service’s hacking scandal.
With the pressures on the telco industry, it’s not surprising they are looking at alternative income streams and Telstra’s strategy seems to play more to their traditional strengths than a media play, which Telstra has tried previously and failed.
It could be though that Telstra, like all telcos, could be destined to become a utility service. While that might disappoint executives and shareholders who dream of glamour, excitement and high profits, that might not be a bad thing.