Once the NBN is complete the Telco playing field will open for competition and innovation. Anybody can become a Telecommunications Retail Service Provider. The Australian market already has near 35 players in consumer telecommunications services (phone calls, data, messaging) and others selling directly to business. Post roll out, anyone can decide to become an Internet and Telco service provider. All you have to do is follow the steps outlined on the NBN Co website. Will internet and phone services become as common and as competitive as our clothing stores? Which industry will be the first to jump in and become an RSP?
The supermarkets already have a foot in the door, with Woolworth’s Everyday Mobile (currently on the Optus network) and Aldi Mobile (on Telstra). Coles is yet to introduce a competitor to this, they have pursued insurance instead (copying Woolworths once again). It is a fair prediction that Coles will introduce mobile phone and/or internet plans into their range of retail products in the near future. What will be interesting to observe is whether once the NBN is complete, Woolworth and Coles (or Aldi) chose to become a fixed line and mobile retail service providers themselves rather than simple mobile resellers.
Woolworths is in a good position to move into the Telecommunications industry, as they already have data warehouses full of customer data from their Everyday Ready Rewards program. This is particularly true with their newly purchased ability to mine (and sell) customer data using their 50% stake in Quantium. They can use their existing information to customise deals and services to their customers. In addition, according to an AMR report on Australian Company reputation, Woolworths has a significantly higher standing (18th of 60 businesses) than all of the major telecommunications providers (Telstra, Optus, Vodafone), the highest of which is ranked at 45th.
Woolworths have already diversified their products and stores in a similar way once before, with fuel. Leveraging their marketing loyalty program to provide customers with lower fuel costs, as well as better services and products in-store from leveraging their existing supply chain. Woolworths fuel stores have a better chance at meeting customer expectations more consistently than the fuel giants do. They bundle their products together to deliver better value and increased repeat business over time.
There are fees associated with becoming a Telco Retail Service Provider (RSP), including spectrum, infrastructure, backhaul and NBN’s charges and fees. These fees for a RSP to set up on the NBN will cut margins from existing (and new) small RSPs, this means that smaller RSPs require larger customer bases to generate a satisfactory margin. Therefore the smallest player may be pushed into niche markets. Woolworths will need to assess their current customer base and their locations to determine their whether becoming an RSP will be a good investment. They may choose to grow their mobile product line as a reseller for Optus until the concentration of customers connected to the NBN makes it financially viable for them to become an RSP so that they can bundle internet and fixed line services. It is likely that Woolworths will eventually choose improved control and expansion over their product mix and customer base. With the introduction of the NBN there will be a level playing field for all RSPs and Woolworths’ track record for innovation and customer experience positions them well for success in the new landscape.
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