Internet Access in Australia - Case Study Example

INTERNET ACCESS IN AUSTRALIA Internet Access in Australia Customer Name: Lecturer Name: Date: Outline Table of Contents Introduction 1 Industry Overview 1 Markets 1 Competitors 2 Customers 2 Stakeholders 3 Environmental Analysis 3 Internal factors 3 External Factors 4 Marketing Strategy analysis 5 Products 6 Prices 8 Place 10 Physical presence 12 People 12 Process 13 Conclusion 13 Recommendations 14 References 16 Introduction The internet has evolved a lot in the last two decades, such that it is becoming an integral component and a requisite for every organization. Internet access in Australia was first availed to universities in 1989 via AARNet, which was the foundation of commercial dial-up ISPs (Internet Service Providers). Internet access in Australia has undergone various changes and developments, that at present, various facets of internet access in Australia have changed, ranging from the technologies implemented to the internet service providers. Australian internet connectivity has diverse unique features, based on Australia’s distant geographic location from other countries, sparse population and Australia’s large size. The country therefore requires a significant amount of infrastructure for Internet communications. Industry Overview Markets The current internet access in Australia is a function of diverse factors. There are several players, and the technology has been steadily advancing, whiles the competitive environment, and has been strategically shifting such that there is emergence of new players in the Australian marketing environment, Grassley, (2004). The demand for internet services has been growing rapidly, while the applications of the internet have expanded in line with the accelerating access speeds, and innovations. The internet access market has been driven by the increasing use of the internet such as social networks, more sophisticated applications, online entertainment, electronic commerce and online banking. The market is also wide and dynamic driven by increased participation of the populace in the online environment. The internet usage in Australia has more than 88% of people and 95% of small businesses daily using the internet daily. 22 percent of the subscribers are government and business sectors while household internet users account for 78%. In the country, the market experienced 5% growth in 2010, to a volume of 7.5 million users. The sales generated by the internet service in Australia have been rising steadily, with the industry expected to generate $6.1 billion in revenue, in the year 2010-11, while it is projected to reach $10.6 billion, by 2015. Competitors There are various companies competing in internet service provision to consumers, business and government, which has realized a growth in data volume. The competition environment has experienced changes with the number of ISP’s reducing by twelve percent due to consolidation. The competition environment has been significantly altered by the emergence of National Broadband Network (NBN) project. The main competitors are four main ISP’s in Australia, with Telstra through BigPond, being the main player; others are Optus, iiNet, and TPG. Customers According to December 2010, statistics there were approximately 8.2 million internet subscribers using mobile phone handsets and 10.4 million active internet subscribers using fixed and mobile wireless services. In the year 2010, the number of wireless subscribers increased by forty nine percent, while mobile phone handset and fixed line subscribers also increased. Stakeholders There are various stakeholders in the internet access in Australia. The federal government is a stakeholder through regulation and monitoring of service quality as well as equalizing the competition. The government also is a stakeholder through the Australian Communications and Media Authority. The government also has a controlling stake in the National Broadband Strategy, hence being a stakeholder. The Internet Industry Association (IIA) is also a stakeholder which brings together various parties such as e-commerce traders, telecommunication carriers, electronic business solution providers, Internet Service providers, content creators and publishers as well as web developers. Environmental Analysis Internal factors There are several factors impacting on internet access in Australia, both internal factors and external factors. There has been severe competition between the internet service providers; this has resulted to deployment of new technologies, fast internet speeds and reduction in internet access prices. The competition has affected the industry, resulting to decrease in the number of internet service providers. Competition within the Internet Service provision has been intense with the major players protecting their customer base, while new entrants and small business have responded through low pricing, and mergers and acquisitions, this is highlighted when iiNet acquired two ISPs, Up’N’Away and Westnet. Threat of new entrants in the industry is at minimal due to the aggressive marketing strategies implemented by the existing companies, as well as the huge initial capital required in terms of product deployment, in order to adequately compete with the established companies. The ISP industry is faced with the threat of substitute products, such as the internet access offered by Telecommunications providers. Moreover, the buyers have power since they have a realistic backward integration, and can dictate the direction of the industry. ISP source their products from several international suppliers, the industry does not face significant threat in terms of credible forward integration threat posed by suppliers, since the ISP’s have liberty to source any product from diversified supplier base. External Factors There are several external factors influencing the internet access in Australia. There are Political, Economic, Social, Technological and natural factors, which affect the internet access business externally. On Political analysis, issues such as government policies and procedures, and political directions are considered where the government has fronted the National Broadband Network (NBN), which is envisioned to introduce a paradigm shift in terms of open-access data network and nationwide wholesale internet. This shall affect the functions and infrastructure of Internet service providers. Economic analysis involves the decreasing prices of internet access, which have resulted to increased demand. Social analyses is more concerned with perceptions such as living standards, traditions and societal dynamics, several businesses have been shifting to have online presence, hence pushing up the demand for the internet. The internet access by ISP’s is also influenced by the competition from mobile telecommunications carriers, where mobiles, personal digital assistants (PDAs) and laptop data cards can access wireless internet, hence substituting the services of ISP’s. The social factors also include the increase in computer penetration, with economic status of the households increasing. Since Computer penetration is essentially linked with internet growth, increase in computer penetration suggests augmentation in internet demand. Moreover, there has been an increase in usability of online applications and the internet being part of social life. The growth of social networks, results to increase in internet demand. There are Technological considerations are advances in technology such as innovations and discoveries affecting the sector. There are changes of the internet provision technologies, with the mobile wireless broadband, increasing in popularity. The utilization of fixed line services such as ADSL is gradually being replaced by emerging technologies. Marketing Strategy analysis Telstra Corporation Limited abbreviated as Telstra Corp of Australia is the most prevalent telecommunication service provider, offering within the country and international mobile services, expanse telephone services, dialup wireless, cable internet access, Digital Subscriber Link, cabled and wireless telephone services. The company is located at Telstra World Headquarters, Telstra Corporate Centre at 242 Exhibition Street, Melbourne, Australia, offering Telecommunication industry services. The company’s full-service business model is a source of strategic competitive advantage, since the company can deliver affordable integrated communication and media content due to economies of scale. Telstra which has a market share of 43.6 % in internet service provision has BigPond as the industry brand name. Telstra BigPond is the largest ISP, in the country, with a great percentage of its customers being retail clients. BigPond has exercised market segregation through different brands such as BigPond broadband, BigPond Business and BigPond Home and offers different internet products such as development of extranets, dedicated internet access lines, remote network access services, , broadband internet services, ISDN internet services and dial-up modem. SingTel Optus Pty Limited abbreviated Optus Telecommunication; is a fully owned subsidiary of Singapore Telecommunications and the second largest telecommunications company in Australia. The company is headquartered in Sydney, Australia and offers integrated telecommunication services in the country. Total Peripherals Group (TPG Telecom) is the fourth largest Australian Internet Service provider and Information Communication Technology Company. The company offers mobile virtual network operator, mobile phone services, ADSL2+ DSLAMs, ADSL2+ network and Internet telephony. Products Telstra offers different internet products in the market. The company gains strategic advantage through diversified product provision, through Telstra Consumer, Telstra Business and Telstra Enterprise and Government. The company utilizes product segmentation where customers are offered products to suit their needs, depending on their consumption of the internet. BigPond offers internet connection through different technologies such as mobile wireless broadband, fixed-line services such as ADSL, Access internet via mobile phone handset, Satellite, Cable, Dial-up internet and ISDN. BigPond offers ADSL through digital subscriber line access multiplexers (DSLAMS) and as well, Telstra provides the infrastructure which avails a great percentage of Australia’s internet access is made available. Telstra also offers Mobile wireless and mobile phone handset internet, through 3G mobile phone networks. This has given Telstra strategic competitive advantage, due to increased penetration of mobile wireless and mobile phone handset internet services. Telstra also utilizes the wide product offering by offering consumers’ access to the internet through Hybrid fibre coaxial (HFC) networks, which provided higher bandwidth and higher speeds. In addition, Telstra offers Satellite broadband to cover areas with limited or not coverage from other service delivery platforms, hence enabling the company to cover the entire country. The company leads through offering the widest product choice by having Dial-up services, which connects the customers to the internet through dial-up modem using the public switched telephone network. Optus has several products in the entertainment and information technology sector such as subscription television services, mobile voice, satellite services, data, local, national, and long distance telephony services, Wi-Fi services, business network services, Internet and dial-up access. The company also offers diversified services such as disability equipment, business with IP network connectivity, over Internet protocol, voice over DSL, and transmission solutions. The wide offering of products has a strategy, enables the company to be a “one stop shop”, where customers can conveniently purchase several internet and telecommunications products. This strategy is similar to the multi-product offering strategy implemented by Telstra. TPG Telecom offers various several products and services such as accounting software, mobile phone service, Internet access, OEM Services and networking. In terms of internet offering, TPG offers virtual phone cards, VOIP solutions, SHDSL broadband access, website & domain name hosting, email services, IPTV, EoC, Fiber, dialup, ADSL and ADSL2+.   TPG has substantially diverted in terms of service offering, from what is offered by other competitors such as Telstra and Optus. Prices Telstra utilizes various pricing strategies for its internet access products. Telstra utilizes Post-paid cap, fixed contract where the subscribers are offered internet access through a fixed-term contract, for a given monthly data allowance. For the home users, these plans include the BigPond® Elite® 5GB, which offers 5GB high speed broadband with no additional usage charges at a monthly fee of $ 29.95 per month. This enables the company to target price conscious subscribers who do not use the internet heavily. The BigPond® Elite® 50GBis 50GB high speed broadband, with monthly payment of 49.95 $. The company targets heavy users through BigPond® Elite® 200GB, which offers no peak or off-peak restrictions and 200GB high speed broadband, at $ 69.95 per month and BigPond® Elite® 500GB, which offers 500GB high speed broadband at $ 89.95 monthly. The company also uses bundled plans, where the services are bundled to achieve an overall lower cost unlike if the service were purchased separately. Telstra offers bundled services include mobile phone, internet, and subscription television and fixed-line telephone. These bundles include BigPond® Elite Liberty® 500GB high-speed, at $ 159 per month, BigPond® Elite Liberty® 200GB high-speed at $ 139 per month. The bundle includes discounted international calls, unlimited calls to any Australian mobile and Unlimited STD calls. These strategies have enabled Telstra to gain strategic competitive advantage, since they can serve a wide customer base. Optus, like Telstra utilizes bundled pricing strategy. In the arrangement, subscribers are charged, depending on the services they opt for, as well as the usage. Optus has a very wide bundled products, which serves a greater customer base, these includes ‘Yes’ Fusion Broadband plans such as 'yes' Fusion $79 which offers 120GB Data, & Unlimited standard, local, national, fixed calls within Australia & Optus mobiles monthly. Other plans include 'yes' Fusion $149, which offers the heavy internet users’ 1TB Data & Unlimited standard, local, national, fixed calls within Australia & Australian mobiles. There is the 'yes' Fusion $99, which offers 500 GB monthly, Unlimited standard local & national calls to fixed lines within Australia and Unlimited standard calls to Optus Australian mobiles within Australia. Optus has also implemented prepaid service model, such as 'yes' Fusion + FOXTEL™ iQ Get Started + Movies , 'yes' Fusion + FOXTEL™ iQ Get Started + Movies, and Fusion + FOXTEL™ iQ Get Started + Sports. The differentiation in pricing is aimed to making the customers to pay specifically for what they would like to do on the internet. The company also offers post paid and prepaid options for Broadband access and Mobile broadband. This is meant to give the customers the flexibility, and hence gain competitive advantage. Optus however has so many payment plans such that the subscribers may not understand, all the plans hence obscuring the purpose of segmentation, Michael & Susan, (2007). TPG has implemented Pay As You Go as its pricing strategy. The strategy saves the subscribers the hassles associating with frequently subscribing to bundles. Moreover, the customers on the Pay As You Go plan are more likely to pay more per Megabyte; this enables the company to make more profits. In addition, the company’s pricing and plans are flexible, such as Pay As You Go, Super Value Plans and Cap Saver plans, which require no prior contract on the part of the consumer, hence targeting consumers who require flexibility. This contrasts with the pricing models used by Telstra and Optus. TPG has won several recognitions through its lowly pricing of its products; the strategy is envisioned to ensure that the company gets more customers. Place Telstra offers its customers internet access in the entire country. The company has exchanges connecting to digital subscriber line access multiplexers (DSLAMS) of other ISP’s located in central business districts and major metropolitan areas. Telstra utilizes Satellite internet connectivity to serve the whole of Australia; the strategy to serve the whole country has demerits since some places do not achieve a break-even point. Telstra has also enhanced its market through having its branches and sales of its products, strategically located in several towns in Australia. Optus has a large coverage, but does not cover the entire country. The company however, has stores in most of the towns where they have their operations. Optus stores also serve as information centers, hence giving the clients a sense of assurance that the company is always available and reachable. The strategy implemented by TPG Telecoms in serving the market in terms of place, has varied from what the competitors have used. Instead of serving all the areas in the country, the company has however specialized in highly populated areas, especially in cities and towns where it can offer services to several customers, while utilizing fewer networking facilities. This strategy has enabled the company to provide services at places, where it can achieve fast returns on investments, hence can offer their services at relatively lower costs, contrasting the strategies utilized by Telstra and Optus, Paul, (2007). Promotion Telstra has utilized aggressive promotion techniques. The major promotion is through its websites, www.telstra.com.au and http://go.bigpond.com which boast of several favorable features such as search engine optimization, customer focus, good site layout, and good categorization of products. The company also does promotion through corporate social responsibility, which is an effective means of promotion according to Tan, (2003). Optus have implemented mass media driven promotion strategy. Whereas it has similarities with Telstra by promoting their products through their parent websites, Optus further promotes its internet access services through other websites such as social media sites and search engines. Any product being promoted by Optus is advertised through several sites. In addition, Optus have also utilized television promotion and Newspapers with endorsements by the Australian Celebrities. TPG Telecom has used a different strategy in terms promotion. The company has changed structure, name and ownership in the past, and has not maintained a consistent promotion. The regularly shifting strategies, is to the disadvantage of the company, since the customers cannot have a permanent link or attachment to the company. Physical presence Optus have implemented in their website a means of registering users and encouraging users to interact on the site, the objective of the design is to make the visitors customers of the online sales retailer, hence creating physical presence. Optus and Telstra also have presence in the social network sites such as FaceBook and Twitter. On contrast, TPG telecom has relatively little presence in the internet, hence being disadvantaged in interacting with the current and potential customers, Allen, (2008). People An important construct in service provision is the utilization of appropriate staff and people, Reynolds, (2004). An organization can attain a marketing cliché through using the right persons with appropriate experience and techniques. Telstra recruits staff using a comprehensive recruitment process, and trains them appropriately on service delivery, hence attain strategic competitive advantage. Telstra also has an inclusive knowledge management program, to ensure that organizational knowledge is maximized; this gives the company a competitive strategic advantage. Optus has implemented a recruitment policy, which ensures that persons employed by the company, are self driven towards realization of the Company’s objectives. TPG has persons of diverse expertise and experience. The company, through buy offs, sales and acquisitions has inherited an experienced workforce. The company does not therefore have regular recruitments and training. Process TPG Telecoms has a very simple interaction process, customers are offered services without the need to subscribe to any offers or even register for contracts. This strategy is favorable for the people on the move, who would not like to be attached to any contracts. Optus has a comprehensive registration process for bundles and contracts, whereas this strategy is relevant towards enabling the company to understand well their customers, it unnecessarily complicates the interaction process. Telstra’s interaction is limited to the bare minimum derails/ Conclusion The internet service provision industry in Australia is prone to several challenges and has been undergoing several dynamics. This has been propelled by a host of factors which are both internal and external. The industry is chiefly influenced by the emergence of new technologies and competition, which has resulted to decrease in price. Moreover, the implementation of the national Broadband Strategy, by the federal government significantly alters the competition environment and service delivery. Success in the sector is a function of several constructs. To succeed, an organization has to offer various products, the products should be competitively priced and the organization has to maintain a physical presence. Recommendations The strategies, implemented by different organizations have been responsible for the performance and success of the organization. Optus and TPG have to implement comprehensive strategies, to ensure optimum utilization of the human resource as well as knowledge management. It is recommended that Optus simplifies its interaction process, to avoid jamming the customer with unnecessarily long registration. TPG telecom has to pursue more aggressive promotion strategies as well as customer focused online presence. Products offered are an important component of organizational marketing mix. The products therefore have to be suited to customers’ needs. Telstra, Optus and TPG have to reconsider their products, since all the companies have several products, they have to market only what is important to the company. The success of a business is a function of its promotion strategies. TPG has to implement and pursue customer centric promotion strategies to ensure that their products are known better. The customer has to increase its online presence through regular updates of its website and being present in the social networks. References Allen, S. (2008). The emergence of the relationship economy: The new order of things to come. Cupertino: Happy About press. Grassley, A. (2004). Simulation modeling for business. Burlington: Ashgate Publishing, Ltd. Michael John Baker, Susan Hart (2007). The Marketing Book. London: Butterworth-Heinemann Paul Fifield. (2007). Marketing strategy: the difference between marketing and markets. London: Butterworth-Heinemann Reynolds, J .(2004). The complete e-commerce book: design, build & maintain a successful Web-based business. Chicago: Focal Press. Tan, P. (2003). Success with Online Retailing: For Small Businesses. Indianapolis: iUniverse. Read More