We here at Dog and Bone have felt for some time that Optus has a clear identity issue.
This is perhaps ironic for a company that strives so very hard to push its particular brand, from the venerable ‘Yes’ campaign that won’t stay dead, to the unfathomable wild animal campaigns of last decade, to that lethally cute little lemon drop guy they have now. Perhaps it’s not ironic, and the rebranding perfect illustrates the issue.
The issue, simply, is that if you want the best mobile product – for most customers this means coverage – you go with Telstra. This is especially true if you live outside of a metropolitan area. On the hand, if you want something inexpensive, you go with Vodafone. It may not work all the time – it works a lot better now than it did three years ago – but you get a lot for what you pay for. If for whatever reason you find Vodafone unacceptable, there are a number of budget MVNO that provide very inexpensive mobile services.
From a business perspective, the same issues prevail, though with a smaller tendency to consider budget options. Telstra’s market share within the business space is larger even than their dominance of the retail market.
Anyway, it was nice when Optus CEO Allen Lew recently came out and basically admitted this:
“While Telstra was seen by most Australians as having the best and most expensive network, and Vodafone Australia was perceived as running an inferior network that offered better discounts, he admitted Optus lacked clear brand positioning.”
I should hasten to point out that this identity issue is by no means crippling. Optus remains the second biggest mobile provider in Australia by any conceivable metric. It is also the country’s second biggest ISP.
But that position isn’t theirs by divine right, and their management must be concerned that Vodafone appears to have finally put its crippling woes behind it, and looks to be growing its customer base at a steadily accelerating rate.
More immediately, Optus’ position as Australia’s second largest ISP is under threat from TPG’s planned acquisition of iiNet.
The choice, clearly, is to either compete with Vodafone on discounts, or compete with Telstra on quality, whist continuing to represent better value for the market. (Optus' latest SIM-only mobile plans are certainly a step in the right direction.) Wisely, and gratifyingly for their existing customer-base, they’ve opted for the latter.
They have announced that they are raising capital expenditure to $1.77billion over the next twelve months, most of which will go towards mobile network improvements. Their hope is that by 2016 or 2017 the market will have shed the preconception that the Optus network is inferior to Telstra’s. One wonders just how realistic that is, and how much is merely bluster. We have our doubts whether that is achievable.
Of course, Telstra itself is hardly standing still. They’re actively promoting the new 700Mhz spectrum services (so called 4GX). The simple fact is that Telstra owns about twice the spectrum of Optus, and will always be able to use that for superior coverage, and greater speeds through spectrum aggregation.
Telstra has also proven able and willing to legally contest any claims Optus makes about relative network quality. The weight of evidence here falls to Optus, since public perception of their network inferiority is very entrenched, which is precisely where Telstra wants to keep it. It’s much easier to reinforce what people already believe than it is to change that.