Telstra’s All-4-Biz telecommunications package has been radically overhauled. While it offers minor improvements, overall it drains value from the package.
You'd be forgiven for not noticing, since All-4-Biz is not a product that sees heavy advertisement. Searching for details on the Telstra website yields only the gentle advice that further details can be obtained upon enquiry, which runs against the ethos of the internet, although sadly not against the presiding spirit of the Telstra website.
All-4-Biz is a comprehensive telecommunications solution for Telstra customers, including land lines, mobiles, mobile and fixed broadband, and additional services such as T-Suite. It encourages customers to consolidate all these disparate aspects of their infrastructure into a single account. While there are manifold advantages to doing this anyway, especially from an administrative perspective, the advantage directly conferred by All-4-Biz is the opening up of higher tiers of the product, which feature better rates and larger credits.
Previously, All-4-Biz plans began at a modest monthly cost of $400, and went all the way up to $30K, with about eighteen increments in between. The higher you went, the lower the call-rates, the larger the equipment credit, and the better the cross-subsidised discounts to certain services (especially broadband and Blackberry).
It certainly wasn't for everyone, but in certain cases All-4-Biz was excellent. The mobile component featured a mixture of Unlimited plans for $150 per month, and $0 plans with reasonable rates, which is exceedingly rare in a business mobile product, and made it very attractive for companies with low mobile ARPU (average-revenue-per-user). All calls between fixed lines and mobiles were free. It included some of the lowest fixed line international call rates we’ve ever seen. (Indeed, one Dog and Bone client that conducted a lot of business overseas slashed almost 40% from their monthly phone bill by switching to All-4-Biz.) And the amount of equipment credit supplied was very ‘generous’, and could provide legitimate value for clients that had a large upcoming capital telecommunications expense on. At worst, if All-4-Biz wasn't the right fit, it could be ignored.
But all that has changed. As part of the current drive to drain value from its products, Telstra has rendered All-4-Biz considerably less competitive. Call rates have inflated sharply; the $0 mobile plans are gone; equipment credits have shrunk, and there is no longer any cross-subsidy bolt-ons to broadband, Blackberry and T-Suite. And whilst many new tiers have been added to the upper limits, reaching to $60K per month for enterprise class organisations, the lower tiers have disappeared; plans now begin at $1,000 per month.
Marginally offsetting this are some minor improvements: Bigpond has been added to the suite of eligible included products, and there are now welcome-credits for new Telstra customers. The mobile component now works similarly to other standard fleet plans, insofar as included call values and data allowances are shareable across the fleet (apart from $10 casual plans).
Since concrete examples always make things more excitingly comprehensible, today we’re going to look at the impact these changes have had on several companies of varying sizes. The impact is substantial.
Company A (Small Business - $400 per month)
On the old All-4-Biz, Company A would have been best placed on a $400 plan, and would have generated a total monthly spend of $538. By signing on to a 24 month plan, they would have also gained a $1,800 equipment credit to lavish on assorted Telstra-branded knick-knacks.
On the new All-4-Biz, their monthly spend would increase to $1,000, due entirely to the fact that this is now the lowest possible tier. Their equipment credit has been reduced to $1,680. Overall, Company A is now paying 85% more per month, without factoring in the equipment credit.
The unavoidable conclusion is that All-4-Biz is no longer viable for any client spending less than $1,000 per month.
Company B (Small - Medium Business - $2,500 per month)
On the old All-4-Biz plan Company B would have been ideally placed on a $2,500 plan, and would have generated a total monthly spend of $2,541. By signing on to a 24 month plan, they would have also gained an equipment credit of $8,750.
On the new All-4-Biz, they would have to choose a $3,000 plan (since the $2,500 plan no longer exists) and their monthly spend would increase to $3,410, due mostly to the increase in call rates, and the loss of cross-subsidy to their fixed broadband products. Their equipment credit has been reduced to $5,040. Overall, Company B’s costs have increased by 34%, without factoring in the lost equipment credit.
Company C (Small Enterprise - $20,000 per month)
On the old plan Company C would have been best placed on a $20,000 plan, and would have generated a total monthly spend of $20,000. By signing on to a 24 month plan, they would have also gained a $50,000 equipment credit, which was one of their primary reasons for selecting a plan that was otherwise slightly too high for them. They had a legitimate need for that large an equipment fund (a mixture of installations and smartphone acquisition), therefore it represented real value.
On the new All-4-Biz, their monthly spend would increase to $26,252, due mostly to the increase in call rates – particularly the dramatic increase in international call rates – the loss of $0 mobile plans, the loss of cross-subsidy bolt-ons, and the hefty reduction in their tech fund (which has been slashed to $33,600). Overall, Company B’s costs have increased by 31%, without factoring in the equipment credit.
However, in their case the equipment fund had a tangible value, in that they would have used the full original value ($50,000). Company C will now have to find that extra equipment capital ($16,400) elsewhere. Consequently, we can say that the loss of value has been much greater than 31%.
All-4-Biz is now completely unviable for clients at the lower end of the market, since the minimum plan is now $1,000. Meanwhile the addition of enterprise-class plans has opened up the product for larger corporations that spend about $60K per month on ICT. However, customers of this size are not interested in off-the-shelf products such as All-4-Biz. They can negotiate much better customised rates, with concessions precisely tailored to their specific needs.
Telstra’s move to lessen the value of All-4-Biz is not an anomaly, but part of a prevailing trend throughout the entire industry. Every telecommunications provider, major or minor, is at present restructuring their plans to render them less attractive. There are many reasons for this, some of which we’ve gone into elsewhere, many of which are economically understandable, and none of which will be explored right now. For now I’ll say that by removing some of the best incentives from All-4-Biz, Telstra has repurposed it from being an obscure product that was useful for some customers some of the time, to being of little use to anyone ever.