Telstra must be realistic in selling its Starlink vision

TLDR version: Telstra’s deal with Starlink is more welcome news for remote area broadband users. Bundling a voice service as part of the service also adds more weight to Telstra’s argument for exiting copper voice services.

As with any technology, providers & regulators will go through a learning phase to understand what marketing claims will really stack up. Operators must set realistic expectations, while regulators should be mindful of placing burdens on operators that could stifle innovation and competition.

Satellite broadband choice continues to improve

Last month, we noted that nbn’s SkyMuster Plus Premium service had the potential to change the competitive dynamic in the satellite broadband market. Unlimited data allowances had been a point of difference for Starlink. Nbn’s decision to offer unlimited data via SkyMuster arguably made it a more compelling offering. This is especially for existing customers who may have been considering switching to Starlink.

Now even more choice will be on offer, with Telstra planning to sell Starlink services by the end of 2023. Telstra claims it “will be able to provide home phone service and Starlink broadband services to Aussies as a bundle offer, as well as local tech support and the option of professional installation.” It also intends to offer higher bandwidth services for businesses in Australia and select countries abroad.

Offering the option of professional installation and local tech support may help win over potential customers for whom the prospect of self-install may have been too daunting. While this option reduces a barrier to switching satellite providers, the yet to be disclosed price for installation and hardware will also be a critical factor.

The other interesting element is the decision to bundle a voice service. Broadband and voice are a familiar bundle for customers. A reliable and affordable voice service for remote customers could give Telstra a stronger case for exiting its rural copper network – and reducing its costs.

Setting realistic expectations – without curbing enthusiasm

New technologies always seem to bring waves of claim and counter claim as operators and regulators grapple with the tension between building excitement for a new service and ensuring the public are not misled.

One NZ has already run afoul of the Commerce Commission over the promotion of its Starlink partnership. The Commission has issued a ‘Stop Now’ letter to One NZ, raising concerns about the potential for several elements of the advertising to mislead customers.

Australian telcos have had a couple of decades of closely monitoring their competitors’ advertising, with the more dramatic disputes winding up before the courts. We expect the ACCC will also be closely watching this space. Telstra and its legal team will be very aware of this when it comes time to promote its Starlink offering.

Why does this matter?

Telstra’s deal with Starlink will bring more choice to regional and remote broadband users. The service-based elements of its proposal, such as professional install and local tech support, will lower barriers to switching for some customers. If Telstra can make the cost of switching low enough, it may be able to win share from nbn.

As the satellite market becomes more competitive, operators should heed the lessons from previous phases of broadband upgrades. Satellite resellers must be mindful not to oversell their offering. They will need to be prepared to substantiate claims, particularly around coverage and performance. On the flip side, we hope regulators will engage constructively with the sector in relation to these issues, so that the benefits of increased competition from LEOsats can be fully realised.

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