Telecom targets Telstra's homes

By PETER GRIFFIN

Telecom's Australian arm, AAPT, is undertaking a major push in the residential market armed with flat-rate calling and internet plans designed to lure customers from Telstra.

The third-ranked player's drive in the residential market comes as Telstra moves to raise its residential line rental charge by A$3.45 a month.

The change, which came into effect yesterday, is expected to raise an extra A$200 million for Telstra.

It follows a move by fourth-ranked Primus to heavily target the competitive residential market.

A new range of AAPT deals for long distance and international calls and internet access had capped monthly fees for unlimited use.

"We're trying to address consumer anxiety around bill shock and the fact that if you call a lot of long-distance numbers you run up a tab pretty quickly," said the general manager of AAPT's consumer division, Brett Chenoweth.

Users could make an unlimited number of local calls and international calls to five locations for a capped rate of A$59 a month.

The package applies only to calls to fixed lines within Australia and to New Zealand, the United States, Canada, the United Kingdom and Ireland.

Greg Armstrong, from AAPT's marketing division, said the plan was designed for people who just wanted to call friends and family.

"We know that there's quite a few people out there who are restricting the amount of calls they are making," Armstrong said.

"They are worried about the total bill."

He said that under the cap, they could talk as long as they liked without having to worry about "bill shock".

A flat-rate high-speed internet service will debut for A$44.95.

Chenoweth said the service was wholesaled from Telstra because AAPT did not have its own access network in much of the country. A dial-up plan for A$9.95 would become available.

The long-distance calls are carried over AAPT's own network so the economics of providing them are much better.

The internet services are new offerings for AAPT which has inherited 50,000 dial-up internet customers from its divested interest in AOL7 and is using that base to build a residential internet business.

The aggressive deals will be pushed in a heavy programme of advertising over the next two months.

"Our sort of advertising budgets here are minuscule compared with Telstra and even Optus, but relative to the money we've spent over the last couple of years, it will be a heavy push," said Chenoweth.

In its results for the nine months to March 31, Telecom said earnings before interest, tax, depreciation and amortisation had decreased by $10 million - nearly 30 per cent - due to "higher bad debt expense and increased advertising expenditure".

Chenoweth said Primus was a credible competitor in the market and had grown off its internet subscriber base.

"Primus has been a pretty successful ISP; they report they've got around 500,000 dial-up customers and they're building their telephony business.

"We haven't spent much time trying to forecast what our market share will be as a result of this campaign."

Mobile phone-only operator Vodafone also used Telstra's line rental rises - its fifth in four years - yesterday as an opportunity to urge customers to get rid of fixed-line phones altogether.