Economy

Telstra whingeing all about profit… Google eyes off affiliate marketing portal… Domain name sold for six-figure sum… Carbon trading green light

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Telstra broadband whingeing all about profit: analysts

Telstra’s push to get a better regulatory deal before it will commit to building a fibre-to-the-node broadband network is purely an attempt to jack-up profits at the expense of consumers, one of Australia’s leading broadband analysts says.

Telecommunications industry expert Paul Budde says Telstra is desperate to maintain its position as one of the most profitable telecommunications companies in the world by grabbing a monopoly broadband infrastructure.

Although Telstra is yet to publicly reveal the price it wants to charge for wholesale access under its broadband plan, it is rumoured to be in the range $60 to $80 per customer per month for high speed broadband. By contrast, the G9 revealed that it would charge just $40 to $50 for a comparable service in the pricing and access documents lodged with the Australian Consumer and Competition Commission yesterday.

Budde says there are no mitigating factors that could justify Telstra charging in the $60 to $80 range.

“It is just about profit. If you look at prices in Europe and the US those prices are much more in line with the G9 proposal than what Telstra is suggesting. It’s no miracle that G9 can do that; they are simply meeting a benchmark set around the world,” Budde says.

IT Wire telecommunications editor Stuart Corner says Telstra is seeking to make up for the loss of profits from current, slower broadband services it would lose if a new network came into operation.

“Telstra would be pricing at the same level as the G9 if they were looking purely at the cost of building the broadband network, but they’re trying to maintain the value of a company that has had the benefit of close-to-monopoly revenue streams, and that isn’t easy,” Corner says.

Budde and Corner agree that the only thing that can break the deadlock now is the Government. Without tough government leadership to either pull Telstra into line or push the G9 proposal ahead, Australia’s SMEs won’t have the access to fast broadband they are crying out for – until the federal election, and the possibility that Labor’s publicly funded broadband plan will come into play.

Meanwhile, Telstra chief executive Sol Trujillo has responded to mounting pressure to reveal the full details of Telstra’s broadband plan, and has hinted that the telco might drop its plan entirely if it is prevented from charging the prices it wants.

Trujillo says Tesltra “does not need to build a fibre-to-the-node network” and could instead choose to expand and develop its existing cable broadband network, The Australian Financial Review reports.

– Mike Preston

 

Google heads toward affiliate marketing

Affiliate internet marketing in Australia could be in for a big shake up if Google’s rumoured intention to introduce pay per action (or sale) is offered through Google’s advertising service AdSense.

Affiliate marketing is where advertisers pay a proportion of sales to websites that run their ads. It’s a thriving industry that has spawned internet entrepreneurs who have monetised their sites through becoming affiliates of merchants with something for sale online. Have a look at SmartCompany’s Online Sales blog today for details of how to make the most of it.

In March, Google stated a beta trial of a new function in AdSense that would allow advertisers to pay per sale, instead of per click or per impression. The function has not been offered to Australian advertisers and Google is tightlipped about how the trial has proceeded and whether it will be introduced in Australia.

“We are exploring it with a small number of publishers; there are no fixed timelines,” says Rob Shilkin, a spokesman for Google Australia and New Zealand. “We think it complements our cost-per-click and cost-per-impression models. It has potential… there is no plan for Australia at this stage.”

But rumours persist. And if Google were to offer the function here it would effectively be using its massive networks to compete with existing portals that enable affiliate marketing in Australia such as www.clixGalore.com.au and www.CommissionMonster.com.au.

Chris Thomas, director of search engine optimisation adviser Reseo, says: “My feeling is that it’s the next logical step for Google. Just as they’ve made a killing from AdWords, and expanded AdWords reach using AdSense, there’s no doubt that they’ll want to put merchants and affiliates together through the Google network. It will really hurt some of the big guys.”

Search engine analyst Barry Smyth believes any impact from the new function would be felt gently because website owners will be reluctant to adopt the pay per sale model. Many are making big dollars from getting paid per click or impression. But advertisers would be more likely to get behind it. “The key to success for Google for this will be getting publisher buy-in and they may have trouble,” Smyth says.

– Jacqui Walker

 

What’s in a domain name? Money, that’s what

The jobs.com.au domain name has been sold to an Australian online marketing company for an undisclosed six figure sum, The Australian Financial Review reports today.

Jobs.com.au was previously owned by an online recruitment company, but was put up for sale after the business went into administration.

The buyer, Boomerang.com.au, is not a recruitment company; its business model focuses on developing an income stream out of generic domain names. But CEO Peter Andronicus says he plans to develop jobs.com.au into an employment information site.

Domain names are not allowed to be bought and sold under regulations imposed by Australia’s domain name regulator, but they can be transferred where they are an asset of a business that is sold.

– Mike Preston

 

Report gives green light on carbon trading

Australia cannot wait for the rest of the world and should have a national carbon trading system up and running by 2011, according to a long awaited report on carbon emissions to the Federal Government released today.

The report by the Prime Minister’s task group on emissions trading confirms that businesses and consumers will have to pay higher energy prices if Australia adopts a carbon trading scheme.

However, the task group, which is comprised of bureaucrats and representatives of big energy users (and no scientists or environmentalists), does not make recommendations on the crucial question of the price that should be imposed per tonne of carbon dioxide emitted or the emissions reduction target Australia should be aiming for.

There are some mixed signals in the report, which says that carbon trading scheme should be “as comprehensive as possible” but should not “prejudice the competitiveness of our trade-exposed, emissions-intensive industries.”

The task group recommends that permits for emitting greenhouse gases should be allocated for free initially, a view that has been opposed by many independent economists. Subsequent permits issued would be sold to the highest bidder, the report says.

– Mike Preston

 

Economy round-up

Australia’s manufacturing industry recorded strong growth in activity in May, with the Australian Industry Group – PricewaterhouseCoopers Australian Performance of Manufacturing Index lifting 3.5 points to 55.2.

The result was driven by a big increase in new orders, reflecting a combination of diminishing fears of a further rise in interest rates, the wide-ranging measures announced in the budget, and record high consumer confidence, an AIG report accompanying the index says, but exports and inventory building remain at flat levels.

The US economy recorded 0.6% annual GDP growth rate in the first quarter 2007, its lowest rate in 6 years, according to US Department of Commerce figures.

At 12.45pm the S&P/ASX 200 is up 0.3% to 6334.4 and the Australian dollar is trading at US82.86c, up on yesterday’s 82.43c close.

– Mike Preston

 

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