Telstra unveils broadband price… Bowser bullies… SME research scrapped… Rate rise coming?… Online franchising first…

Ta da! Telstra reveals low end broadband price

Telstra has finally given consumers an insight into the kind of prices they could be paying under its fibre-to-the-node broadband plan, confirming reports that it will charge wholesalers $59 per month to provide 512kb broadband to retail customers.

This could mean a final price to consumers of about $70 per month for broadband which, although fast by today’s standards, would be at the bottom end of the speed spectrum in a fibre-to-the-node broadband network.

By comparison, the Optus-led G9 group of rivals to Telstra have indicated plans to charge a wholesale price of $29 per month for faster 1.5mbps broadband.

No wonder Telstra has worked so hard to keep the figure under wraps.

While the G9 unveiled its plans with a bang by lodging a comprehensive price and access proposal with the competition regulator, Telstra’s approach was a carefully controlled whimper, releasing only its basic broadband price in a private briefing to a select group of journalists.

Market analyst firm Ovum director of research David Kennedy says Telstra appears to have gone for the status quo option with its entry level broadband price.

“At the moment, people with the most common 256kb broadband service pay around $30 for line rental and $30 for 256kb. If you put that together it is something very close to this price, so what Telstra actually promising is the status quo,” Kennedy says.

He says that while on its face the G9’s proposed price looks much better than Telstra’s, the Optus-led consortium’s price is based on the assumption that it will only have to pay $5 per line access Telstra’s copper network and attach its fibre to its customers homes, a price that Telstra has rejected.

Also important, Kennedy says, is the period of time each group has said they will lock in their prices – 13 years for Telstra compared to three years for G9.

“There’s been a lot of talk about operational costs falling when fibre is put into the network, and if that is the case then perhaps what we won’t see those price savings being passed on to customers under the Telstra plan,” he says.

Telecommunications market research firm Telsyte’s managing director of research Warren Chaisatien agrees there is a solid prospect that the cost of providing broadband will go down over the next decade.

“Based on past technological trends, you would think going forward that the technology should become cheaper. It’s happened everywhere else and so I think consumers would favour short-term commitments that allow flexibility for future downward adjustment of broadband prices,” Chaisatien says.

– Mike Preston


Petrol debacle

We’re heading into a long weekend. And as usual, it is rising petrol prices on the agenda, with calls growing to increase the powers of the competition regulator in order to stop price gouging.

Labor leader Kevin Rudd has called on voters to lobby MPs to give the Australian Competition and Consumer Commission more power.

And the head of the Australian Automobile Association, Mike Harris, says the ACCC should have the right to inspect retailers’ financial records.

Head of ACCC Graeme Samuel told SmartCompany this morning, when asked if he would seek powers that would give him compulsory information acquisition from the retailers, that he would be communicating with the Government first and not through the media.

Meanwhile expect petrol prices to go down as there has been a big fall in Singapore prices recently.

– Amanda Gome


Research on small business scrapped

The main source of data on the small business market, The Characteristics of Small Business, has been scrapped. In its place is a number of separate reports to be issued by the Australian Bureau of Statistics.

The decision will annoy businesses, consultants and policy advisers who are already concerned at the lack of data about “the engine room of the economy”.

Yesterday SmartCompany pointed out that the report, which had been expected last year, had been delayed again until August.

SmartCompany reported on a rumour that maybe the figures on small business creation were not good, and the report would be delayed until after the election. Not so, says John Blachette, director of business demographics at the ABS.

He confirmed this morning that the report had been scrapped and says there are no links between the ABS and politics. He says even if the CPI or employment figures are falling, reports would still be released before an election.

There were a number of reasons the report was scrapped. This included the difficulties of including both characteristics of the business and business owners in one report, he says.

Other reports including Business Entries and Exits, a report from Census data, due out later this year and household surveys, will provide data about this sector, Blachette says.

Sue Prestney, spokesperson form the Institute of Chartered Accountants in Australia says research into this sector is vitally important. “The whole sector is so fragmented and it’s very important to have one document that paints a whole picture not just for policy advisers but also for businesses planning strategy.”

It is also important for social reasons. ‘We need to know for example whether the decline in women running businesses is continuing or just an aberration,” she says.

 – Amanda Gome


Is an interest rate rise on the horizon?

Although yesterday’s fall in unemployment to a 32 year low of 4.2% is to be welcomed, there is no doubt it brings the question of whether the Reserve Bank will raise interest rates this year back to the top of the agenda.

Recent moderate wage growth and CPI data meant there was unanimous support among market economists for the RBA’s decision not to lift interest rates when it met on Tuesday this week.

But in the wake of yesterday’s strong jobs result, the market now has priced in a 55% chance of an interest rate rise by August, and 100% chance of a rise by November.

NAB economist James McKinlay says the market – and, no doubt, the RBA – will look closely at next month’s wages and CPI data for any sign of inflationary pressures.

“With the economy above trend growth we’d say capacity constraints are still flowing into the economy and that will just add to inflationary pressures over the next two to four months,” McKinlay says. “So although we don’t see the RBA raising rates in the short term at the moment, we think the RBA will wait and see whether CPI and wages figures continue to be subdued.”

Westpac economist Anthony Thompson says while wages growth has been tame so far, the strong labour market will support strong consumer confidence and household spending.

“[The jobs figures] adds to the upside inflation risks into 2008, whether from wage inflation lifting cost pressures or household spending adding to demand pressures and pricing power, “ Thompson says.

– Mike Preston


Tassie, SA budgets

South Australian Treasurer Kevin Foley delivered a $337 million cut in payroll tax to business when he brought down the state budget last night.

The payroll tax rate will fall from 5.5% to 5.25% from 1 July, with a further 0.25% cut to come in the following year. Foley says this will reduce the South Australian payroll tax to the second lowest in the country.

The cut is the business centrepiece in a budget which, like the recent Queensland budget, takes on significant debt in order to fund big ticket infrastructure items. Hospitals get the biggest share in $4 billion worth of new infrastructure funding, funded by $1.3 billion in borrowing over the next four years.

The budget predicts economic growth of 4% in 2007-2008, with a forecast surplus of $30 million.

The Tasmanian budget was also brought down yesterday. Treasurer Michael Aird delivered a modest budget, with close to $1 billion for new infrastructure and new money for health and education.

Although economic growth in the state is set to grow 3.5% next year, the Tasmanian budget is forecast to fall in deficit by $39 million in 2007-2008.

– Mike Preston


Webby winner from Britain expands to Italy through franchising

One of the websites that picked up a Webby Award in New York last week, social lending site, is expanding to Italy. The British site, which is backed by Bessemer Venture Partners and Benchmark Capital, allows people to lend and borrow money with each other, sidestepping the banks.

Zopa charges borrowers a fee of 0.5% of their loan amount and lenders a 0.5% annual service fee, and earns money through selling payment protection insurance to borrowers who want it, and by introducing some potential borrowers to other loan providers. The company has a San Francisco office preparing for a US launch, but it is adding Italy through franchising.

Springwise reports that Zopa’s technology and brand have been licensed as a start-up. Milan-based P2P s.r.l. is currently recruiting tech team members and hasn’t yet announced a launch date, pending accreditation from the Italian banking authorities. The Italian franchise is headed up by Maurizio Pietro Sella, a former Citibank executive.

This is the first franchising deal online we’ve heard about, but if you know of others, let us know. Australia enjoys a reputation as a great franchising nation – could we be a leader in franchising great web ideas from overseas?

– Jacqui Walker


Alliance marketing consolidation continues apace

ASX-listed digital marketing services group BlueFreeway has just bought affiliate online marketing company Viva9 and 51% of technology firm BlueArc Group, bringing the number of businesses in the group to 16. The last six have been bought since the company’s float in December 2006.

Last week BlueFreeway announced an upgrade to its forecast earnings, which were increased from $3.6 million to $4.5 million, a rise of 25%. Read Chris Thomas’ blog for more on affiliate marketing.

– Jacqui Walker


Economy round-up

The total value of housing finance commitments increased 2.7% in April 2007, according to Australian Bureau of Statistics figures released today.

In further sign of the strengthening housing market, owner-occupied housing commitments increased 3.5%, and investment housing commitments increased 0.7%. The number of commitments for owner-occupied housing finance increased by 2.2%, and the number excluding refinancing increased by 2.1%.

And ANZ economist Paul Braddick says “despite the threat of a further interest rate hike in the second half of the year, housing market conditions will tighten further, which combined with ongoing improvements in household finances will underpin further growth in housing finance”.

Meanwhile the Australian dollar has come down a little from yesterday’s heady, 16 year high of US84.67c to be Us84.35c at 12.45 pm. At the same time the S&P/ASX 200 sits at 6214.1, down a solid 1.5% on yesterday’s close.

– Mike Preston


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