The Changing Role of Telstra

This report discusses the changing role of Telstra in the communication sector, with a focus on the paradigm shift for SMS and Voice termination. It provides an overview of the pricing systems and consumer response, as well as international business theories and relevant literature. The report also establishes a link between the event and appropriate concepts, and includes a SWOT analysis, justification and supporting evidence, and entry strategies.

The Changing Role of Telstra 0
Title: The Changing Role of Telstra
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The Changing Role of Telstra 1
Executive Summary
This report summarizes the Telstra’s company background and a case has been
represented on the paradigm shift for SMS and Voice termination. An overview has
been provided on the pricing systems and consumers response. International theories
have been explained with reference to the quality of research conducted and scope of
the project. An overview has been given on the establishment of link with the
international concepts and it is supported by the evidence and original thoughts. Logical
sequence has been given followed by the conclusion.

The Changing Role of Telstra 2
Contents
Introduction....................................................................................................................................3
Concise reporting of action/event.......................................................................................................3
Contextual information of action/event...............................................................................................3
Concepts/theories/models...........................................................................................................4
Explanation of the relevant concepts/theories/models....................................................................4
Review of relevant literature...............................................................................................................5
Quality of research (relevance of the sources used).......................................................................6
Extent of research effort.......................................................................................................................6
Establishing the link......................................................................................................................7
Explanation of the link between the event and appropriate concept.............................................7
Justification and supporting evidence........................................................................................9
Arguments, critique and original thought...........................................................................................9
Logical sequence................................................................................................................................10
Conclusion....................................................................................................................................12
Referencess.................................................................................................................................13

The Changing Role of Telstra 3
Introduction
Telstra is a multi-national Australian company and the company’s performances
have been growing in double digits. Irrespective of the market downturn, the company
has been able to maintain the robust performance through fixed and mobile business
lines. A Telstra and investment partner has seen a downturn in their investment policies.
The consumers may expect that pricing policy will get increased. The pricing policy us
being used as the defense mechanism against the government policies. Communication
sector is undergoing through a rapid change. Advancements of technology and
customer preferences are due to the increased competition from the different operators.
The disruption in traditional market places has caused global corporations to evolve into
a new value chain towards china and other states. .
Concise reporting of action/event
Telstra fundamentally understands the market dynamics of china and its pricing policy..
Indications from the new policies are new network has been driving the competition.
The pricing system is under construction and this is a real challenge for all the retail
providers. The Telstra Company is making every effort to ensure no customer or
supplier is at disadvantage stage (Gerrand, 2010).
Contextual information of action/event
External Environronment
Suppliers are more active respondents to provide better and attention to the customer.
The digital ecosystem comprises of a broader network and this has a direct impact on
demand. Service network providers are under the pressure to provide the customers
with innovative plans and make capital investments. Due to the launch of National
Broadband Network has been immensely focused towards the shaping of the markets.
These changes are going to severely affect the communication regulatory prices.

The Changing Role of Telstra 4
Internal Enviroment
The global startup is reliant over the technology innovation systems and has been
changing the technology in past 20 years. The technology has created a vast number of
challenges across all the industries. The communication market has presented the
sophisticated items and innovative solutions that emerge from the community
requirements (Moorhead, 2017).
Concepts/theories/models
International business theories are different forms which provide a complete history on
how to exchange goods and services between two entities and people. Different trade
theories have evolved and it is essential to understand the nature of different theories
(Moorhead, 2017).
Explanation of the relevant concepts/theories/models.
Theories are enumerated below-
1. Absolute Cost Advantage- the Company’s Absolute Cost Advantage approach
is consistent with the regulatory criteria. A cost based approach must be adopted
for the promotion of allocating efficiency in different markets. This is how the
company can promote the dynamic and competitive efficiency. Carriers must be
able to recover the total costs and prevent the business interests as well. The
company has agreed with the Australian commission, which is in context of
pricing the service to be consistent and deliver effective pricing systems to
functional corporate bodies (Gerrand, 2017).
2. Constructive Theory-The constructivism theory is a dominant theory of
international business which promotes agency and structure must be mutually

The Changing Role of Telstra 5
constituted. The existing social structure of animosity among the operating
companies can be withdrawn, if proper measures are undertaken. This change
can be brought by mutual confrontation happening between the state and
agencies (Easton and Howard, 2005).
3. Comparative Cost Advantage- The Telstra Company has been making a great
number of investments and its benchmarking can provide the quick view of
gaining results. The share price of Telstra Company has gone high irrespective
of the geographic risk, market sentiments. The company is majorly focused
towards earning the economic profit rather than earning based metrics
(Deardorff, 2014).
Review of relevant literature
The literature review sets out the preliminary view of stable pricing systems for the voice
and SMS services. However, the government commission bodies have created small
jurisdictions which have regulated the SMS termination. This is mainly due to lack of
stable pricing system. The Telstra company is of the view that a practical approach
must be taken. If there are certain evidences that exist between the cost of SMS
termination and cost of voice termination, then underlying fact is to determine the costs
of SMS termination. Firstly, Telstra considers commission body must not set the SMS
termination service prices. However, there are high regulatory risks in the determination
of SMS charges. This is mainly due to the robust SMS markets in Australia. The
environment needs an alternative messaging system. According to Dong and Wong
(Dong and Wong, 2016) -At a practical level, the commission needs to identify the price,
terms and cost and time involved with the development of business model and
benchmarking the information. There are certainly other approaches like application of
few adjustment techniques to voice messages rates and get significant rates.
A SMS service is considered as bundled offers and receives great competition and
setting of a regulatory into account and overweighs the risks and costs associated with
it. If the authoritative body had to set prices, Telstra agrees on consistent pricing
methodology and SMS and voice termination costs must be estimated. Telstra has
agreed cost-based pricing method must be used for estimation of the costs of offering

The Changing Role of Telstra 6
voice as well as SMS termination services. A simple, cost relationship can be inferred
which will not be appropriate due to the risks associated with under-recovery of costs
related to SMS termination. Price can lead to the increased competition. The
benchmarking or cost modeling process can be taken (Stojanov and Kandžija, 2013).
Quality of research (relevance of the sources used)
To convert the financial measures of revenue as presented in the company annual
accounts which have been collected through economic measures. Few measures will
be reported routinely and used through the analysts. Fundamentally, there are A
number of measures which must be reported on a routine basis. This is how the
accountability of the firms can be measured. Most of the time data received is
approximations. The link between the economic profits and accounting profits is timing.
Economic profits can be measured ordinarily and economic profits are based on
essential timing. Economic benefits of a firm can be measured through the NPV value of
cash flows through an investment. In case, where the net present value is zero when
compared with the value of current profits (Morrow, 2010). Accounting profits are the
measurement of current profits and this is visible from the investment decisions. For
Example-Any major investment firm will not be able to return the money during its initial
stages and this may show the accounting lines. The Net present value can be positive.
However, there are no methods through which economic profits can be measured
correctly and accounting profit can give reasonable approximations. A reasonable data
are made available to the company wherein results of single year must not be unduly
relied over. The value of the assets which is reported through the firm and the net value
of the cash flows can provide the estimation of high economic level activity.
Extent of research effort
The company has invited inside views for the appropriate regulatory period and
including the commencement and appropriate expiry dates for the SMS and mobile
voice termination (Wang, 2011). An expiry date must be included and associated
determinations. There are several factors which must be taken into account for the
determination of pricing approaches for the MTM and FTM terminations. Telstra

The Changing Role of Telstra 7
company is offering homogenous services, i.e.; mobile based termination services.
Telstra argues to keep the pricing strategy in the similar manner irrespective the call is
made from the mobile or fixed network. Moreover, Telstra is concerned about the
asymmetric pricing system for MTM voice termination and this is under review. The
Asymmetric pricing system raises the arbitrage risk and calling externalities risk. This
will result in huge inefficiencies. However, Telstra Company is not of the order to adopt
the different pricing approach (Okubo, 2008).
Establishing the link
An attempt has been made to convert the profitability accounting measures as
presented in the organization annual reports to economic resources. The company
participates in active research to routinely report and provide a picture of the firm’s
profitability. However, there are a number of measures which are utilized due to
profitability accounting measures. These are just the economic profitability measures
(Matsuoka and Kikuchi, 2012).
Explanation of the link between the event and appropriate concept
The link between the event and appropriate concept has been highlighted here.
The Telstra needs to comprehend the link between the accounting and economic profits
and this is mainly timing. Here, the cost advantage theory is applicable. Economic
profits can be measured ordinarily. If the NPV of a given cash flow is higher than
economic profits are made from the investment to realize the economic return.
Accounting profits are measurements of current profits from prior investment decisions.
This can be explained with the help of an example- a major investment company may
not be able to generate the revenue in its preliminary stages and will show huge
accounting losses, irrespective of the investment value is positive (Okubo, 2011).

The Changing Role of Telstra 8
.When there are no immediate ways of measuring the economic profits, accounting
profits can be measured on an approximation basis.
SWOT Analysis
Strengths- The company is also involved with creating the newly owned infrastructure
business through which it can drive business and future opportunity. Radical Transition
in customer pricing and plans must be able to deliver the enhance customer
experiences. The company is expected to increase the productivity program by $ one
billion to $ 2 billion cost out by FY22.
Weaknesses- The company is expected to reduce the number of employees and
contractors in different layers of management.
Opportunities- The company Telstra has brought simplified products which will
eliminate the customer pains and provide them with digital experiences. The company
needs to create the standalone infrastructure business for driving performance and
setting up exceptionally well.
Threats- The simplification of the structure and empowering people for serving the
customers is mandatory. Another important aspect is a portfolio management and cost
reduction programs (Jasiński, 2017).

The Changing Role of Telstra 9
Justification and supporting evidence
The present analysis has been made based on the information sources from third party
corporate sources. This includes internal research and annual reports. However, the
accuracy of information cannot be confirmed to accuracy. There are a number of
estimates and inferences and assumptions in generation of analysis. The 12 CPM
target price has been set with regard to the regulatory body determination. The pricing
principle has been established for the effective supply (Borders, 2012). A cost and
consultation model needs to be established to inform about the supply estimate in the
Australian context. For example-There are no equivalent requirements for the regulatory
which can demonstrate the reason behind the final determination with relevance to
statutory requirements. When arbitrating the dispute, the authority rule is to actually set
he pricing system and has an aim of resolving the dispute that exists within the two
parties due to non-agreement with terms and conditions of access. The regulatory
bodies required to consider the dispute and adopt the pricing methodology to the
evidence as provided (Skaar et al., 2015).
Arguments, critique and original thought
The economic profit derived can be more robust and ensures a particular steep with
clarity of objectives.
1. The operators must be provided with adequate time for adjustments of retail
prices and a sudden increase or decrease can generate disruptions in the
planning and operational telecommunication carriers.
2. The impact on customer segments can be reduced. For instance- the regulatory
bodies consider the decrease in prices and this can lead to the changes in the
balance between the monthly subscription rates and/or decrease handset
subsidies (Denness, 2013).

The Changing Role of Telstra 10
To justify- smaller prices will not require the transitional arrangements. In a scenario,
when commission is setting the regulated price for voice and SMS termination, different
arrangements needed to be made. However, it has been observed, SMS traffic is
balanced and public communities use unlimited SMS mobile plans. According to the
Telstra, SMS termination rates will have the minimal impact on retail markets (Kotecha,
2018).
Entry Strategies
The regulatory body is undertaking the separate consultation for supplementary prices
and also for the declared price. Telstra had made submissions to the regulatory bodies
in charge. The company notes that the overall position of anay supplementary prices
must be dealt with conjunction with primary costs for every service (Breckman, 2007).
Telstra has been taking crucial decisions and considers switching costs can be
overstated. Furthermore, the switching costs between different technologies will be
required to achieve the end-to-end benefits. It has been stated when competing firms
are differentiated within each other, switching costs will be active. It has been identified
$59 is the connection fee and $ 99 is the differentiation fee (Sheaffer, Golden and
Averett, 2009).
Logical sequence
Customers are focused towards acquiring the bundle of voice services from the retail
store. This can be effective due to customer preferences as it receives a single bill for
the different services and cost savings from the same provider. The price of the
package must be provided to the customers at a given discount. The company is of the
view to include the local calls, basic access national and long distance calls. The
company seeks to identify the relevant product substitutes. The Telstra has been guided
through the commercial realities and ensure market can identify the areas of
competition. Any geographic market should be corresponding the commercial realities
of a given industry.

The Changing Role of Telstra 11
Generic Strategies
The company must be aware of trade patterns. There are difficulties when applying the
conventional geographic demand with supply side analysis to fixed telecommunications
line. The fact holds that fixed line infrastructure is connected with the household. A
customer cannot move to another geographic area due to price increase or quality
degradation. The company needs to take into account the relocation costs that can
outweigh the savings. There are certain difficulties in the application of supply side
analysis. For example-The huge investments made in the fixed line networks, which
include the sunken characteristics and long lead times which are often involved. This
can increase the possibilities which will be faced through the rivals and has limited
scope.
It has been observed in the past, customers will be unwilling to change the
telecommunications provider which arises due to the lack of information. Switching
costs are high when the transition takes place from one service operator to another
operator. A report suggests that customer status quo will be acting as barrier in
achieving the sufficient scale and effectively competent. When switching costs and
information asymmetry is available about the extensive range of available contracts, the
company Telstra will be given a considerable advantage as the provider of local
telecommunications (Kikuchi, 2009).
The company is creating new digital platforms that may enable the simplification of
businesses. This will lead to enhanced customer experience and savings too. The
company has also invested in the fixing the customer points and adopting the new
technology and ways of working. The new technology platforms devised for the
customers shall cover the complete customer lifecycle and ability to move towards
simplified and new product suite. This can enhance the customer experience.
Significant measures have been undertaken for the development of new digital
platforms. Small businesses have started building the products in FY19 and migration of
customers is expected by FY20.

The Changing Role of Telstra 12
Conclusion
The Telstra Company must define the scope for the target market and perform
assessments and applications of different pricing systems. However, Telstra suggests
that demographic markets must not be segmented through the customer type.
Customers can be easily served through the network or the fiber shot upgrade. Telstra
provides that relevant markets can be identified by assessing the state of competition in
relevant markets. The state of competition cannot be static and applied to descriptions
of current behavior and conditions. Dynamic factors must be taken into account like
sustainable competition and extent of which the threat of entry constrains the output
decisions and pricing systems. At a theoretical level, the perfect competition concept
can describe the market structure wherein the consumer or producer does not have the
power to make an influence on pricing system. According to the economic theory, the
perfectly competitive markets have a large number of suppliers and buyers. All firms
have the relevant market knowledge and can freely enter or exit. However, the rival
competition existing between the two firms is intense.
As the company is shifting the new platforms, the company will aggressively improvise
the experience for customers and address the customer points. The improvisation
process for end to end ordering procedures seeks to increase the customer experience.
This is visible in the order processes and time taken for the activation. The radical
simplification of products and new offerings can eliminate the customer pain point and
drive them through the digital innovative platforms. Establishment of standalone
infrastructure to drive the performances and set up the plan is the next step. The
simplification of business will have an impact over the workforce.

The Changing Role of Telstra 13
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