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February 19, 2009

Trujillo vs. reality

On the face of it, what we have here is one of those displays of canine dominance with which the average dog owner is familiar. One puppy decides to hump another puppy, which objects and tries to mount the other, and before you know it, they’re snarling and wrestling, and you’ve got to separate them.

Frankly, in this case we blame it on Barcelona, and the Mobile World Congress, which each year seems to gives Telstra CEO Sol Trujillo some sort of hormone imbalance.

This year, however, when our globe-trotting. star-quality “Next Dimension Working CEO” started publicly comparing his cojones to those of other CEOs who possibly don’t get paid quite so many millions, Skype’s Josh Silverman and Google’s Vic Gundotra apparently took offence.

Silverman and Gundotra suggested that Trujillo’s by-now-constant boasting about the speed of the Next G network  being responsible for an increasing share of Telstra’s revenue completely overlooked the impact of the iPhone phenomenon, and the demand for applications like Skype’s VoIP service.

There ensued an unseemly squabble about whose strategy was likely to extract the highest ARPU (Average Revenue Per User), which for cellular carriers equates to the Book of Common Prayer.

Trujillo dismissed Silverberg and Gundotra’s suggestion that carriers should engage in fair play with their subscribers, and warn them about just how much data they were going to consume if they chose to point their Internet-capable phones at a Web site.

His comment, which frankly has Bleeding Edge scratching our head [can his signal strength in ethics reception be that low?]: “So what you’re saying is that because I don’t know if I’m using one gallon or two gallons as I drive my car, I just give up and refuse to drive?”

Perhaps we’re being unkind, but that seems to translate to never giving a sucker an even break. 

But the exchange made Trujillo’s strategy quite transparent. He dismissed the notion of all-you-can-eat data plans. Telstra subscribers are going to have to continue to pay through the nose if they expect the company to continue to invest in infrastructure. Well, that’s no secret.

But the other plank in the plan is clearly built on convincing business customers that it’s OK to tip a lot of money into Telstra, because that’s going to increase their productivity. That’s evident if you look at the case studies at Telstra’s Enterprise and Government site.

According to Trujillo, “Some of our business customers are already seeing productivity uplifts of up to 30 per cent in parts of their workforces from the Next G network by cutting travel costs and saving time.

"With 21Mbps rated network and devices, we expect to see business productivity increase even further at a time when business and governments need to find practical ways to lift economies out of recession and do more with less."

We didn’t look at all the case studies, but it seems to us that some of the businesses which did buy Telstra’s one-stop solutions could have made even greater economies with alternative technologies.

And we weren’t convinced that the one-button, one click etc. magic that Trujillo claimed was essential to his personal productivity actually was quite that simple, let alone affordable.

As it turned out, the timing was fascinating. As Trujillo was performing in Barcelona, at home AAPT released a survey which showed Australian households on average were spending $44 a month more on telecom costs than a year ago.

More than a third said their children’s technology consumption had become a burden on the household budget.

We’re increasingly amazed by the degree of cognitive dissonance between the economic climate, where practically every day brings news of more sackings and failures - Dun & Bradstreet predict the failure of up to 100,000 small to medium enterprises - and Trujillo’s apparent conviction that people are going to continue to pay through the nose to prop up Telstra’s balance sheet.

Posted by cw at February 19, 2009 09:20 PM

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