michael malone on zdnet's twisted wire, page-5

http://www.bloomberg.com/news/2010-08-13/tpg-telecom-iinet-slump-in-sydney-on-speculation-telstra-will-cut-prices.html

Typical market over-reaction IMO.

I'm an iiNet shareholder but because of my location I could only get a pretty slow and unreliable DSL service. About 6 weeks ago Telstra released some very attractive bundle deals so I switched to Bigpond Cable.

Note that was 6 weeks ago. In the mean time Internode and iiNet have been complaining to the ACCC that Telstra is now selling retail below wholesale costs - that's been in the press for weeks.

I don't know what these so called investors are doing if its taken them this long to realise Telstra/Bigpond is competitive again.

All that said, I'm still an iiNet shareholder. I don't think that product pricing is the whole story. TPG and iiNet have very disparate pricing and even MM acknowledges that. At the end of the day its the combination of product, pricing, marketing, and quality of service that determines success.

Just as an aside, Telstra products are pretty good. The network is great, and the staff try really hard to provide good service. But they are foiled by the horrendous mess that is Telstra's IT systems.

To give you an example, I wanted to remove MessageBank from my phone line. I thought I should be able to do this on the website, or even just be dialling a code on the phone. Nope, I have to call up. I call up, I go through an IVR that identifies that I want to disable MessageBank, it identifies my calling line ID, asks for my DOB, and then puts me through to a consultant. The consultant asks for my DOB again to verify my ID -- didn't I just give this to the IVR a second ago? Anyway, she then cancels MessageBank on my line per my request, and informs me it'll take up to 24 hours for request to go through "the system".

To achieve the same outcome on iiNet I would just log in to their online Toolbox and do it myself.

I'm not complaining about the Telstra process as a rabid angry customer - I just question why the IVR has all the required details, then has to put me through to an expensive support person in order to achieve the desired outcome.

On Whirlpool you can see the multitude of issues Telstra's IT systems cause. Users can't get case/ticket numbers to track their issues, Bigpond is unable to account for usage in a timely manner (it randomly delays it from 15 minutes up to 8 hours), and my favourite one - users aren't even able to order what they want reliably because the systems magically lose and transform orders.

Of course no one is perfect. But the concept of Telstra competing on price and squashing everyone including iiNet and TPG to the tune of a 8+% single day drop is ludicrous.

I hope MM and his team don't prove me wrong when they release the next round of plan revisions and numbers. ;)