The world has long been a world of price wars, with many providers charging outrageous prices for their services.
And while the latest deal from Telstra could be seen as a major step in the right direction, some are still worried that it could lead to more price hikes and a drop in quality of service.
But according to analysts at research firm Ovum, Telstra’s new deal will actually bring down the price of the internet by about $2.4 billion over the next five years.
That’s a drop of about 7 per cent.
That doesn’t seem too dramatic, but the company is already facing significant competition from other providers and is hoping to gain a similar foothold in the high-speed internet market in the future.
“We think that the deal will see Telstra lose ground in the US and Europe as broadband providers seek to capture some of the value from the internet’s growth,” Ovum’s chief research officer Tim Goggin said in a statement.
Telstra and its competitors have also recently started charging a higher price for fibre broadband, meaning the price for a fibre broadband package has increased by over 20 per cent in the past five years, according to Ovum.
Telso’s fibre internet service is available to more than 40 million customers in the UK, Australia and New Zealand.
Tels US cable provider Comcast, meanwhile, is the biggest broadband provider in the country, with nearly 1.3 million customers.
Telcos like Telstra are often able to sell a better deal because they can offer a lower price in the face of competition.
But in this case, Telcos are looking to keep their edge and the cost of the new deal is set to be a bit cheaper than that of its competitors.
Ovum says the new telcos deal will also result in a cost saving for consumers.
“It’s not as though there’s going to be less competition on the internet, as we know there’s still competition,” Ovums chief executive John Goglin said.
“There will be more competition in the market.”
This is part of Telstra being able to use its $20 billion in cash reserves to pay off its debt and reduce the price it charges consumers, which it did during the financial crisis of 2008.
But Telstra is also looking to bring down costs of the next wave of internet infrastructure it will build.
Telco is currently building its own fibre network, known as Telstra Xfinity, which will deliver fibre internet to a range of areas including offices, hospitals and schools.
Telxnt has also been investing heavily in its fibre network and has announced it will begin construction in 2019.