TelstraClear's resale business soaring

By PETER GRIFFIN

It may not be offering anything much different to arch-rival Telecom, but TelstraClear claims its resale customer base has jumped 500 per cent this year as businesses seek out an alternative telecoms supplier.

TelstraClear now has nearly 10,000 resale customers who are billed by and receive customer service from TelstraClear but are in effect buying a Telecom product.

The margin on reselling business line rental and call packages to TelstraClear customers is minimal, but it allows TelstraClear to control the billing relationship with a greater number of customers - and sell them add-on services such as toll calling and internet access which carry higher margins.

TelstraClear's residential and small-business head, Steve Jackson, said the company now derived $20 million in revenue a year from resale customers. An undisclosed portion of that was fees for the resold line rental and the rest was made up of more lucrative add-on services.

Under provisional wholesaling and local loop unbundling provisions, both of which are being examined by Telecommunications Commissioner Douglas Webb, TelstraClear could gain access to Telecom's lines itself, moving from a resale to a wholesaling model.

That has the potential to change the game entirely for TelstraClear, which would then pay a much lower fee to access a Telecom line over which it would run its own services.

Just how this would improve the profitability of TelstraClear's line access business is unclear.

"We don't know what the deal would look like if and when it becomes available. But the margins on this are slim, they'd have to be better," said Jackson.

TelstraClear, which signed up just 100 resale customers a month at the start of the year, was now adding 1500 to 2000 customers a month.

The company has been pushing its resale products through sales channels but has not yet gone big on resale. It is not able to resell residential calling.

Jackson said there might be problems with the two carriers servicing large numbers of new customers in a short period, hence the lack of above-the-line advertising around resale.

"There would be thousands of inquiries and we wouldn't be able to service them," he said.

"If they became automated we could go big bang with it."

Although TelstraClear is obviously growing its resale base, its dissatisfaction with a mobile reseller agreement with Vodafone shows the lack of value in resale as a business.

TelstraClear is considering introducing its own 3G network as an alternative to reselling Vodafone's services under the 029 number prefix. TelstraClear will next week undertake 3G demonstrations in conjunction with equipment vendor Ericsson.