Q&A: BigPond Broadband, Telstra - September 2005  

This month, S&T talks to Justin Milne, managing director of BigPond, the broadband arm of Australian incumbent telecoms company Telstra. At the time of speaking, BigPond was on the verge of signing up its millionth broadband customer. Analysts predict that broadband in Australia will reach a maximum penetration of 13% in the next four years, equating to around 2.8m broadband subscribers in 2008, up from 727,440 in 2003.

How is the broadband market developing in Australia?

“We were a bit late getting going with broadband in the Australian market for a variety of reasons. However, 18 months ago we came up with an A$19.95 price point at BigPond and we are certainly making up for lost time with penetration climbing steadily.”

What gives you an edge over your competitors?

“We are the only ISP in Australia with a good content proposition. It’s pretty simple – if you like the content we offer, then you are going to join BigPond. We have exclusive broadband rights to the Australian Football League, National Rugby League and the V8 Supercars. We also have thoroughbred horseracing and a wide range of music content. In terms of music, we have 65% of the market in terms of downloads. We also run a DVD business and Australia’s biggest games portal. Our focus is very much on the Australian market.”

Do you charge for your content?

“Any content we have is free to BigPond customers. We are a poor cousin to free-to-air in terms of rights windows so it wouldn’t work trying to charge.”

How are your deals with the rights owners typically structured?

“The V8 Supercars deal was a very simple one. What we try and do with our rights deals is make it part of a sponsorship deal. With a platform sponsorship deal in place for the V8 Supercars, we effectively own the race as it were. Our V8 deal also includes an advertising package with the TV rights owner – Channel Ten – and at the track we partner with Ten and share resources. We take our feed, they take theirs and there’s a good symbiosis. The line between sponsorship and content is getting increasingly blurred.”

How long are your deals?

“We usually negotiate three to five year deals. We prefer longer-term contracts because then everyone knows what they are doing. However, technology of course changes as we go along and we have to evolve as well.”

What makes your V8 Supercars content compelling?

“We offer live in-car coverage, which is often exclusive, as well as interactive applications. We provide the temperature in the car and monitor the drivers so that our customers can see what gear they are driving in and what the times are per lap etc. The experience they get is different to that on television and therefore not competitive. In terms of television versus broadband, there was a bit of suspicion in the industry initially relating to who was going to eat whose lunch. But we have found that fans often watch the television coverage at the same time as the broadband coverage – both platforms are completely complementary.”

What are your core demographics?

“We now have a lot of women on our sports sites - the gender bias is certainly not as noticeable as it used to be. The image even in V8 where fans are blokey and beery is no longer true – with women making up 45% of our audience.”

How do you leverage your rights deals to attract new customers to BigPond?

“There’s lots of cross-promotion and we offer prizes for members – such as rides in V8 Supercars for example. Our virtual car racing competitions have prizes linked to actual events.”

How do you see the new media market developing in general?

“Trends in terms of content are interesting. In the medium term I see ubiquity – most people will have broadband. 3G services are also interesting – although we have only launched trials so far. I want to be able to pick up my content and take it with me – on my 3G handset, then on my laptop or at my office on a portal. The idea that you can access content from different devices is potentially very attractive. Regarding ‘convergence’, I haven’t seen any evidence that one device is a cure all for everything. Other interesting technologies that we are watching are DVBH.”

Do you have any thoughts on the future of the Australian market?

“It’s all very early days and we can’t say that anyone has specifically cracked the broadband market on the content side yet for sure, but that will happen in the next three to five years. Many of us are playing in the same market but in different ways and we are always looking closely at what the other telcos are doing and we often co-operate as well.”

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