The ‘Telstra tax’ explained.
In Australia there are only two ways to subscribe to Office 365 – directly through Microsoft or via its syndication partner Telstra.
Organisations can only subscribe to Office 365 directly through Microsoft if they have an Enterprise Agreement (EA) which has a requirement of at least 250 desktops. As this is out of reach of SMBs their only route is through Telstra.
A quick search online will uncover the fact that in Australia we pay considerably higher prices for Office 365 than in the US. Australians pay A$40.10 per user per month for the full-featured enterprise 3 licence through Telstra’s cloud portal T Suite while Americans pay US$20 (as do Singaporeans, who use the same data centre as Australians). Given the fact that our dollar is stronger, on the surface this doesn’t make sense.
To understand this “Telstra Tax” we need to look under the cover to see what the price difference is made up of.
The exchange rate
Historically the Australian dollar has purchased less American greenbacks. Right now we are riding on a high for several reasons including the global financial crisis which hit America significantly harder than Australia.
Microsoft, however, has an internal exchange rate which is fixed at approximately 1 Australian dollar to 0.83 US dollars. This means that Microsoft licences for the same software (cloud or on-premise) is more expensive than the US. With the dollar at parity Australians are automatically paying 17 percent more.
The Australian tax system is significantly different to the US. No longer do we have individual sales taxes – we have the GST which has been fixed at 10 percent since its introduction.
Adding the GST to the exchange rate and we’re now looking at a difference of about 27 percent between the Australian purchase price of Office 365 and that in the US.
Telstra adds several levels of service in Australia to add value on top of the Office 365 offering. These include sales, support, billing and its partner network.
For SMB customers on the Small Business and Professional licence (referred to as a P SKU) Telstra offers phone-based break/fix support. Customers who purchase Office 365 directly from Microsoft elsewhere in the world can only obtain assistance via the Office 365 Community online forums.
Customers of Telstra Business are able to take advantage of the strong product tie-ins that Telstra has established. For example, if a Telstra customer signs up on an All4Biz plan covering various communications services this opens up two potential benefits; service discounting (including Office 365) and loyalty credits (funds that can be used to pay for implementation services by Office 365 partners).
There is also a great team of T-Suite Application Sales Specialists (similar to IT pre-sales consultants) available around the country who can help businesses make the right choices around cloud solutions without the need for engaging a partner.
By adding the Office 365 subscription (under T-Suite) to the Telstra bill, it’s one less piece of paper or payment due date that SMB customers have to worry about.
Telstra has a nationwide network of partners who can provide customers with assistance on any Telstra product or service. This same network is being cultivated to support customers with Office 365.
Bringing it all together
There are certainly more benefits for Telstra customers than for customers on other carrier networks who want to use Office 365. Is Telstra gouging Australian customers on Office 365 pricing? I hope the points raised in this piece explain that it simply isn’t the case.
Loryan Strant is a Microsoft Office 365 MVP (Most Valuable Professional). Follow him on Twitter @TheCloudMouth.