John Linton ....perhaps only because Christmas day happiness spills over to a second day.
The promised sunny day hasn't got off to the best of starts and the promised brisk breeze is nowhere to be seen but maybe that will happen. We are taking my visiting sister on the harbour to see the start of the Sydney to Hobart and then lunch at the RSYS which is always an enjoyable way of showing Sydney at its most spectacular to visitors so I will, somewhat reluctantly, miss the start of the cricket - but sacrifices have to be made for rare visitors.
I was very pleased to see that our order intake on Christmas Day was 40% higher than last year (though the numbers are, of course, very low) and in these uncertain financial times you tend to look for as much good news as you can find. As another sign of the times it was interesting to see that now there is a Christmas Day support ability that a surprising number of people used telephone, email and forum services to help them resolve problems. More a sign that internet is becoming ever more deeply embedded in our day to day lives (VoIP and email becoming far more widely used for communicating than ever before) and, of course, if games playing becomes disrupted then a growing number of people's 'lives' cease to be worth living). For those people who have access to the MRTG reports it's still surprising, at least to me, that the overall use of theĀ network only declined throughout Christmas Day by 25% from its absolute peak level on the highest day in 2008.
The other obvious trend, if you have access to the MRTG reports is to look at the annual chart for total external bandwidth and see the monthly average usage has almost exactly doubled over the past twelve months. I'd like to be able to say that our number of users had also doubled but that isn't the case - the number of users has increased by 'only' 35% over that time. It is one of the most obvious 'signals' that the average monthly downloads per customer have increased even more over the past 12 months than they did in the previous 12 months - and far exceeded the savings that were achieved by negotiating better buy pricing for IP bandwidth and customer connectivity bandwidth.
From time to time I read comments by various people (end users, media) complaining that the price of Internet doesn't "go down further". I am never able to understand such comments because, based on Exetel's own pricing over the five years we have been in business the price of an internet service has fallen by between 40% and 45% over the last 5 years based on downloads x speed - the people who complain about prices not falling seem to completely ignore those two factors when basing their complaint that they still pay their $40 or $50 (or whatever) per month for their ADSL service.
The other fact is that ADSL2 really is actually much lower cost than ADSL1 in terms of raw end customer cost per month with the 10 to 20 times faster speed 'thrown in' for nothing. The cost to Exetel of an ADSL2 port and a telephone line rental from Optus is actually lower than the cost of a 1500/256 ADSL port/no telephone line from Telstra (and as can be seen from other ISP's ADSL pricing that is a common situation). ADSL1 pricing, to Exetel, hasn't changed for over two years so we have no ability to reduce ADSL1 pricing (port or customer connection) over that time other than by the greater efficiencies we build in to our business and the price reductions we may achieve in other areas of the total cost of providing the service - but as I previously said the amount of data used by end customers has almost doubled over the past year which negates the savings we achieve from operational efficiencies or lower IP costs.
Looking at 2009 I can't see any immediate likelihood of end user ADSL1 prices falling unless we can increase our buy volumes to a point where we 'qualify' for volume discounts - but in 5 years of growing our volumes with Telstra that has never happened and I see no prospect of that happening now as we make greater efforts to 'encourage' our ADSL1 users to move to ADSL2. Similarly the exchange rate is going to make it more difficult for our 'traditional' suppliers of IP to provide better pricing though their own internal cost reductions via the four(?) fold increase in SX capacity will make that difficult for them to argue. Similarly if the Pipe capacity does become available in mid 2009 (or whenever it is now planned for) it will, presumably, exercise a restraining influence on any reluctance to reduce IP pricing, for volume, by an adequate amount.
All in all I think that Exetel's customers have been well served by the 'lower prices' we have provided year on year since February 2004 and we will continue to make the efforts necessary to attempt to reduce overall pricing further througout 2009 - given the intractable nature of one or two of the current obstacles to that happening. What exactly can be achieved over the coming months is just too uncertain for me to make any predictions and I could be completely wrong about what will happen.
My personal view is that a much higher percentag of people than currently will take up the PAYU plan options which will take a lot of 'estimation' out of plan structure pricing and make it easier for both parties to 'budget' their pricing more effectively. We will continue to work on improving the structure of the PAYU model as we get more data from actual customer usage.
Time to go.......