Saturday, January 3. 2009What Will 2009 Bring To Australia's Larger ISPs?John Linton It's again that time each year, for the past 7 years (since I first became involved with ADSL), that I have taken a few minutes to look at the coming 12 months in terms of what I think will happen to ISPs (including Telstra) over the coming twelve months. I used the time on the flight home earlier this morning to think about what Exetel can expect in the way of competitive pressures in 2009. My predictions on 2nd January 2008 can be found here: as a guide to how useful my views may or, much more likely, may not be. One thing that 2008 finished off was the almost total elimination of the 'lunatic fringe' ISPs. There are still a couple left but they too have almost completely disappeared from sight and, I suspect, will cease to exist completely in the coming few months. My random assessments of the 'top ten': It seems highly likely that Telstra will ramp up its ADSL2 offers and those users who can get ADSL2 from Telstra will be very 'tempted' to swap their ADSL1 service for the higher speeds of ADSL2 via a series of 'unbelievably low priced' "special offers". It seems to me that Telstra will do everything possible to cease suplying ADSL1 to wholesale customers, at least in its current form, as soon as possible wherever it has ADSL2 ports. With their elimination from the 'NBN Tender' they will do everything possible to use their current ADSL2 and HSPA networks to render any faint hope that an NBN can be delivered in some sort of 'this century' timeframe as unlikely as possible while they get their paybacks from their ADSL2 investments maximised. By already 'sucking in' some of the 'independent' ISPs in to becoming Telstra ADSL2 resellers and with the 'carrot' of also letting them re-sell (if not wholesale) their HSPA service at 20 mbps type speeds in the foreseeable future they have a fairly simple way of eliminating the urgency/need for an NBN of any description. Prediction: Will continue to grow ADSL2 and HSPA customer base at the expense ot their own and their competitor's ADSL1 customer bases.
They will have to cut Telstra's current HSPA lead but this will also be hampered (in terms of allocated capex) by their need to stay involved with the NBN. The ongoing squeeze by VoIP on land line rental and land line call revenues will make life difficult for them for the foreseeable future. AAPT iiNet Then there was the even stranger decision to become a "3" dealer"? What was that all about? Prediction: will run out of money and be bought out No-one else, including Telstra, delivers such profits (as a percentage of revenue) and the vast majority of communications companies don't deliver any profit at all. Mind you - the predicted 2008 profit disappeared in the predicted "unforseen issues" in the taken over company's books so it will be interesting to see just what profit is delivered but as a public company the predictions will now be more accurate. SOT continues to heavily advertise and has continued to develop its network so, far more than iinet, SOT has a 'reason to exist' as it does offer a low cost/high usage alternative to Telstra for a range of products but it may have to address the danger of burying its network with high end users at low prices. Prediction: TPG continues to grow and, as far as can be determined, continues to make a lot of money. It is the likely "third provider" in the current Australian marketplace. Their decision to wholesale Optus ADSL2 and then, even weirder, wholesale Telstra ADSL2 is bizarre for a company that claims to only offer value to its customers. Prediction: Will need a 3/4G service to remain relevant. Adam Internet I know absolutely nothing about this company but companies of this size can only have a future as a takeover candidate for someone bigger - given the money is right which in 2009 is not likely. Prediction: No idea Of the current crop of suppliers of communications services only TPG (SOT - must stop using "TPG" this year) appears to make any 'value offer' with Optus, iinet, internode etc just taking Telstra's high prices and offering the same service configurations at a few dollars a month less. Not very imaginative or any reason to be in the business at all. Exetel? Too small to bother with but may survive and grow in 2009. Trackbacks
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"David Teoh completed the"sale of the century" in gettting $A150 in cash"
He didn't get a good deal at $150, I'd have paid $170 for it. (I think you left out 'million'). Comment (1)
Primus do have some infrastructure - decent data centers in Sydney and Melbourne and their own DSLAMs scattered around.
Does AAPT's ownership of Powertel and their associated assets count at all? When I was speaking with AAPT last year, they were going on about their current main project which is to build a national MPLS network. Comment (1)
Telstra will be hoping for the NBN to go ahead if this is anything to go by http://www.news.com.au/business/story/0,23636,24819458-5017676,00.html?from=public_rss I don't put a lot of faith in the integrity of the media but the concept is very much the way Telstra plays the game
Optus will continue to make its advertising company rich, anything they make they seem to pour into yet more campaigns, win at all costs seems to be the go here TPG, I hope they continue and keep all the mega downloaders on their network safe from any broadband experience I want Will Internode fanbois ever realise they are being taken for a ride? DoDo, I suspect this company was named after their support channel Exetel, the way I see it will continue picking up connections and growing quietly in the background Comment (1)
John ,
My predictions for broadband in AU. Grandeous statement from a users / my point of view. iiNet - will continue to make the most glossy shareholders statements in AU. Telstra will continue to remain the most arrogant ISP in AU. TPG will endeavor to chip away at both Optus and Telstra, until they become more than just a nuisance, but an actual threat. aaNet / Eftel will continue to assure themselves that they are the best thing since sliced bread -- but they will eventually realize that you need more than dough ($) to make real bread. Internode - they continue to make no big mistakes, but they are working on becoming as arrogant as telstra and if the Old Granddad port and cigars should ever run out in the boardroom it could spell the end for Internode. Optus -- Optus -- Optus they just seem stuck in the mud , they cant decide whether to attack or go into defense mode. They don’t seem to have an actual strategy - I suspect a management problem. Exetel – bet you where waiting for this one – I will define it as this- There is no reason, based on their current strategies employed, why they will perform any worse than they have in the previous 5 years. Exetel has been a standout during the past 5 years and I cant see any reason why this will not continue in 2009 and for the next few years. NBN - is just a myth in the foreseeable future. Australia is in great need of a hero to arise from the ashes like the mythical Phoenix ---------- Possibly a Calliope ( the Muse) . Comment (1)
AAnet/EFtel have no "dough", just look at their financials.
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Very Interesting analysis john.
I agree TPG will continue to grow subscriber numbers at a rapid rate & offer great value plans for the consumers. David Teoh has to be the smartest ceo going around in the telco sector. The $93 million profit figure should be met easily if they grow as fast as they did in FY 2007, with august profit $7.7 million. Dodo, internode to go in 2009! Comment (1)
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