Wednesday, January 2. 2008What Will 2008 Bring To ISPs In Australia?John Linton While it's very much a pointless indulgence/waste of time I have at the start of each year, for the past 6 years (since I first became involved with ADSL), 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 have to say that my 'predictions' have a pretty iffy success rate with as many being completely wrong as are basically right - though I have predicted some demises that didn't seem to catch the attention of the suppliers to them or the customers of them as early as the signs seemed to become obvious to me. The first thing I notice is that there are far fewer ISPs who are attracting attention (some tiny ISPs in the past seemed to make themselves noticed despite the miniscularity of their user bases) and the number of ISPs making any innovations also appears to be far less. Clearly then, the first observation has to be that 2007 saw a significant reduction in the number of organisations offering ADSL services which is easily explained by the fact that Telstra Wholesale ceased offering its 'virtual ISP' service and the two "largest" of the tiny ISP aggregators (WCG and Veridas) went bankrupt eliminating almost all of the allegedly 'hundreds' of small ISPs who were their customers from continued trading. So the 'lunatic fringe' ISPs have become a rapidly receding memory and the very large ISPs have grown larger. It makes it easier to consider but a lot less interesting. My random assessments of the 'top ten': Telstra Bigpond So Telstra BigPond (at least according to Justin Milne's current set of figures) has grown strongly and has also recovered a huge (12%?) market share over 2007. That's an amazing performance and, as I think I remarked in some previous rambling, extremely depressing. I think it's depressing because, if the claims are true, it means that so many Australians are truly stupid enough to pay the highest prices for the lowest value in the ADSL marketplace. I can see that it could be true looking at the analysis of where customers who leave Exetel are now going - over 50% of all churn aways are going to BigPond - whereas for the first three years of Exetel's existence maybe one every month or so would do that. So, whatever it is that BigPond is doing seems to be working (one of the things seems to be writing to Exetel customers and offering them 8192/384 ADSL plus unlimited free telephone calls at a lower price than TW offers Exetel a wholesale price for a 8192/384 port) and means that BigPond will be the major threat to Exetel, and I suspect other ISPs, in the coming twelve months. So it looks like Telstra BigPond will continue to use its inside information and its monopoly position to make providing ADSL services very difficult for all other ISPs. Prediction: Will continue to grow ADSL customer base and attempt to whatever they can to screw up all other competitors via whatever legal and obstructionist tactics they believe they can get away with (nothing new to see here - move along) Optus From what I can see Optus had a growth year and, based on its advertising spend, must have done very well in growing its total broadband customer base and its market share - so the two largest broadband providers have both grown their market shares which puts the way Australian customers see the other ISP's broadband offerings in a sad perspective. Of course, if I was a new user, I would find free activation, a free modem and 6 months free usage a pretty compelling sales pitch and one that can't be found beyond Telstra BigPond and Optus. So Optus will follow/lead Telstra BigPond down the ever more 'give away' path and will progressively bundle land line and mobile service give aways to attempt to maintain their market share growth. Prediction: Will grow ADSL customer base and heavily promote 3G broadband. iPrimus A sort of 'Optus Lite' in terms of market place impact and ideas (just identical copies of Optus). Their lack of a broadband over 3/4G service will be a major obstacle to overcome which is being compounded by their 'just too late' decision to build out a DSLAM network. The squeeze on falling land line rental and land line call revenues will make life difficult for them for the foreseeable future. Prediction: Will slowly lose market share and relevance in the Australian market place AAPT A sort of 'Slim Line Telstra' in terms of market place impact and ideas (just identical copies of Telstra BigPond). Like iPrimus they will be affected by the loss of land line and land line call revenue. What they do with their stake in iiNet will be interesting and it would be likely that they will be lot harder to deal with than Powertel were - in terms of their 'rights' under the wholesale agreement on the iiNet DSLAMs. Prediction: Will give iiNet a hard time and sell their stake to Amcom who will take over iiNet while AAPT continues to fade away until Telecom NZ finds a buyer for it. iiNet Having tottered on the brink of financial disaster they now claim to be 'debt free' (courtesy of selling off half the company to Amcom and AAPT) to raise money to bail them out. No problem - the share price is back in positive territory and the annoying Irishman based ads continued to spoil a visit to the movies late into 2007 which would indicate that they still have a major objective of growing as quickly as possible. Their problem will be that they are locked in to a DSLAM deployment strategy that has some significant doubts in terms of the longevity of DSLAM provided broadband being the preferred internet delivery option. However they have no option but to grow and their latest Telstra 'windfall' will provide enough money to make whatever impact such money can make in today's marketplace. Prediction: will be bought out by Amcom/AAPT TPG I'm never sure just how TPG is funded and where the money came from to buy Chariot so it's difficult to see what the actual TPG strategy has ever been or might be. If the few million dollars needed to buy Chariot came from retained earnings then the strategy is clear - TPG is a 'golden goose' that despite what anyone else may think delivers a handsome return to its owners and that is its reason for existence. If not - well I don't have the sort of mind that can be bothered to build hypotheses on zero facts so have absolutely no ideas. Like iiNet, it appears that TPG is locked into its DSLAM deployment and is vulnerable to any significant technology change to wireless type services. Over the past 3 - 4 months almost 40% of all customers that leave Exetel go to TPG so whatever they are doing is working in terms of customer acquisition. Prediction: TPG was a pioneer in the ISP industry and continues to survive, grow and, as far as can be determined, continues to make a lot of money. If it hasn't over extended itself on its DSLAM implementation 2008 should see more of the same. InterNode Continual statements of growth in customer numbers and employees and new premises all indicate a company growing rapidly and profitably. Prediction: Will need a 3/4G service to remain that way. NetSpace I never hear anything either positive or negative about NetSpace - to the point where I hear nothing at all. It's been around for a long time so presumably it will be around for a bit longer. Prediction: No idea. DoDo I can't believe, irrespective of their size (whatever that may be) that this company can stay in the ISP business. Prediction: Bought out by Crazy Johns or some such operator. Westnet It was obvious from the, pretty dramatic, price increases put in place by Westnet in 2007 that things were not all 'beer and skittles' within that company. It's addiction to 'providing the best service' (in itself a sensible 'go to market') via an ever increasing over hiring of personnel to provide what they define as 'service' will remain a mill stone round the 'corporate neck' that will eventually drown them. Prediction: Major personnel down sizing before June 2008 - bought out by iinet/fade to irrelevance. From my limited knowledge those are the only companies larger than Exetel that, in any way, could affect Exetel's plans for 2008. I think Exetel, as the smallest of the 'serious' broadband providers will have its work cut out to deliver on its plans in 2008 but, one advantage of being small, is that we are very quick to adapt to 'surprises'. Trackbacks
Trackback specific URI for this entry
No Trackbacks
Comments
Display comments as
(Linear | Threaded)
Surly the ACCC would be interested in the fact that Telstra are calling your customers and luring them away with a below cost offer?
Just after I first got ADSL hooked up (with a now bankrupt provider) I had one such call trying to get me to move to bigpond, However said ISP where offering a pretty ridiculous deal (one that would have lead to there demise) I told them what I was getting and the bigpond sales person simply said they could't match it. Comment (1)
Yes - you'd think that someone would put a stop to such practices.
However the sad fact is that Exetel doesn't have the time or money to follow such things up. What we have done is to advise telstra that we know what they are doing and they have, denied doing it, twice. The problem with their denial is that: a) They actually wrote to an Exetel employee with the offer. b) We have a copy of the written document. They still deny it happened. Over the years there have been many similar situations with customers of Exetel and therefore that must mean with customers of every other ISP and Telstra always deny them. We will wait for a reply to our third enquiry about the latest incident. Comments (2)
They are a very small company of no relevance to Exetel.
From their published accounts and strange public statements I'd say they wouldn't survive very long and there customer base would be bought out by iiNet from the receiver. Comments (2)
I think you might be onto something there with Dodo - I don't know about anyone else, but I can't seem to get my head around signing up with an ISP that has the same name as an extinct bird....
Comment (1)
|
Calendar
QuicksearchArchivesCategoriesBlog AdministrationExternal PHP Application |