John Linton Over the past twelve months there has been an interesting change in Exetel's residential broadband business with the percentage of applications for ADSL2 gradually increasing on a month by month basis. This has dramatically changed over the past 4 - 6 weeks with new ADSL2 applications moving towards 50% of total broadband applications and, for the past few days, moving to over 55% of daily broadband applications.
This is surprising, in one way, because the combined total of exchanges covered by the suppliers Exetel uses to provide ADSL2 services is less than 500 with over 5,000 being available for ADSL1. Of course the ADSL2 exchanges are those with, by far, the highest percentage of DSL users and, depending on what you believe may provide ADSL2 services to around 60% of the total Australian population.
I don't think that this change has occurred because Exetel is getting less ADSL1 applications than in the past - from the raw statistics ADSL1 applications per month have continued the slow increase month on month as they have for the past 24 months. It's true that more current Exetel ADSL1 customers are moving to ADSL2 with Exetel but I was referring to NEW monthly applications rather than what current users are doing. In those terms Exetel ADSL2 users account for approximately 20% of total broad band users after 15 months which is interesting but not spectacular.
I've previously commented that there is a very definite trend for people who 'churn away' from Exetel to now basically only go to two other ISPs - 55% go to Telstra (an unheard of scenario in the past) and 40% go to TPG (again an unheard of scenario in the past). Looking at the 'profiles' of the users who churn away to TPG its obvious that they are high speed/high volume users clearly attracted to the newer TPG high allowance at very low cost plans. There is no discernible trend in terms of user 'profile' for the customers who churn away to Telstra except for one curious characteristic - they are closely related to specific geographic/exchange areas over time. That would seem to indicate that Telstra is conducting some sort of telephone/mail contact program offering some sort of deal to non BigPond users on an exchange by exchange basis or area by area basis.
So, there should probably be an understandable drop in new ADSL1 applications given that, in the past, Exetel would never have considered that new users with some realistic level of understanding about ADSL (the ones who choose Exetel for the most part) would have chosen either BigPond or TPG as best meeting their needs - that has clearly now changed. So we would expect a reduction in new ADSL1 applications and that's probably occurred but been masked by the general overall increase in people around Australia taking up ADSL services.
We would have expected to see our ADSL1 new applications drop due to the unbelievable "free this/free that" offer war going on between Optus and Telstra and, in terms of market share, that has undoubtedly happened
However the rapid change in 'mix' between ADSL2 and ADSL1 is still a little surprising. If I had a choice I would select ADSL2 because you get likely faster speeds at the same price as ADSL1. However, at least for Exetel, the major reason for the change is more likely to be that the cost of activation of an Exetel ADSL2 service is either free or $50.00 less than an ADSL1 service.
It will be interesting to see if this trend continues and what difference will be made when/if the cost of activating an Exetel ADSL2 service returns to the pricing charged to activate an Exetel ADSL1 service.