Sunday, March 22. 2009Pricing ADSL Services In 2009John Linton We continue to look at our ADSL1 and ADSL2 pricing parameters for the second quarter of this calendar year as more indications emerge of changes in attitudes among some of Exetel's suppliers and as the overall rate of growth in the communications industry, at least according to the ABS and some sensible industry analysts, continues to shrink at a slightly faster rate - currently estimated at close to 4% for the year ending on 30th June 2009 and likely to finish the year below that. Exetel's revenue growth in the period 1/7/08 to 28/2/09 has been at a rate of a fraction under 24% (compared to the same 8 months from 1/7/07 to 28/2/08. In some ways it's nice to think your business is growing at a rate of 600% of the theoretical 'industry average' but our tiny size is, of course, a major factor in achieving this, largely meaningless, statistic. Another way of looking at it is that 24% is considerably slower than our 'historic growth' of over 30%. However, what we have noticed is that our revenue growth over the first 10 weeks of 2009 is back to the above 30% compared to the first ten weeks of 2008. Interesting in some ways but not truly meaningful in any way I can determine. Our focus for 2009 remains in growing our business user base at a much faster rate and therefore our business sector revenue. The reason for that is that when we did the planning for 2009 we decided that the lack of growth in the ADSL market and Telstra's likely non-selection to build the 'NBN' would produce some 'seismic shifts' in the big carrier's "marketing promotions" to try and shore up their ADSL bases and make some sort of revenue contribution as their wire line revenues continue to decrease at a faster rate. So we have two more weeks to decide what we do, if anything, with our residential pricing for ADSL and HSPA. We've been pretty happy with the overall results we have achieved over the past five years in staying alive as a company while pursuing a policy of offering the lowest priced broadband plans in Australia with an increasingly more comprehensive range of 'add ons/value adds' than any other broad band provider. Personally I think the 12 hour 'bonus' download period is of immense value to a broadband user and we have, over time, increased the 'free download allowance' from 20 gb to, currently, 54 gb. The other 'add ons' of free SMS's, free faxes, large amounts of free web space and large number of free email accounts and a free fixed IP are pretty comprehensive and are widely used by Exetel customers. How the current offerings can be improved remains to be seen - there are a lot of pressures from a range of areas that need to be dealt with to just maintain the current levels of offering. What is somewhat intriguing are the indications that the major cost component of ADSL broadband (the monthly charge for the basic 'port' charge) which have been sky high since ADSL was introduced by Telstra some 8 years ago may reduce by some amount in the not too distant future. This is absolutely by no means certain but it is the only way that residential prices from Exetel can be meaningfully reduced. As I briefly discussed yesterday the likely fall of IP costs by something like 40% wont deliver much of a decrease because, from what we can see, the average usage of IP by end users is increasing by almost that amount - based on the trends of the past 12 or so months. However what Exetel does isn't relevant (except to Exetel customers of course). What almost certainly will happen is that Telstra will 'be forced' to reduce its incredibly high residential "list" prices for ADSL2 and will have to deal with how that affects their incredibly high ADSL1 "list" prices. They have, of course, already done this for over two years via their string of "special offers" which have effectively meant that they have been offering broadband services at below wholesale costs to an increasing percentage of their user base. While this is 'legally' defensible because of various factors the end result is that they have almost run out of the ability to sell to even the dumbest users at their "list" prices and have achieved most of their 'competitive' objectives (restraining take up of competitor ADSL2 offerings) and milking dry the ADSL1 marketplace. What Telstra actually does is completely unknown to me but if Telstra lowers its 'umbrella' pricing then every other high priced ISP will be force to lower their pricing irrespective of whether their own operating costs are reduced - which unless Telstra changes their port charges - they wont. So the 'new' Telstra 'marketing' policies are likely to be based on lowering their ADSL2 charges to end users (using whatever subterfuge they select) which will force all of their competitors to reduce their end user prices (and their profits - for those of their competitors that make any). The net result, for broadband end users, will be lower ADSL and HSPA prices over the balance of 2009. Of course, this is pure speculation on my part but it is the scenario we are basing our own, irrelevant in any broader sense, future pricing considerations on. The problem is to find a way to remain the lowest cost provider in the Australian marketplace in the face of significant new 'special offers' from an increasingly desperate Telstra. Tough problem. We will continue to look for ways to use HSPA to enhance the ADSL Only one solution has come to mind so far. Trackbacks
Trackback specific URI for this entry
No Trackbacks
Comments
Display comments as
(Linear | Threaded)
John,
may I say that extra GB's added to a plan does not make that plan better if your not using the current GB's anyway. The difference between 48GB's in offpeak and 54GB'S in offpeak really is irrelevant to the average user. I know the snout in the trough brigade would beg to differ --- but who are you trying to please here? I guess that over 90% of Exetel customers wouldn't use their full 60GB plus allocations -- and I feel you’ve moved too far to increase the usage in the off-peak period . That card has been played -- your now struggling to cope with massive increased usage every month by maybe only a few thousand users who believe its their god given right to use every single MB of usage they have been given. Have you considered cutting the massive offpeak usage given to most plans 54GB and replacing it with a realistic 30GB of off peak. Times are hard for people right now -- reducing household spending is what its all about. Can I respectfully ask you to consider dropping some prices and cutting back on the huge 54GB offpeak allowances. You need a low $40-00 1500/256 plan with 20GB usage pm for all the people that are madly trying to tighten their belts at the moment. Maybe reduced offpeak will assist you not having to invest in extra bandwidth as well. Exetel are the most innovative out there - if anyone can innovate something from nothing its you. ps. you killed my plans of coming back to Exetel by removing the 10GB HSPA $57.50 plan -- i had it all worked out to drop the Telstra phoneline till then, is there a chance this plan will reappear, in May my adsl2 contract with pacific finishes and I after being with you from the early days i would like to return home. cheers bill. Comments (3)
A $40.00 1500/256 plan with 20 gb of peak downloads would be $20.00 below cost.
Comments (5)
Have the prices risen that much since November 2008 when Exetel offered $40 1500/256 plan or where you also losing money to offer this plan.
Why did you offer a 10GB HSPA plan for $57.50 and then 2 weeks later change it too a 8GB plan for $55 -- that is a massive increase to use 10GB @ 5 cents per MB over 8GB's / makes they same 10GB's worth $155 per month . holy cow .. that’s almost triple. John , youve never been a smoke and mirrors man before - whats happening , my thoughts are you are improving the bootom line to either retire or sell Exetel. Comments (3)
While there are occasions, like last Friday at 3.00 pm, I feel as though I'm way past my use by date and should have retired long ago that is not an option currently available to me.
As for selling Exetel - it has never crossed my mind and, unless/until I lose what little is left of my good sense, it never will. I have no idea why you would find some scintilla of allsusion to such things in what I write - I certainly can't see anything. Comments (5)
So why did you cut that 10G HSDPA plan back to 8G?
Are you going for the IPO? Comment (1)
A PAYU HSPA service with purchasing options similar to your current PAYU ADSL services could be an attractive product.
I have a family member who would like their own net connection but getting a DSL service at this time isn't practical for a few (non-financial) reasons. HSPA would be ideal if they had the ability to pay for x GB and then have the service stop working until they bought another block of x GB for usage with rollover being an option. Although this is very similar to the prepaid options Optus and Three offer, Three's offer is completely and utterly useless and should not be allowed to be sold. Optus seem to heavily manipulate traffic, make you beg for a routable IP and don't have Exetel's value adds or online facilities. Just a thought. Comments (2)
We are only a few days away of making pre-paid plans available - though I have never seen why people would want them.
Comments (5)
The reason it would be attractive in the particular case I'm thinking of is the "safety" that a block-based usage system provides. There's no way of being hit with an unexpectedly large bill.
Personally I'm much happier with a post-paid service. Comments (2)
Likewise, the attraction of prepaid is the safety net it provides, spend $30 and once the money runs out you can't spend any more (anyone with teenagers is aware of this) I would love to have this in a post paid service so there was no mucking about with recharges etc and just know that there was only so much they could spend, just about any phone deal is better than the rates on prepaid but the fact that you can't stop the charges at a pre defined limit on post paid services is too dangerous with kids, so instead they get charged exorbitant call rates and with no clarity of what your paying for anyway, another telco cash cow
Comments (3)
John,
I would like to say thanks for just answering questions in this highly volatile environment -- most people would not take the time or risk to make themselves available. Thats why I like Exetel. - Unlike any other... For this I thank you. cheers bill Comments (3)
What I would love to see is a HSPA plan that is priced at a a minimum but 'shares' quota with a combined ADSL/ADSL2 plan. So if I download 1GB on my HSPA plan, it comes off the peak componenet of my ADSL plan.
Of course the price per/GB is not equal so this would be a problem. Perhaps then you bill the HSPA data at 3 times to 5 times that of the ADSL data. 1GB on HSPA is 5GB off your ADSL2 account. Either that or, a free 50-200MB of HSPA quota with all ADSL2+ plans (with the ultimate goal of encouraging more customers to use the HSPA service). Of course equipment is BYO, and perhaps there is a one off $20 fee for a SIM, but it would definitely be an industry first (as far as I know) and it looks like you guys have the ability to implement something this. Might submit this as as suggestion! Comment (1)
Everyone I'm recommending the Exetel services to is very happy with the pricing. With the exception of new ADSL 1 customers. I understand that you're trying to move people HSPA, but optus reception isn't always available in country Victoria.
My number one complaint is that $130 is too much for a connection fee. I personally like the 6 month contract, but you might have to look at moving it to 12 months to make the connection costs more attractive. Comments (2)
The $130.00 (inc GST) provides an averaged (the cost to churn is zero) 'profit' of $22.00 to Exetel which is used to cover the costs of the set up of each customer and the support that some customers 'need'.
While it's true that some customers never call Exetel and simply connect when the circuit goes live there are others who either through their own ineptitude or the carriers take up a lot of time. Personally, I wouldn't want to lock a customer in to a 12 month contract by 'loading' the carrier's set up charges into the month payments. the carrier's charges have to be paid and Exete's very low pricing doesn't allow us to absorb the carrier's set up charges to Exetel. Comments (5)
perhaps just an assumption on my behalf but I would have thought we were close to saturation point on ADSL connections and a churn would be more likely than a new connection, are there really that many new connects happening in the current market place?
Comments (3)
You have to take in to account that people with ADSL keep moving to new premises which, in ADSL carrier terms, is a new connection.
Also when people move from ADSL1 to ADSL2 that is a new connection in carrier terms. Comments (5)
Ok, didn't think about the relocations that occur, I guess in the rental market this would be prominent, another + for HSPA based solutions though, no more disconnect, reconnect fees etc, aside from the connection cost of the ADSL there is also the connection of the phone line ($59 if it still has a dial tone, up to a few hundred if not)
Perhaps that's the next agent opportunity waiting to happen, real estate agents that could offer or suggest HSPA based services or perhaps even rent them out themselves, there's a $200 saving on a phone connection and ADSL connection straight up which could make an HSPA solution all the more attractive to the home rental customer with a lot of properties being offered with a 6 month lease I can see why a 12 month contract would be less attractive to the customer Comments (3)
|
Calendar
QuicksearchArchivesCategoriesBlog AdministrationExternal PHP Application |