I did some work on Exetel's 2009 and 2010 business plans yesterday in between other things as, being a tidy minded person, I have always tried to have the next financial year's business plan in place before the end of May of the previous financial year and the detailed estimates for the year after next completed by mid-June.
The current uncertainties in terms of whether or how fast there will be a FTTN service available and to what geographic 'spread' and just how far LTE and its derivatives will have advanced and by when make planning tougher than usual; not that it's ever easy to do realistically.
I don't know whether it makes any differemce as to what the total markets will be for any particular technology - for instance will there be any ADSL1 services in two years time given the current Telstra roll out of ADSL2 currently claimed by Telstra to provide ADSL2 to around 80% of Australian households.
ADSL1 would have an estimated 3,500,000+ users at the moment and it would be logical to assume that all of those ADSL1 users who can get ADSL2 will move to ADSL2 over the coming 24 months. So that would mean that the total Australian market for ADSL1 by the end of, say June 2009 would fall from around 3,500,000 subscribers to less than 600,000 subscribers.
Scary thought for a small company like Exetel that has over $1,000,000 invested in ADSL infrastructures and monthly circuit bills of another $450,000 a month at the moment. The take up of ADSL2 by people buying from Exetel is less than 30% of the total ADSL1 and ADSL2 applications although that percentage slowly increases month on month.
A FTTN solution, depending on how it's priced of course, will have some sort of impact, probably greater rather than lesser, on the combined ADSL1 and ADSL2 user base when/if it becomes deliverable and you can be pretty certain that, whatever anyone may say do or think, the overwhelming majority of customers transferring to any future FTTN solution will be to Telstra.
If you don't believe that then all you have to do is to consider who currently buys the most, by a factor of tens, cable and other modems in Australia and who would be able to offer "free cable modem/free activation" for any future FTTN solution. (no 'churn' process will obviate the need for a new modem).
The long term 'lock in' contracts to current ADSL2 offerigs (and for some strange companies - ADSL1 services) will become more 'stridently' "pushed" from now on but will be of little use in preventing whatever Telstra will put in place to promote migration from the "obsolete copper technology".
So I used the 'magic' of spreadsheets to 'model' different scenarios and after several iterations I settled on the most likely currently predictable outcome as being ADSL1 declining to zero by December 2009 and ADSL2 declining to 15% by December 2010 for the major residential marketplaces.
A dismal picture in some ways - but then it's a given with only the time frame being an issue - it's quite likely not to be within the two and a half years in my scenarios but it could be.
Having pretty much decided that, irrespective of the timeframe, there was not a lot a small company could put in place that would have any real influence on what could be offered to the residential marketplaces after December 2009 (I discounted the effect of LTE in this iteration of planning but realised that it would be the only way forward in the medium term for Exetel in providing residential data services) I spent some time on the business marketplaces which Exetel has been slowly building since February 2004.
A much brighter picture.
Firstly the impact of both ADSL1 and ADSL2 on businesses in the State capital cities and an increasing number of regional centres is practically non-existent other than for very small offices. Even where it does play a part the value added services such as VoIP, SMS, Hosting and 'Consulting and Support' play a far larger part in the decision making processes than any giveaways included in ADSL deals.
Secondly, wireless 'Ethernet' is aready playing a role in providing multi mbps service to business users who can obtain them and wireless is, in many ways, going to continue to provide a superior business service. We are impressed with the speed of activation and the latency of the first wireless circuits we have installed for bsiness customers and hoefully that performance wil be the norm for wireless Ethernet services.
I was sensible enough not to get carried away with the ability of Exetel to replace any future loss in residential data revenue with business revenue but it's clear that the business services a company like Exetel can offer are not at all threatened by Telstra's machinations or even the overall movement of the phase out of ADSL1 and ADSL2 residential 'grade' services.
All of my first 30 years in providing IT and communications services in Australia were to medium and large businesses and one thing I'm very sure about - 'purchase' of such services isn't influenced by modem give aways or saturation advertising and the actual delivery of such services can never be based on monopoly pricing.
So, at least at this stage, what is clear appears to be concentrate on getting an LTE solution for residential users and put much more effort in to non-ADSL services than has been done to date.
I guess you could say - "and that's merely stating the obvious".
In many ways it is.
It will still take some pretty intelligent planning and some gutsy investment to achieve over the coming two years.
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