There are still so many unanswerable questions about what will happen with ADSL pricing plans and the effects of wireless broadband and either Telstra's or NBNCo's fibre offerings over the coming months that it seems impossible, at least to me, to make any reasonable assumptions or forecasts about likely future movements in the residential ADSL marketplaces. Before doing any final changes to our financial operating plan today we have made the assumption that the two most likely scenarios will be:
A) Telstra will try and eliminate further erosion of its ADSL customer base by increased targeted marketing activities in areas where they have exclusivity of ADSL2 by making deals impossible to refuse to other ISPs ADSL1 customers by all means at their disposal.
B) All other ISPs will be forced to lower prices in the exchanges in which they have ADSL2 DSLAMs to, in part, offset their ADSL1 losses in the country (and other DSLAMs) and to fend off each other in the areas where there are multiple ADSL2 choices.
This is based on the fact that the most likely direction of the total ADSL market being downwards at a faster rate than is currently occurring. Obviously I have no real idea of what is happening but there has to be some sensible assumptions about movements in marketplaces and these are the best that I can come up with. Exetel's ADSL plans have changed significantly to offer better pricing (lower than any other providers for 99% of the people who currently use Exetel's ADSL1 and ADSL2 services) and those price points have, so far, met the objective of new customers replacing the current customers who are leaving Exetel plus a small net increase but with the new customers downloading one tenth to one twentieth of the amounts the leaving customers were doing. Whether that excellent result continues is unknown but it is encouraging.
The number of Exetel customers who cancel their ADSL service and move to a wireless service is very tiny but it is increasing each month because for the customers who download less than 5 gb a month a wireless service for $A40.00 a month is much lower cost than an ADSL service plus telephone line rental and for people who can get around 2 mbps (which is a very large percentage) there is no 'speed' barrier. I am beginning to think that a 10 gb per month plan at around $A40.00 would probably see a dramatic increase in the number of users who would dump their ADSL and land line telephone service to save money and have the freedom of location but that is going to require a radical re-think by Optus on how they provide wireless wholesale services to companies like Exetel. There is one obvious to 'blind Freddy' solution which we have suggested but I don't see that happening quickly enough to make a sensible change to our currently predicted very low wireless broadband growth over FY2011.
Similarly I don't see much growth in fibre customers over the coming year with far too many unknowns to make any growth prediction sensible to plan for. Assuming that the current government does 'turn on' the Tasmanian service in early July we will be interested to see how our new concept of zero monthly charge plus pay for what you use goes against the unimaginative 'same as ADSL' price plans of the other three ISPs who have currently announced their pricing. I also wonder how the people in Tasmania will react to those ISPs pricing as more information becomes available and additional ISPs sign up to provide services? In any event it will be an interesting information gathering exercise which, together with the Telstra Point Cook trial and the about to be turned on (for Exetel) Opticomm fibre trials will make the impact of fibre services on ADSL take up clearer than they are today - at least to us. What transpires between Telstra and NBNCo will, presumably, be known some time before the next election and the information gained from these three 'trials' will hopefully allow us to make more informed decisions then.
In the meantime we need to decide over the next few hours what we do about ADSL1 and what, if any, changes we make to ADSL2 'bundling'. Too much to do too little time - the price you pay when you decide to take your annual leave before the end of the financial year and therefore lose ten days which you only now remember you always needed to complete the process.