Thursday, December 17. 2009The 2009 ADSL 'Market Share' Problems Continue........John Linton .........but there appears to be no prospect of any abatement right through 2010. I see that Internode has "listened" to their customers and announced a new set of ADSL plans. I think they didn't "listen to their customers" at all but did look at their churn aways over the last few months and and also noticed the lack of new sign ups and were 'forced' to attempt to stop the increasing level of customer loss and make an attempt to more closely match the plans of the suppliers to whom their customers were churning. Perfectly understandable and sensible business decision but no need to try and dress it up as "listening to customers" - Internode like the rest of the commercial ISPs ONLY 'listen' to their month on month new sign up/churn figures. Internode's plan changes just mirror the other changes currently being made by the other ISPs that are reliant on 'growth' in the ever more saturated ADSL marketplaces confront the realities of too few customers to meet too optimistic forecasts..... ....and the bad news is that it will only get worse as the various ISPs (from BigPond downward) get ever more desperate to meet the growth forecasts they have planned for and notified their shareholders to expect.......except, unless all the readings are wrong, it simply isn't going to happen.....because there is no growth to be had without significant price reductions and none of those companies appear to have ANY ability to reduce their prices from their 'comfort points' because of the devastation that will wreak across their current customer's revenue/profit generation on which their companies are dependent..... and that's the REAL problem of 'umbrella' pricing 'strategies'. Each one of the 'leading' ISPs is completely dependent on retaining their current customer base AT THE CURRENT CUSTOMER SPEND LEVELS. They can't afford to actually reduce their prices - all they can do is to try and repackage the "PRICE" they charge at the moment to appear more attractive than their current prices currently do. So as they watch the stagnation/reduction of their customer numbers as their competitors try their 'Titanic deck chair shuffles' they try 're-packaging' in various ways but the one thing none of them can do is to reduce the charges to the customers....apart from being locked in to the growth forecasts they have made they are also locked in to the high operating cost levels that years of 'easy profit money' generated in a constantly growing market that would never stop growing. I only briefly looked at the Internode changes but they seem, at first sight, just to be knee jerk, if not panic, reactions to the various changes made by Telstra and TPG. As far as I can notice iinet and iPrimus and, to an extent, AAPT have not, yet, made their contribution to the 'me tooism' by announcing their own new plan versions (inevitably at the same prices as they currently offer) but you would have to bet that would happen before Christmas or just in time for the 'new year'. Depending on the sales results these companies see by the end of February (when any obscuration by the 'festive season' downturn evaporates) I think it is highly likely that this 'beggar your neighbour' process will continue for the remainder of FY 2010 and then right through to next Christmas as even the most poorly prepared of the current 'major ISPs' confront the fact that ADSL is a saturated market where the price of even retaining their current customer levels will only be possible at the expense of their bottom lines - an even more unpalatable prospect than a falling 'market share. Something different will have to be tried to make any difference - just raising download allowances at the same old price points won't achieve very much, if anything at all, in a market place where each of the providers offers the same service. Now that Telstra has been forced to move away from its starting plan inclusions of 200 megabytes to a meagre 2 gigabytes the rot has well and truly set in for cheating customers via huge excess charges and any ISP that copied that pernicious scam will have to replace that evil blood sucking income with 'real' money. Similarly the ability to add telephone line rental and, even more ridiculously priced, PSTN telephone call profits will continue to wither away as even the more timid of technology adopters embrace the savings of VoIP - so quite a problem confronting the 'umbrella' pricers. Maybe innovation will have to be tried?......but that would require several qualities the large providers simply don't possess and they would need to find a way of breaking the titanium steel shackles of being locked in to their current sky high price points. Maybe it's time for true innovation?.......somehow I doubt that. PS: Exetel's December ADSL orders are 25% up on December 2008 - for whatever that means. Trackbacks
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John,
iiNet have announced plan changes as per below; http://www.iinet.net.au/products/wp-summary-tables.pdf http://www.iinet.net.au/products/wp-summary-tables-bus.pdf Comments (2)
Thank you - no wonder I didn't notice - a perfect example of my view that such companies always try and retain their old sky high prices while playing around with slightly increased down load allowances.
iinet is truly screwed in the blood bath that will be 2010. Comments (7)
It's interesting that a couple of years ago iiNet and Westnet used to be one of the market leaders when it came to offering bang for buck. Now they are at the middle of the pack and charging more for it. Granted they have a large offering of free content however I would argue that a fair proportion of customers have no real need or desire for this content.
The new plans are also misleading in my opinion and this can be shown on the whirlpool thread http://forums.whirlpool.net.au/forum-replies.cfm?t=1342232. It's interesting that for non-naked customers to gain access to higher quotas they need to subscribe to a PSTN service from iiNet also (An extra $10’ish per month over Telstra Homeline Budget). Where are the efficiencies, lower costs and higher quotas that were supposed to have been driven by PIPE International? Comments (2)
iinet/westnet have simply met the reality of a saturated market and faster moving competitors who have 'improved' their prices while iinet was reaping the rewards of public grandstanding and spending time on an unnecessary court case instead of running the business.
iinet has nothing to offer an ADSL user and this will be shown in declining market share and declining profits and revenue over the next three reporting periods. Comments (7)
iiNet are retaining Telstra as their main transit provider. Their usage of PPC-1 via Vocus is only a small component of total transit.
Comments (2)
Thank you for the information - though it sounds a little odd that they would by Pipe via Vocus - as they were one of the 'rescuing angels - or at least I thought they were?
Comments (7)
I agree, it does indeed sound odd. But BGP tells no lies:
http://www.cidr-report.org/cgi-bin/as-report?as=AS4802&view=2.0 They don't peer with Pipe Transit and they're not peering with Tata or any networks in Japan or the US. If they were buying bandwidth on PPC-1 directly, they'd surely do what Internode have done and connect it to a PoP in the US. Perhaps not having that infrastructure in place already caused them to go down this path? Comments (2)
I am continually surprised by the differences between iinet's public statements and then what eventually becomes the actual situation.
Comments (7)
Greg Bader, iiNet CTO:
"we are using PPC1 capacity, at the US end we use Vocus for transit/peering (simply quicker and easier than chasing it all ourselves)" http://forums.whirlpool.net.au/forum-replies.cfm?t=1295817&r=21254985#r21254985 Comments (2)
Thank you for the clarification.
A fairly inaccurate Statement though - it appears to imply something that isn't what the actuality is. The actuality being that iinet is using a very small company to provide connectivity from the US peering points to an Australian peering point with the only difference being the under sea cable is less robust than SX and, presumably lower cost....at least lower cost than at the time they comitted to buy it. The story iinet tells the business analysts was very different....at least the story they told one analyst was. Comments (7)
How is PPC-1 less robust than SX? It's many years newer, using more advanced capacity. If you are implying that SX is more robust because it is a ring, this is only the case if the circuit(s) purchased by iiNet are protected.
As for using Vocus, why not? It's cheaper and simpler for iiNet to establish their first overseas presence using Vocus, especially if they are limited on resources (perhaps being used to support their court case). Comment (1)
1) Pipe is, by definition a vulnerable, single strand, connection - it can't be "protected".
2) It seems odd to me that a public, self proclaimed, "major" ISP uses a start up third party to provide a crucial element of its service. Comments (7)
I don't think its entirely accurate to say "iinet has nothing to offer an ADSL user".
Superficially all ISPs sell some amount of quota at some nominated bandwidth for some price each month. Beneath the numbers are unquantified attributes relating to actual performance & reliability. Unfortunately as most of it is hard to appreciate until you actually suffer an outage or poor performance most folks seem to overlook this aspect of the service offering. The way I see it companies such as TPG & Exetel offer very good value for money, offering the highest download quotas at every price point for the residential user. However from direct experience (whilst staying with a friend who is an Exetel customer) speed can be highly variable, and in fact Exetel's own network graphs show a massive spike & saturation at 2am every morning, and again between 10 and 11am. http://public.mrtg.exetel.com.au/bwsummary/total-supplier-bandwidth.html As an iiNet customer I do not experience any noticeable slow down at any time of day (unless there is some sort of outage), and certainly not regular periods of saturation. Internode similarly pride themselves on the quality of their network. However I pay $20/month extra (vs the comparable quota plan on Exetel) for what I consider to be a higher quality service. This isn't for everyone. Each ISP chooses their mix of price & quality, and obviously the associated profit margin. The nice thing about this is that it gives customers the option to choose an appropriate service for their needs. If they desire the absolute best bang for buck in terms of downloads per $, then Exetel & TPG are obvious options. If they care more about consistency of performance & availability of service I would recommend ISPs such as iiNet and Internode. FWIW I have recommended friends to all of the ISPs named, which is to say I aim not to be biased towards any of them. It really depends on what's important to the customer. Comments (2)
The graphs show spikes but do not show saturation - there is a very big difference....as I assume you would be aware.
There is no saturation on any link within the Exetel network and constant automatic monitoring/re-provisioning is in place to ensure that remains the case for all links at all times. P2P traffic is constrained, from time to time, from 2 am to 3 am and from 8 am to 12 noon which would show as a 'slow down' for that sort of traffic which is an irrelevancy due to its nature....no Exetel user seems to have any problem downloading their off peak data allowance in any month and over 2,000 seem to have no trouble downloading far more than 60 gb - ipso facto no 'saturation. Only P2P traffic is affected when those controls are enabled. My comment about iinet being irrelevant in today's market is related to the fact that they are too expensive for what they offer - far more than can be obtained from other suppliers and have nothing 'additional' to make the extra expenditure worthwhile. ADSL is a 'commodity'. It is, of course, simply my opinion. Comments (7)
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