Monday, January 18. 2010Wireless Wars Continue Where They Left OffJohn Linton I spent some fruitless time yesterday trying to come up with some inspiration to improve our wireless broadband offerings for residential users - something I have been doing on and off for the past 3 - 4 weeks. I had looked at the new Telstra wireless plans earlier in the week to attempt to work out what Telstra thought was happening in the wireless market but I couldn't detect much other than their switch from very expensive 'excess' charges to 64kbps once a user reached their limit must mean something as Telstra is not known for removing huge revenue rip offs from its dumber users. The only thing I could come up with for Telstra forgoing that huge revenue source is that they must 'sense' that there is a noticeable switch of their lower end ADSL users to wireless - but it's a guess with nothing to support it. The only thing that is certain is that for Telstra to reduce any price means that they aren't doing as well as they need to do with that particular service. Our wireless sales are up around 300% from the same period in January 2009 (when we had only begun offering the service) and around 30% over the same time in December which means the small changes we have made to date have had some effect but not nearly enough. One thing that remains puzzling to us is that we use the Optus 3G network yet, since we began, delivering wireless services (via Layer 2 direct connection not just re-selling the retail service) in October 2008 the speeds on our Optus service are consistently much faster than the speeds on Optus own service by a quite considerable margin. We tested this out with the Optus Product manager on two occasions over the past year and he agreed that he duplicated the results and mumbled something about 'firewalls'. I also have an Internode/Optus service (I purchased late in 2009) which is, as far as I know using Optus Layer 2, and that service whenever I test it over the past three months is far slower than the Exetel/Optus Layer 2 service in identical locations (strangely it almost looks as though Internode are just using the Optus retail service based on the speeds being nearly identical - but that can't be so based on Internode's public statements) - I have no idea what this means but I do know two acquaintances that use all three services and say that it's a consistent result. It would be nice to find a way to use that anomaly but if, in fact there is a way, it continues to elude me. So the reality is that with the 'wars' between the carriers resulting in explosive growth the only result is, as would be expected, round after round of price 'adjustments' on their various retail offerings which ensure that they generate enough new user traffic to ensure their tower upgrade/back haul plans are only just keeping up with their new usage volumes. This is a really good thing in many ways as it ensures that wireless is more heavily promoted than it would be otherwise and that pricing for variations of the service are at the lowest possible points. Finding ways of effectively competing in that environment become very hard and show no signs of becoming easier as 2010 progresses - at least not as far as I can see. When you consider why Telstra gave up the revenue it earned from excess usage charges it becomes a little clearer that it was aimed at trying to cut off the profitable part of the other carrier's 5gb type plans rather than to offer its own customers a better deal. So with no excess charges to 'balance' the gambles on setting download inclusions Telstra has made "shaping" a benefit to the end user (until they try using wireless at 64kbps) that only benefits them. Looking at the rest of their plans and their data/cost equations they are very, very unremarkable. We will work on trying to come up with something today and tomorrow but if that produces no great new ideas we will have to give up on any further promotions in the residential marketplace and just tough it out until we can find a new way of approaching the residential marketplaces. We can't take too many risks as we make only a few cents per service with the current pricing which means we have to re-jig the pricing bases to make any impact(unlikely at the moment) - or just gamble with our future which I'm not inclined to do. I am not hopeful.
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Last week I had a business customer get a $2,800 bill from Telstra on a wireless broadband service. This caused them to leave Telstra for Exetel for their internet and landlines.
When people get stung like that, word spreads quickly. Fortunately, a quick call to the TIO and they had $2K knocked off immediately. While it does mean greater competition for Exetel, and for an on-contract $20 off bundled buyer it can get close to matching Exetel's value; I will admit that it is the first time I've been happy to see that a change has been made to stop the unconscionable huge excess billing trend they've had in the past. Looking at Exetel's offering, the one thing I'd really like to see is a mechanism to prevent excess usage charges, and at the same time prevent abuse by using 'free capped' internet. I would suggest a system that allows a user to opt for a reduction to 2kbps immediately when their included downloads are used; and only allow 200MB of excess usage at that speed. I guess the problem for you in implementing that would be if data usage records are not real time - but since you also have prepaid I assume similar mechanisms exist. The other problem may be that you've structured your high-usage plans to factor in extra income from those who go over, so doing the above might generate a loss instead If shaping is impossible due to cost, then a simple disconnect option would be a reasonable second option. As an interesting case study, with ADSL1 8Mbps being so expensive, I was considering moving to HSPA to keep the high speed and drop the ADSL to 1.5 for VoIP; but the problem is that with a few computers running Hamachi (which sometimes spills VPN LAN traffic over a WAN link) and other services that might decide to auto-update; I run the risk of racking up a large excess overnight if I don't watch it. Likewise, the dormant Internet Cafe experiment means I'll be setting one up on my own. I would have liked to use HSPA to simplify the install; but again when it's a shared resource it's too risky. Cheers, Mike. Comment (1)
Michael,
Shaping of HSPA is really easy to do but.....I'm not sure how practicable it is for the end user....I think it amounts to making the connection unusable. By far the majority of our wireless users are the PAYG users where the whole basis of the plan is only pay for what you use. It's something we have considered and will consider again. Comments (4)
Perhaps you could offer a data block-style system, whereby HSPA customers are directed to a portal to buy additional usage upon exhausting their monthly quota?
A few providers do this with both ADSL and HSPA services, but that doesn't say how popular or well-regarded it is of course. Comment (1)
I remember that John laughed out loud at Eftel's (right company?) attempts to promote pre-paid ADSL services. Exetel's $0 1.5c / MB is a great post-paid service. I wouldn't want anything else.
That said, Optus leave much to be desired in my opinion. My first mobile service was with Optus 12 years ago. I was living in Mount Lawley in WA. Inside our house the phone was very low quality. It surprised me that within 4km from the CBD they couldn't provide a good service. Our entire family got CDMA phones, and since then NextG. The quality improved immeasurably. When I take my Exetel HSPA service there, it's completely useless. To make calls I use the ADSL via WLAN connection on my phone. I'd imagine that this will remain forever as Optus have not improved the service for the last 12 years. What I don't get is that many of my friends houses have unusable HSPA services in Perth, from Maylands to Rivervale, or Como, Mt Lawley, Fremantle, Trigg beach. All the locations are for practical purposes black spots for Optus. I'm not sure why, but my naive opinion is NextG just has much better penetration over Optus' 2100MHz service. From looking at the mobile tower maps on google maps they all use the same towers, just the frequency is different. I wonder how many other people this would apply to. The technology to use MoIP is great, just many locations are just dead. I was at the back of Little Creatures in Fremantle last night, and again, no Optus tower could get to the location. That kind of thing would never have happened if I was still using my (expensive) NextG service Oh well being contactable 24/7 is overrated. Comments (2)
I don't travel that much any more but when I do I don't seem to have any problems with Optus wireless - mind you I don't stray very far from major highways.
I understand that isn't a universal experience but unless Telstra ever wholesales their wireless service (unlikely based on previous statements) then it becomes a choice between Optus and Vodafone. Comments (4)
Yeah, I'm not bagging the Exetel service just pointing out shortcomings that are completely out of Exetel's hands.
Everyone would love Telstra's network at 1.5c/mb prices. But as you say why would Telstra want to share their network. Then again, why do Optus want to share their network I guess they think that they can extract the same amount of profit from you, than they could from end users. Comments (2)
Exetel already 'restrict' the 'Pay as you go' HSPA connections when you reach (each?) 1GB of data. The absolute most you can be charged in a month is ~$20. In order to be charged more, you have to acknowledge you've used 1GB and are happy to pay for excess.
Comment (1)
The only thing holding me back from Exetel is the poor on-net call rates, esp since you are using Optus which most resellers seem to able to offer cheap on-net rates. Even if the monthly connect had to come up $10 to compensate.
Comments (2)
The rates we currently offer are the very best we can do - we already don't make any money on them.
In any event you should use MoIP which is way cheaper than any mobile rate on the market. I've used MoIP for almost 18 months now and my mobile monthly bill is almost zero at 10 cents a call. Comments (4)
From my exp. MOIP is great, but I have had no luck when in the Train or Driving with the Handsfree due to slow handovers and complete dropouts. That is where an On-Net VOIP Gateway works flawlessly. I only need a mobile when out and about. The ability to dump a gsm call to Asterisk and out via voip is working great for me. This can now easily be done with your current Vodafone offering with free calls to ones office DID, but then you miss out on the Optus Broadband value. Using a gateway like this can be made transparent to the end user by the use of a SIMDialer (ie BB09) from http://www.yourbluetoothtech.com. Granted though this a rather technical solution and probably hard to sell on mass.
Comments (2)
Hi John
Quite interested in your mentioning that Exetel uses an Optus layer 2 connection. I run a popular prepaid broadband website that features your services and I often get asked what are the difference b/w the speeds offered by all of the providers using Optus wireless. I really think you should make more of a song and dance about this (obviously trying to explain it in plain man's language). When I chat to some of my customers they often ask me about speeds so I plan to make some reference to this post in my blog to further assist users. If you have anything formal on your wireless speeds I would be more than happy to use it on my site to further promote you. Comment (1)
The trouble is I don't have any sensible explanation for it.
It is the same network as Optus retail uses and the same as Internode uses. Clearly something those two companies do makes a significant difference but every time we test them the result is the same. Comments (4)
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