Thursday, May 6. 2010ADSL1 And ADSL2 Futures...........John Linton .....more doubtful now than at any time since February 2001? I spent some time looking at future ADSL2 plans yesterday as Telstra seemed to step up it "come home all is forgiven" direct approaches to Exetel's, and I assume other ISP's, ADSL1 customers in country and rural areas and some city areas. As usual their offers are below the wholesale cost they offer Exetel. One long term Exetel customer sent me the offer which in summary was: ADSL2 including 25 gbytes for $49.95 per month In rural/country areas there are no other ADSL2 offerings and, without breaching any pricing confidentiality, I can say that this price is lower than TW sells an 8192/384 to Exetel for - excluding the cost of the back haul and the cost of the IP. Now 'city dwellers' wouldn't find such an offer at all exciting but for people who can only get ADSL1 via Telstra (either from Telstra Retail or from a TW wholesale customer) it looks pretty good - particularly if you are a user of an 8192/384 service for which you are paying much more. Certainly I would think this current offer will make it difficult/impossible for any remaining TW ADSL1 wholesale customers to remain viable selling Telstra's ADSL1 services much beyond the end of this calendar year....almost certainly Telstra's direct intention. So....what to do........it seems to be getting harder and harder. While we had anticipated 2010 being the most difficult since we started up Exetel it seems to be even more difficult than we had expected - and our expectations were for an extremely tough time. I am becoming convinced that we will have to change our approaches to ADSL over the coming months and either find a radical (new) set of operating plans to maintain our planned level of customers at a realistic level for the next 14 months or find something else to do with our time and money. What those plans may be is completely unclear to me at the moment. Maybe things will become a little clearer when/if the Telstra/NBNCo 'discussions' reach a conclusion? At the moment Telstra appears to be making every possible effort to 'recover' the customers it has lost over the past twelve months by keeping its pricing at unsustainably high levels.....even a monopoly reaches that point eventually. It seems, at least to me, that Telstra is signalling that it expects to operate in the future without a wholesale business, at least in its current form, and has thrown caution to the winds in making impossible to refuse offers across a broad range of services including ADSL and wireless broadband. While that can only be good for current and future customers of those services it means that companies of Exetel's size have no future in being a TW customer much beyond the end of the next financial year. This is not a problem of itself - we have never been able to make a profit on reselling Exetel's ADSL1 services and actually look forward to the day when there is a real alternative that we can offer our current ADSL1 residential users. However that is some time in the future right now and it is the right now that we have to deal with. Between now and the end of this month we need to make up our minds on how we address FY2011 and it can't be in any ways related to what we have been doing over the past 6 years. Pity that I have not got any really good ideas on what we should be doing for residential users that would make sense to them and not lose us money. The two seem mutually incompatible to me at the moment. I do know where I would like to see Exetel being on July 1st 2011 - I see that very, very clearly. My very real problem is I have not got much clue about how to get there given the current market scenarios. Copyright © Exetel Pty Ltd 2010 Trackbacks
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If only our government and other business's were this honest. it would be so much easier to choose.
John i hope you do find the balance between customer and profit and will say us users have been on a good wicket with our off peak times and allowances. Thanks Comment (1)
Thank you for the encouragement.
I think too few of our customers have any idea as to just how low cost a service they have received for the past six years - and no reason for them to think about it. Everything eventually comes to an end though. Comments (10)
I guess there's some obvious reasons why you can't do this; but what would be great would be to be able to show your customers:
1 - This is what we pay to give you your service. (Telstra port rental amount, cost to us per MB) 2 - This is what we pay per MB roughly to provide your service via our peers. 3 - This is how much profit we're actually making. Surely armed with such data, only the stingiest would complain; and you could clearly show that the problem is the Telstra / whoever, and not you. I guess it could put you at some commercial disadvantage relative to your competitors, but at the same time would show the world what the real deal is. Cheers, Mike. Comment (1)
The 'management consultants' will tell you to get rid of your adsl1 business.
They would also tell you to stop your endangered species philanthropy too. Then, with the money you save, you can pay their fees... Comment (1)
Will you ever consider reselling TW ADSL 2 services?
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Of course - but we don't have the option of doing that.
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Hi John,
Many friends and I joined Exetel because it offered a more then sufficient download limit at a very reasonable price. Backed with a solid reputation it was really a no brainer moving away from the larger telco's. I have been very confused of late with the current offerings in regards to unlimited plans. While I'm no expert in this area I just don't see the need for you to offer this kind of service. I was under the impression from previous blog entries that your customer base was growing rapidly before these changes, so why the change?. If it was an answer to competitors with catchy "unlimited" plans I personally believe your customers don't believe in this hype and the majority don't even need this kind of service. You would certainly be able to see this but one unlimited user could potentially use the equivalent of hundreds of users bandwidth and the majority of "normal" users who you cater for suffer and you as a business suffer with less profitability. Obviously there is no clear cut answers to your direction but I thought I would add my thoughts. Comments (2)
We only offer unlimited plans to Exetel customers who qualify for such an offer.
Our aim has always been to offer ADSL at the lowest possible prices and to break even on doing that. Today, there are an increasing number of offers that are well below our current buy prices - I referenced the Telstra 25gb ADSL2 offer as a typical example. We will keep ring to offer the best value to our customers but so many of them seem to think that what we offer should be even more for even less. Perhaps they are correct - I don't think I know any more. Comments (10)
It does appear that the only way to get the $49.95 offer is if you are also getting a new PSTN service. If you already have the PSTN you are welcome to apply for the $79/$89 version of the same.
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Felix,
Thank you for that input - if you could legally lay your hands on some documentation it would be appreciated. Comments (10)
It is on their website
http://www.bigpond.com/internet/plans/adsl/latest-offer/ Comment (1)
Thank you.
When we asked our Telstra account manager about the offer he said he knew nothing about it. Yet another example of the ethical, moral and just plain truth standards within that company. Comments (10)
RE the "Telstra 25gb ADSL2"
Do you foresee a wholesale price drop with in the next 2years? These plans require a 24 month contract and full service phone line. "Min cost over 24 months HomeLine® Plus with Self-Install Cable Home Network Gateway Modem on BigPond Elite Liberty 25GB Broadband is $1917.60 plus $9.95 delivery fee. " So its not really a straight forward $49.95 a month as such. Comments (2)
I think that Telstra is already dropping/has already dropped the wholesale prices of both ADSL1 and ADSL2 to some wholesale customers.
Two years is such a long time in this business it's impossible to estimate what will happen in any meaningful ways. The key is whether or not the 'NBN2' will become a reality. If it becomes a reality then it MAY change the face of residential communications - it will depend on what the cost is going to be - at the latest estimate of $A30 - $A35 per month ex gst for a 20 mbps service it isn't going to be that attractive except in area where there is no ADSL. It also depends what happens to Wireless broadband pricing/capacity over the coming year. It never is a very good idea to lock yourself in to a 24 month contract if you have a choice' but - it's an individual's situation decision. Comments (10)
I wrote a 'complaint' email, but I thought I'd summarise it here:
Why I like Exetel: - efficient and fast help service. - good resources so I don't have to waste time getting helped. - cheap (for me) - reliable (speeds and connection). What I don't like: - starting to market plans towards download warriors (I see this reducing reliability). If you offer shaping at 512kb, 12 hours per day I in theory download 80 gb. Yet it costs $10 more for 30 gb (Z/21NoTel vs Z/22NoTel). Some people will abuse this. Why charge people set blocks for going over (or even per gb). The same with unlimited, only if you have the resources to offer it, as it will get abused. User pays system is best for me, worst for download warriors. Comment (1)
I noticed that today you've removed your 8MB plans. I assume this is directly related to this inability to compete with Telstra's ADSL2+ 25GB offer?
For me, I am moving to a new house at the end of the month, where Telstra's ADSL2+ is the only available network, and for a high downloader like me their pricing just isn't practical. I was planning to move to one of Exetel's ADSL 8MB plans, but now that they've been removed I don't see any way for me to stay with Exetel. You mentioned that your ADSL1 plans don't earn you anything - I would be happy to pay extra to make those plans profitable. Obviously I don't know what your costs are like, but if Telstra's plans exclude you from the low-download segment, could you not still cater those plans to the high-download segment, where Tesltra has no decent offer? I've been a happy customer of Exetel for 3.5 years now (and have even signed up 2 friends in that time), and I would be sad not to continue as a customer in my new place. Incidentally, Telstra's 25GB ADSL2+ offer only lasts until the end of May, is it worth holding off on significant changes until after May to see what Tesltra's next move is? Comment (1)
The reason for, again, removing the Telstra 8 mb plans is that so many customers are unhappy with the fact that they are "capped" at 3 mbps and accuse Exetel of "false advertising".
If, knowing that, you want to use an 8 mbps ADSL1 service then sign up for a 1500 service and email us and we will manually change your order to an 8 mbps service. Comments (10)
John,
As someone who has been with Exetel for over 6 years now I appreciate your candid discussion of the difficulties you face in running Exetel. I was disappointed to see that your initial attempts at launching PAYG ADSL were abandoned as I believed there is a place for such plans. Whilst I can understand why they failed initially, I'm certain if you re-introduced (and persevered with) those plans they would eventually become successful as the other plans are re-aligned to reflect their true cost of delivery. The decisions to remove the bundled VOIP Calls, SMS', FAXs and now the reduction in the Off-Peak period all make the PAYG plans more attractive. The only thing that was missing from the old PAYG plans was the ability to buy Data packs similar to those you introduced for VOIP Calls, SMS', FAXs when they were unbundled. Les Comments (2)
Les,
I agree that it's the only sensible approach to take - but honesty has little/no place in ADSL marketing. We will add a payg option to the new ADSL1 plans over the week end and the new ADSL2 plans will also have a payg option. You may have noticed that the new Fibre plans are ONLY payg. Comments (10)
John,
Whilst PAYG plans might not have a place in ADSL marketinh I'm sure they'll appeal to the 50+ % of Exetel users that have no needs for high downloads limits once the other plans reflect their true cost. For to long now low download users have been subsiding high download users. Les Comments (2)
PAYG for ADSL1 - it will be great to see them return!
I used to have one ..... hopefully I'll have one again.... or maybe even 2! Harry. Comment (1)
John,
Thank you for the change today for us who committed ourselves for the next 12 months to your company for adsl1. I can see that telstra has made it impossible for you to continue with this offer. I am gratefull that you have honoured your side of the bargain even if not highly profitable. (if at all) regards tony neale Comment (1)
We got our electricity bill last week. It was $700 for the quarter. We have never paid this much for power. That equates to around $2800 per year just to have the lights on and to function normally. We have gas hot water and gas heating. I can see where you are coming from.
Matt. An Exetel user from the beginning. Comment (1)
Matt,
Thank you for your support. Are you getting the Pioneer discount? Comments (10)
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