Wednesday, May 19. 2010Your Toes Are Protruding Over The Edge Of A 1,000 Meter Sheer Drop.....John Linton .........and the raging fire behind you is almost within touching distance..........if you are a wire line based communications infrastructure owner in Australia We made some progress yesterday in getting some of the basic 'understandings' on how the FY2011 plan would be based and the rough time frames for making the various 'adjustments' to the way we define the sources of the revenue streams from the different services. There is a very long way to go and only 6 weeks to compete this work which is taking, and will take, far more time and effort than in any previous years - at least that I can remember. The additional work is mainly caused by the changing nature of the ADSL marketplaces and trying to work out how to adapt to those changes. But the changing nature of the ADSL situations is by no means the only issue that needs to be considered for a company of Exetel's size. There is no, well none that I can see, doubt that Rudd will 'turn on' the Tasmanian Phase 1 part of the 'NBN2' network come July 1st 2010 - if he doesn't then the current Labor government will almost certainly see itself become that rarity in Australian politics - a one term government - and that means some resolution of the current 'negotiations' with Telstra will have to happen well before the next Federal election. Early indications are that fibre, even at Telstra's pricing will find a market in any area that it is offered. If Telstra decides it will 'go its own way' then it has the ability to offer fibre to well over a million residences in Sydney and Melbourne and could, for a relatively low investment (well within its financial means) expand that fibre offering to double or treble that number of 'big city' users. I constantly comment that wireless broadband continues to become faster and with more download capability at lower costs per gb and the ABS reports seem to show that wireless broadband will overtake ADSL in terms of number of users before the end of 2011. The combination of new fibre offerings in an increasing number of areas, the inexorable growth in wireless replacement of ADSL and an already saturated ADSL marketplace is the sort of "triple whammy" beloved of editorial speak. There is NO doubt (irrespective of what uninformed people try to say) that ADSL is already 'yesterday's technology' and the challenges that the three current developing situations poses to ADSL service providers is growing each passing week. So, as I see it, the providers are already offering, what for all but a minute percentage of users, is more speed and downloads than they actually need, can use or even want to use for something like $A50.00 per month. Where next? For the first time in any market that I am even vaguely aware of Australian ADSL providers have reached a stage where they have nowhere to go. Few, if any, current customers can use the amount of data they are being offered for $A50.00 per month. Yet the churn rate of users between providers is increasing and the total number of Australian ADSL users probably continues to decline. What is your next move? It's certainly true that all but a minute number of residential users of ADSL services have more speed/more downloads/acceptable price than they have ever had in the past or will ever need for years to come and they are now enjoying a service that entirely meets their needs at prices that are as good as anything that has ever been seen in this country for ANY product or service. If there was no competition then both buyer and seller would be perfectly happy. But that isn't the case. Too many providers have given their shareholders an expectation of continual growth and, as far as can be seen from the public record, have given the investor community future forecasts based on continued growth. But where is that growth going to come from? Only one place - growth can only come from their competitors and that means more 'marketing dollars' and lower prices to 'lure' customers from one provider to another - not a pretty prospect for companies that have also set expectations on profits. That may, just, be possible except for the continued growth of wireless broadband and imminent availability of fibre services will continue to shrink the size of the total market available to ADSL providers. This in turn means that the only way to meet some of the ADSL providers 'growth' forecasts (which incidentally drive the internal costings on which current pricing is based) is for there to be less 'competitors' - it has never been any different in commerce. So, at least for us, we need to find a way of increasing our wireless broadband and fibre broadband customers as there appears to be no sensible basis for assuming we can find a way of increasing our ADSL market share. Copyright © Exetel Pty Ltd 2010 Trackbacks
Trackback specific URI for this entry
No Trackbacks
Comments
Display comments as
(Linear | Threaded)
For a company with infrastructure at the exchange, I think it might be even worse than you suggest. What do companies with their own DSLAMs etc do? In a shrinking market, that equipment is devaluing quickly. Even reducing the number of 'competitors' may not help if there aren't enough customers for the equipment.
Comment (1)
I think most DSLAM deployers have quick ROIs on those investments so the depreciation should take care of the asset write offs.
Of consequence though would be moving from one favourable cost base to something different. Comments (3)
I've just bought a netbook (3G built in, weeee) because the 'powers that be' at work think I surf the web too much at work, over the work network.
So I was looking for a suitable 3G plan. Knowing that Exetel had the $5/mo with 1.5c that was my price point. I searched Dodo, 3, Telstra, Optus, Exetel, Virgin, and a few others. I was amazed by the variety of packages available. It truly is a very competitive part of the industry. Most had a $15/mo 1Gig plan.. But I thought that I probably wouldn't use 1gb... I was about to buy the $30 pre-paid 2gb over 90 days plan from Exetel (great idea btw) but I remembered my parents had a BUSMA plan that has a VoIP number they use over their ADSL. But they don't really use the SIM card for data traffic particularly. So I'm going to use their SIM card to achieve exactly what I want. a PAYG plan at 1.5c/mo. Yay. Comment (1)
I don't see any real indications wireless is replacing wireline broadband or making much of a dent.
3G/broadband has long been said by the carriers to be a CONCURRENT technology offering, a fill-in solution. and, one assumes , the carriers know best after doing the research, from testing their deployments and in evaluating how costly (/infeasible) it really is to install never ending additional towers over the landscape the more people that use wireless. At $10.00/GB it is just not a replacement, obviously Fibre is but wireless at the home computer level is rather like a dial up with 'no wires Ma' connection - useless for multimedia as the costs are waaay prohibitive (and thats not going to be fixed very cheaply) (Only) 7/vividwireless' can hold a candle to the claim that in this year and 2011 wireless will provide some better value (GB), particularly if you include WiMAX' early speeds that show it easily dwarfs all ADSL 1- but then, Exetel do not have WiMAX/LTE to make an offer like they had done in the days they utilised Unwired network. The telco/HSPA stuff on the other hand is just tacky junk to buy time up to the year 20 15, not broadband. I realise all Exetel have on hand to utilise is this "gut the sucker'@$3,000 per mps" - it just needs to be made palatable to consume (in the form of Moip riding over 3G as you have started to support, is one good idea) i.e. for consumers who have been through 'the telcos' and are past the point of using a wretched mobile cap plan again. Just don't get too optimistic on mobile data being taken-up, easier to sell or whatever is the current view. Look at the US economy and those reports that the buyers there have become quite averse toward (re-)'committing' to expensive contracts. Surely there must be a day coming when 3G/4G joins ADSL in becoming 'saturated'..can never be too certain, but with a bit of luck and some healthy competition we might get that bloodbath. For the moment though I'd agree mobile BB is at least here more safe and certain, it has time left to become established before it begins that descent into looking boring to the market. Consider: some 21 million-plus goons wielding handsets +HSPA phones+devices +those who wish to stay connected to their facebook or use online 'iPads' etc - these are the applications driving growth in a 'complimentary way' for broadband. Though, whether Optus would provide sufficient resources for resellers to differentiate themselves and win market share in the long term I don't know. Meanwhile, our dismal, corroding, copper line, network needs to be replaced ASAP in the decade ahead and, very clearly, there is one logical successor only which can accommodate that project - 'Government Fibrenet'. PS: 'HSPA' currently represents some "50Mbps" of Exetel's total traffic or roughly "1" per cent. Comments (2)
You overlook a number of things.
25% of the Australian market uses less than 2gb per month of downloads/uploads. For those users wireless allows them a lower cost broadband connection than ADSL - even not including the fact that they could get rid of their land line rental is they wished to do so. Exetel can support 10,000 users on 50 mbps of back haul/IP compared with 1 gbps for 10,000 ADSL users. Exetel makes a sensible profit from HSPA services as opposed to break even/loss on ADSL services. I could go on but, basically, all your assumptions are incorrect. Comments (3)
Interesting numbers for Exetel.
I must endeavour to take them more fully into consideration in any future analysis. Thank you Comments (2)
|
Calendar
QuicksearchArchivesCategoriesBlog AdministrationExternal PHP Application |