Thursday, June 17. 2010What To Do With ADSL......John Linton .....I have no real ideas. 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. Copyright © Exetel Pty Ltd 2010 Trackbacks
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10GB for $40/month wireless would be such a boost for Optus, that you wonder what is stopping them. Perhaps over-satuation of their limited towers may be the main worry?
Having recently had to cancel my ADSL1 Exetel service in Hobart due to selling my house, I am totally confused about what to do in the near future. I am moving into a new house in a week. Telstra's Naked service for $60/month as well as their $50/month plus phone is also tempting, but their 24 month contract has turned me off. If they offered these with 12 month contract I probably would have signed already. Comment (1)
As the network grows any localised saturation will be eliminated as it was for mobile telephony services.
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From what I've seen you write in your blog over the previous months, assumptions (A) & (B) seem reasonable assumptions to make - though Telstra is a hard company to second guess!
As for wireless, you seem to be working from the assumption that price will drive the whole market. I'm not convinced. I suspect the part of the market willing to ditch their landline for VOIP, MOIP and/or mobile is actually quite small and most of them have probably already done it. Perhaps the only way to increase this market is to provide a complete landline replacement solution. Much of the market is conservative and/or risk adverse. I know the wireless technology and VOIP over wirless is "reliable", but I'm not convinced it is as reliable as a landline. For me, the landline is the rarely fail technology that is good for a backup. Also I'd have to change my usage pattern for wireless due to my uploads (up to 4G per month - downloads < 2Gb per month). The thing that makes a phone a necessity is it's ability to be a safety net - to call for help whenever you need it. It could save me and my family in times of emergency. I expect it to always work - even in a blackout. (Yes we have a corded - no power phone.) So for me to move to wireless broadband, I need the total package to be cheaper - and that includes a landline. Even with savings on a landline plan from dropping ADSL2, wireless is not price competative, the setup is too complicated, and it bases all my communication options on one technology - mobile services. Comments (2)
I do understand your views.....but do you have a pony and trap as a standby for when your car won't start?
Even if you have kerosene lanterns for when the electricity fails and a water tank for when the mains water supply fails you already have a mobile phone for when the the telephone line fails and, if you're really paranoid, a sim on a different carrier for when your primary carrier's service fails. I am sure, as you are, that there is a significant percentage of the market that thinks as you do - but all Exetel wants is 1% of the rest. Comments (5)
Actually I don't need a pony and trap as standby because I have a landline! I can call a taxi. I can solve a lot of problems with the phone, which is why I place such importance on it.
However I wouldn't have backup options if I only used a landline. Similarly for water and electricity supply. They are designed and built to a level that satisfies my risk aversion. The kind of event that would take those services away carries other larger risks. I'm not convinced a wireless VOIP solution is quite so well designed nor the hardware as well built. Rather it is a number of layers built upon each other but without the underlying layer being designed specifically for VOIP. The weaknesses are all the weaknesses of each layer plus the weakness of the combination. Having said that, I'm also not convinced a significant percentage of the market thinks like me. They just act like me! What drives them is fear of the unknown and not understanding the technology. What drives me is understanding the technology and being risk adverse to relying on it as my only communication technology. Hope you have a great holiday! Comments (2)
You mentioned point a) that telstra will try to eliminate further erosion of their customer base.
It appears you are correct and this morning they released new bundled plans for their home phone/ADSL2 and t-box products. http://www.telstra.com.au/bundle_save/tbox-bundles.html They are a compelling product. Whilst they do NOT provide the same level of value that exetel does, it is a drastic improvement on previous attempts by the big T. Unfortunately for companies like exetel, I am on an exchange that ONLY has either ADSL1 or Telstra ADSL2. This denies me some really good plans out there and doesn't allow me to indulge in any naked services. What it also means is that you might lose a customer. Whilst its something I would prefer not to do, at my price point, its one of the best value option available to me! Comment (1)
Telstra will continue to try much harder.
That, in turn, will force every other provider to try much harder. Good times if you are a customer - pretty bad times if you are a supplier. Be wary of 24 month contract terms. Your "really good price today" will look pretty bad in a years time let alone in two years time. Comments (5)
Vivid wireless in Perth offer $55 for 10 gigs, I'd imagine that they will provide some downward pressure on the big carriers. That's still 37% over what you want the price point at. Maybe they'll offer you a wholesale agreement.
Though I'm completely naive when it comes to companies considering wholesale. Why do Optus wholesale to other providers who offer the same products at a discount to Optus? My only explanation would be similar to 'coles' milk and 'brand' milk. Lets pretend they come from the same cows, but having separate products allows the consumer decide their willingness to pay. Rich people buy brand, poor people buy coles. This allows the wholesaler cow man to capture both markets with the same product. So Optus still profit on Exetel cheep products, and profit on their slice of retail market. Comment (1)
When you say Exetel's emphasis has changed to the corporate client, does this mean also that the satisfactory profit for residential DSL would remain framed to a 2%-3% desired level?
That with those 'heavy' accounts expunged by December 2010, perhaps then the $-per-GB could be forecast to improve over the balance of that year. And, have you met your estimate that your blog would be bought for $20.00, by 200 people ? Comment (1)
Personally, I am happy with the results of the changes we have made to ADSL plans.
Our only purpose of being in business is to offer services at a lower cost than any other provider or not to offer them at all and the 'departure' of the ultra heavy down loaders will continue to make that possible - we have never intended to make any money from ADSL services but we have drawn the line at making a loss. Comments (5)
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