John Linton ....or more exactly, it's long past time to start again.
Assuming the final version of the Telstra Wholesale ADSL2 contract is signed off later today we will activate the web site and user facilities order forms for ADSL2 services on Telstra exchanges marking a 'return' to where Exetel started from over six years ago. By 'return', I mean offering current services to end users via a Telstra network rather than only using Optus and AAPT. The wider coverage by some 300% in terms of area but less than 20% in terms of numbers of possible customers doesn't sound very significant and that may well prove to be the case - after all Telstra's retail operation has saturated the coverage area for several years and has made financially unbelievable offers to the customers on each ADSL2 enabled exchange as it has been activated.
So why mention such a 'non event'? Well, there are two main reasons.
The first is that the whole communications industry in Australia has been changed by the current government's intervention and irrespective of what happens now more changes will continue to happen over the coming months and years that will not be 'good' for companies of Exetel's size and type if we continue to pursue the paths we have 'trodden' since we began the business. It isn't a question of the 'NBN2' being a threat to ADSL or anything of that sort. It's a question of how Telstra sees the future of government intervention in a part of the economy it has less than no knowledge of and, as illustrated by the Krudd craziness, how much damage they do before it all ends in tears and therefore what Telstra does to meet the various scenarios it sees as being the various futures. If you think I'm wrong in saying for the past two years that the industry is changing try Telstra's CEO's views in explaining Telstra's drop in annual profit:
http://www.smh.com.au/business/telstra-dives-as-fullyear-profit-falls-20100812-1207v.html
http://www.smh.com.au/business/telstra-reinvents-the-reinvented-20100812-120h0.html
The recent price reductions by Telstra retail are not likely to be the last ones (see article above) - Telstra can reduce ADSL2 prices to whatever it finds its necessary to do to achieve whatever market share and financial objectives it decides to put in place. So all the talk around the different parts of the industry of how much market share such and such company will achieve in various areas based on past events are so much wishful thinking in the chaos progressively engulfing the assumptions upon which such prognostications were made. The 1,000 kg gorilla point remains the only valid point -
"How much ADSL2 market share can Telstra have? - Whatever it wants and whenever it wants it."
The second reason is that the same scenario same applies to the medium sized business marketplaces that Exetel has been slowly developing an ability to provide services to - in the past there was zero way that a company like Exetel would consider buying wholesale business services from Telstra but today's Telstra appears to be very different to El Sol's "wholesale customers are parasites" view of the communications business. Obviously this is no road to Damascus epiphany but simply one 'path' that the future split up of Telstra might make necessary - though in most futures I can see there seems to be very little reason for Telstra to persist in wholesaling anything - but that is for then and we have to deal with now.
Companies like Exetel have no choice in taking this view of the 'now' because we could have been in a position of AAPT selling their retail business to one pernicious (to us) company (iinet - which they did) and selling their wholesale business to another pernicious company (TPG - which they apparently came close to - but didn't at this point in time but could at any point in time from tomorrow onwards). This would have been extremely inconvenient to us - to put it mildly....and it will certainly happen, that the wholesale business will be sold to someone, at some time in the future.
Personally, I don't see that Telstra's new ADSL2 pricing is sufficiently attractive (even including the up front cash credits and discounts) to make any real difference to Exetel's immediate future but I do like the idea of being able to offer ADSL2 services in more regional and especially in some country areas. I also have very little doubt that Telstra Retail will increase the attractiveness of the current ADSL2 offers quite significantly between now and Christmas 2010 and then on into 2011. The wider coverage will be of some assistance in 'protecting' Exetel's market share over the coming months and what eventually transpires will have to be dealt with as things continue to change.
On balance, and by no great margin, I think I would prefer to be Exetel than some other providers in the next few months.
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