It seems that there is a great disturbance in supplier land with some quite, to very, surprising changes of mind/heart/pricing models becoming more and more evident as this month's meetings and 'offers' are revealing. I am not aware of any particular 'event' that has prompted so many different types of 'offers'. Perhaps it's simply that all of the people we deal with have now had time to assess their first quarter results and have seen the trends in October and are not seeing anything they like. After more than a year of Telstra Retail 'attacks' and TPG's reactions to them perhaps more and more suppliers (including Telstra Retail and TPG) are 'running on empty'? Perhaps its just the 'Christmas Spirit'?
The reasons this scenario is puzzling is because elementary business principles tell you if a series of products offered to a marketplace increase in 'value' to the customer by, say 100%, over a relatively short period of time but the net dollars received for those services doesn't change or even declines then the underlying costs of the companies supplying those services have to reduce in similar proportions - by either the cost of operating the network that provides those services falling proportionately or the personnel involved in promoting and delivering the services reducing.....or both. Otherwise the operator of a company has learned the financial skill equivalent to walking on water.
We have been offered a series of cost reductions of the basic 'building blocks' of the services we provide ranging from 20% to 80% over the past week or so with three more meetings to be held over the next three days that are certain to provide even lower pricing on two key elements of the residential services we currently offer and one involving the base Australian infrastructure costs. In fact the only cost we incur that hasn't reduced has been the cost of wireless broadband.This is all very welcome but, without knowing anything at all about our supplier's cost structures I am a little bewildered as to how this can be possible. One thing has become evident - that's the loss of two of the very best 'account managers' from two of our major suppliers. Reading various press statements it seems that more than one of our suppliers has started reducing personnel in their 'sales teams' and it would seem logical that they are reducing personnel in other areas.
I have been through only two scenarios like the current residential ADSL saturation situation before in my business life and the were both pretty shattering for the companies involved as a major 'industry' peaked, declined and then died. I have never been involved, or read about, a situation where a government has added to the chaos by intervening in a market in the ways that the current federal government is doing so that adds a new element to the conundrum. Of course, my experience is very limited but the changes occurring, as evidenced by the continual selling price erosions have not yet become evident - other than, perhaps, in the latest round of both selling and cost price reductions - and the first signs of personnel attrition.
What will happen? Well the federal government's attack on the Australian communications providers won't stop anytime soon - they still have no idea (at least according to their public statements) of the chaos they are currently causing let alone the likely ramifications of that. Telstra Retail will not stop what they are doing for at least twelve months because the federal governments attacks have left them with no option.....and so 'down the line'....Telstra Retail reacts to government attacks forcing all other providers to react to Telstra attacks resulting in.......
.....well, at least it's a great time to buy network delivery components....but will their be any point in operating a network that doesn't deliver any return?
This is nice - I was waiting to read of such news of discounts. Of course, news of reductions itself doesn't count until it percolates in to the monthly fee I am offered. But worth staying tuned to find out.
Perhaps - but the point of the planned PoPs is to assist us with business links in those countries which doesn't really affect our business with Optus other than to increase the fibre links we sell in Australia.
Yes, as you've been kind enough to mention in this blog prior.
Still, given the conventional thinking that such suppliers seem to be guilty of, perhaps that was the premature conclusion they came to. If there is any reading of your musings going on at Optus and Verizon, surely they're concerned regarding the news of other potential IP suppliers.
We run Exetel as an 'open' company in that we share with our suppliers whatever information is not obtained under 'do not disclose' conditions.
So Verizon is well aware that we are looking at alternatives as we have advised them 2 months ago as our contract requires us to do that we were terminating the circuits and we have advised Optus on the same basis.
Despite old fashioned 'secrecy' habits we have never operated that way - not because we are 'special' but because we can't see any point in not sharing all possible information with people you do business with.
Mind you - we don't find our suppliers reciprocate our open attitudes - but then they don't have the same levels of freedom that we do.
Great news that you're getting lower wholesale / buy prices and thus can potentially increase your margins. I'm happy with what I'm paying so not waiting for a price drop.
However, I was wondering after reading "One thing has become evident - that's the loss of two of the very best 'account managers' from two of our major suppliers." Would you consider offering those staff a job? Great staff are hard to come by and they may be interested in working with a team that has the flexibility to rapidly change the product / associated services (billing, reporting etc) to match the market.
1. If we have been observing Exetels movements it has indeed passed Optus Wholesale savings on to the consumer, this week, accordingly; leaving a reduction in TW much overdue. - That this can similarly happen, is highly critical.
2. `$88.95 a month'-including home wire basic-for ADSL2\'entry level', is inconceivable.
(it escapes my faculties of reason)
..But then, so is 'not shaping' in adressing today's consumer
3. I'd be curious how many 'TE-2D' did 'Australia purchase' within the intake of Oct2010 ?
4. +Does the changes in pricing presentation requested by the ACCC, stem or aid Exetel sales, or makes any difference?