Tuesday, January 4. 2011Exetel "Pricing Itself Out Of The Low Usage ADSL Market"....John Linton .....an opinion that has been expressed several times over the past few days.....where the low usage market is described as "$30.00 per month. Perhaps that's true. I am wondering which ISPs have buying and operating costs that allow ANY sort of ADSL service to be sold at $30.00 per month? Exetel has obviously fallen so far below reasonable 'buying power' that we obviously can no longer compete in these marketplaces - if "$30.00 per month is indeed the reasonable price for an ADSL service in 2011. The prices we pay for port costs alone are more than $30.00 for a 1500/256 ADSL1 service without telephone line rental (available widely) and are over $38.00 for an ADSL2 service including telephone line rental (available from around 400 exchanges).The cost of running Exetel (administration, support, billing, Pop costs) is around $1.50 per customer and back haul and IP is around $0.80 per gb. Assuming the low end user uses less than 3 gb per month (which they do) the lowest cost (without profit) for a service is: ADSL1 1500: $30.00 + $1.50 + $2.40 = $33.90 ADSL2: $38.50 + 1.50 +2.40 = $42.40 How does Exetel offer a "$30.00 per month service when the COSTS of such a 3 gb service are higher than such an end user price? The answer is it can't be done by Exetel and could only be done by a company with far lower component buying costs. If you were to look at the providers of ADSL in Australia which suppliers would you find that offer such a service? Personally I can't find one but then I am 'battle fatigued' from looking at pricing of ADSL services over the last two plus years. Please don't cite the TPG con of $29.95 for unlimited ADSL which any ethical company would advertise as being $59.95. Exetel can provide an AAPT service at below $30.00 (for a ADSL service only with the customer paying for the telephone line component to the provider of their choice) but the coverage is restricted to major exchanges in major cities and, because of the carrier subsidies this offer can only be provided to new customers. So, a $30.00 ADSL service is out of the question from Exetel and, as far as I can see, is out of the question from any other supplier who intends to fully provision their network to deliver full speeds at all times of the day and week......something some suppliers clearly have no intention of doing and rely on customers who either don't know or don't care that they are expecting a service that does not perform to the apparent speed and reliability description.But, even if that is not the case, Exetel's costs are greater than $30.00 a month so it is an impossible price for us to offer and as we need to make a profit to stay in business we can't begin to contemplate such a price point. Should there be providers that can offer such pricing, and make a profit, then it just confirms that Exetel should put its efforts in to products and services that can be competitive and sustainable in the longer term. Copyright © Exetel Pty Ltd 2011 Trackbacks
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Hi John,
Is a 256Kbit port still available as your low end option, my parents just want a basic ADSL service and would be better off with a mobile plan but don't want to change and are worried about extra costs if they go over their limit, they don't need a 1.5Mbit service and the cost would be higher than sticking with their current plan the $10 extra charge. Also I noticed that in the latest iteration of Android (ginger bread) there is a VOIP/SIP application built in, I'm not sure if Exetel's MOIP application offers more than this but it could save you some development costs. Thanks for your Blog during the last year it has been interesting to read about what goes on in Exetel, Best wishes for the new year and I hope you get to take some days off this year. Comments (2)
The price difference between a 256 and 1500 ADSL1 plan would be $8.00.
Comments (5)
I only know of a few $30 ADSL2 services. (I'm trying to compare apples with apples.) TPG's ADSL2+ (no phone) on line sharing (so like your AAPT service) is $30 per month for 5Gb+10Gb. But as you will point out - it is TPG and the question of under provisioning comes into question. There is also Eftel and Aanet plans at this or less. Lastly there are a few "prepaid" or similar but with very limited availability. Depending on other services a user has, Telstra may be $30 for ADSL1. That's about it.
I suspect the low usage market is price sensitive and even if $30 is not achievable, it might be worth examining a budget/low cost plan on AAPT and ADSL1. $8 is significant. It may also be a perception thing. The lowest plans (30Gb + 180Gb) look like there is room to move even if there actually isn't. Comment (1)
No-one expects Exetel to provide its customers with ADSL services, but I know a number of current Exetel ADSL customers that are more than happy with their 256K and 512K services and who only use 0-3GB of data per month.
What these customers would like to see is Exetel return to offering 256K - 1.5M PAYG plans at whatever cost Exetel can provide them whilst still making an acceptable profit. Given the numbers you have provided then it appears Exetel might be able to offer 256K - 1.5M PAYG plans for around $26 - $35 per month with usage at $1/GB, and a 3GB 1.5M plan for around $37.50 per month. Even if the 3GB 1.5M plan was offered at $40 per month, for the low use users this still represents a saving of $10 per month over the cheapest 1.5M plan which was on offer under the new plans released and a saving of up to $8 on what the an old 1.5M plan would be after the $10 increase. Comments (2)
John,
It's good to see that a 256K PAYU plan is now listed on the website so hopefully will offer 512K and 1.5MB plans shortly. I doubt many customers that already have a 512K or 1.5M plan would like to drop to a lower speed especially given that VOIP really needs a 512K service to run nicely. Les PS: My original post was supposed to say "No-one expects Exetel to provide its customers with ADSL services at a loss" but somehow the "at a loss" got lost in one of my edits before hitting submit. Comments (2)
I liked the old PAYU plans the most.
Still do. Any chance of offering them again? Regards, Harry. Comments (3)
The only $30 plan I'm interested in is a 256/64 ADSL1 one that I can move my mother to.
Comments (2)
PAYU at $27.00 plus $1.00 per gb downloaded is the very best we can do.
Comments (5)
A plan like that would be excellent and very popular for the older users like my parents.
Comment (1)
PAYU at $27 plus $1 GB sound good for my parents too if it can be made available again.
Comments (2)
Well you're very best is very good. Faced with this $10 increase pushing her $30 plan to $40 I would happily move her to a $27 PAYU plan. The only time 1GB has been downloaded in a month is when I have been there.
Comments (2)
Is this for ADSL1 1500/256..... if so, it looks great!
Any chance for PAYU for ADSL2 too? (I have a sister and a father in law using Exetel ADSL2 (Optus) - both on old PAYU plans). Regards, Harry. Comments (3)
NOOOOOOO!!!!
The port cost to Exetel of a 1500/256 service alone is over $30.00 per month. The new plan is for 256kbps users. Comments (5)
hi John,
I see you have now included PAYU plans for both ADSL(Telstra) and ADSL2 (Optus) plans. Thanks. I have selected the ADSL PAYU plan for my "country" residence - and my lucky "rellies" with their Exetel Optus ADSL2 services have each selected the ADSL2 PAYU plans. Regards, Harry. Comments (3)
Thank you for your ongoing support.
Comments (5)
I agree with what others have stated.
I don't think you have to price too aggresively, $40 for 4G 1500K and $50 for a 4G ADSL2 plan would suit many people while giving a decent profit. These customers do not need an off peak period either. Adding the off peak would attract the "value conscious" downloaders who will download 180GB off peak and blow the economics of the plan. Just my 2cents as those plans would suit my Mum who otherwise will have to go from $38 to $50 next month. Comment (1)
Would it be possible to provide a single "basic" plan in 4 categories... ADSL1500/256, Telstra ADSL2+, Optus ADSL2 plus phone, and PTL ADSL2+.
These plans could be "cost to Exetel + whatever amount is needed to ensure a profit + 0gb included data" . They would be PAYG plans, with plan and data at whatever cost is required to ensure profitability for Exetel. (I know you have introduced new 256/64 PAYG plans, but IMO, these are too slow for all but a few customers) I dont think an 8mb plan should be considered, because the port cost is too high, and I think 1500/256 is adequate as a cheap ADSL1 option. Surely such plans would not lose Exetel money, and nobody could complain about Exetel not having cheaper plans available. It's inevitable that these plans would be more expensive than your normal plans if the customer used a lot of data, but if that were the case, they would choose one of your other plans instead. And to ensure the continueing profitability of such plans, there could be a notation in the plan's conditions that "they are provided at the lowest possible price, and as such, the cost may vary up or down from time to time, if the cost to Exetel varies". Maybe I'm naïve, but I believe most customers who are interested in this type of plan, would be very comfortable with plans and a condition as I've described. I agree with IC, you don't need to be too aggressive with pricing... just provide a solid cheaper option that still makes you money, and let the customer choose how much to use. (or not) Comment (1)
"you don't need to be too aggressive with pricing... just provide a solid cheaper option that still makes you money, and let the customer choose how much to use. (or not)"
I'll also add my support to that. John, You mentioned in one of your forum posts, "We could look at a $50.00 plan with 10 gb of downloads and with the included free local, national and calls to Optus mobiles." If this is basically a OCV200 plan with less GBs of data, then I think that would offer good value to customers who simply don't have large download requirements. Actually anything between 3Gb and 10Gb of included data with price between $45 and $50 per month, with the included free local, national and calls to Optus mobiles, I feel, would be appealing to many people. I hope this is useful information. Chris. Comment (1)
Want to second Chris here. Something like a $50/10GB version of OCV200 would be much appreciated by us, and I'm sure many of your "lighter" naked ADSL2 customers.
Comment (1)
Has there been any thought for a PAYU on AAPT exchanges like the one I am on now D/20BYOLINE.
Regards Richard Comment (1)
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