Tuesday, February 1. 2011Tough For More Than A Few....John Linton ....and although this article is largely BS: it is a continuing indication of what the ABS reports every six months for free - that small ISPs can't compete at all and any sized ISPs are making less money than they once did from providing ADSL services. I don't know why a company like iinet would bother "researching" the small end of the ISP market (as I said the ABS publishes 6 monthly reports on that exact subject) so any statistics are likely to be - well - not really statistics and are just an obvious statement of what the ABS has been reporting for three or four years. Also the self serving comment that iinet have increased their ADSL customer base is undoubtedly untrue (and once you subtract the purchases will show that iinet lost customers over every six month period for the past four years) it continues to go South. Today is recurrent billing day and it was another record month for Exetel - unsurprising as the recent price increases for out of residential ADSL customers vastly overwhelmed the usual January slow down in telephone calls and excess usage charges and the student cancellations of ADSL services during the long university annual break. Our loss of residential customers turned out to be a little below my expectations and far below those of anyone else who predicted what they would be - for which we are all very grateful to our long term customers (surprisingly almost 20% of our residential customer base has been with us for more than six years). Our corporate revenue was solidly up - despite the embargo and our mobile revenue also grew strongly with all other services holding their own in the quietest billing month of the year. All in all it was a very positive start to what looks like being an even tougher six months to the July - December period of 2010. Though it would be best to wait until the larger companies make their half yearly reports and the ABS publishes their July 1 - December 31 2010 statistics. Perhaps all of the tiny ISPs will disappear this year - it has been a continuing trend for some four years and has to reach zero at some point in time. Perhaps some of the larger ISPs will get out of the residential ISP business this year - clearly Netspace didn't consider it worth the effort of remaining in a business they had been in for a very long time. But, I would have thought, that there aren't going to be any real communications companies getting out of residential ADSL in the current year because no matter how far away the 'NBN2' is in reality the medium sized ISPs that are left will take the view that it is closer to being 'switched on' in some real places than it was last year and if they have made the efforts required to survive last year they may as well hang on a little longer to see if Ms Faustus desperation to make it appear to be viable results in better port pricing than is being offered by Telstra and Optus and their own DLAMs. So, my guess would be that none of the small medium/medium sized ADSL service providers would fold their tents and disappear into the night this year. If Ms Faustus wants to get "re-elected" (bearing in mind she wasn't actually elected last time) she will have to make it 'look' like the 'NBN2' is being delivered which means that she will have to take a deep breath and make the pricing artificially low to attract any current ISP to use it. By definition this almost certainly means that she will have to offer 'NBN2' ports at significantly lower costs than current ADSL2 ports with equivalently attractive back haul options or no-one will bother to make the switch. This in turn will result in most wholesale ISPs 'fire saling' their ADSL ports to scrape the last money they will ever get from those DSLAMs where 'NBN2' is turned on. That's the way I currently see it. Then, of course, for those people who continue to think that wireless is not really something a fibre network has to worry about articles such as this: http://www.betanews.com/article/Ericsson-sets-MCHSPA-speed-record-with-prototype-device/1296497667 keep those with less blinkered vision aware that wireless is going to become very much a preferred option for some, as yet unknown, percentage of the residential data marketplace. If you don't believe that check the next set of ABS statistics. So, a new month and new targets and new 'challenges' - fortunately it's a lovely summer's day in Sydney. Copyright © Exetel Pty Ltd 2011 Trackbacks
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John,
I've always been fascinated by your view that only the lowest cost service is of interest to informed, rational consumers. I understand from your many blog posts that Exetel's target market is the budget conscious consumer but why do you discount the premium market (as catered to by iinet) as any less relevant? In every industry there is the budget conscious segment and the premium segment. If price were the only determining factor then there would be no market for BMWs, Porsches, iPhones etc. etc. My point is in every market segment there are people will to pay a premium price for a premium (or perceived premium) product/service. What's wrong with that? Comments (2)
I clearly communicate very badly.
Exetel's only reason for being in business is to provide services at the lowest possible cost at the highest quality achieved by any other provider at any price. (that's what it says on our web site for the past seven years). iinet provides a pretty average service (if that) at a high price. I wouldn't think it was sensible for me to waste my little remaining time making any more money than the little I currently have and my motivation to get up every day is to contribute some tiny/miniscule amount to the country of my adoption. Low cost doesn't equate to non-premium quality. People who by Porsches (and I was one of them several times) didn't equate a Porsche to anything but beauty - I was not (at least I hope I wasn't) the wanker element who bought a Porsche for its 'image enhancement'. What's wrong with trying to save people and businesses money that is charged to them to support supplier companies unnecessary personnel and useless 'organisational structures'? Comment (1)
John,
I am a customer of both iinet and Exetel and while the services are quite similar from a technical standpoint, without a shadow of a doubt I can say I've had a much better support experience with iinet. They have Australian based support which is fast, technically competent and easy to understand. They also operate their own DSLAMs which means they can troubleshoot layer1/layer2 issues on the spot. I'll pay a premium for that any day (and I do). To me the hassle of dealing with overseas call centres and telephone support frustrations is a far bigger issue than paying them a few extra bucks each month. I'm not sure why you are so critical of iinet. What basis do you have for saying they provide a pretty average service? They operate in the same industry as you but simply target a different market segment. Nothing wrong with that and I think there is a need for ISP's who cater to each type of user. -Allan Comments (2)
It is unfortunate iinet feels the need to pursue their " little guys", though every industry has one predator and I just expect iinet is cast to be that monster in Australia ... until it runs out of things to buy.
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Having said that, the way a proprietor talks about selling data makes him feel like a drug pusher, has to make Exetel at times appear like a juicy carrot for acquistion.
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"wireless is not really a fibre network"
Unfortunately to make this a reality it would need someone like JL to run it. The major players are unlikely to allow devices to to use multiple channels on their networks when they currently run their wireless networks with such high contention and low provisioning. Particularly in regional areas this is unlikely to occur even thought wireless should be the preferred option to laying fibre, of course the current Government could backflip and conclude that the NBN must include wireless that is built and provisioned correctly. Telstra would be the only provider that would come close to doing this but very unlikely in regional areas. In Tasmania for instance Telstra still have many of their towers running at slow speeds and high contention. They have told customers that they even though they could get a good signal from the Telstra tower, they were not going to upgrade the towers "in the near future" to support decent data rates, and that they should and could get satellite dishes on the Gov scheme instead. Optus shops in Tasmania were not selling sims if you were going to use them in an ipad as they did not have the infrastructure in Tasmania to support them. On further questioning about iphones, smart phones and 3g modems they agreed that these had caused the issue of degrading the service. Comment (1)
When it comes to wireless, the analysis seems totally wrong. As a general rule, people buy services (internet, phone, mobile phone), not technology. So the question is isn't whether wireless or fibre is better, but whether the technology can provide the services people want and for what price. Wireless could win that question, especially if packaged well - eg MoIP in the home.
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