.......what is now going to happen to the minnows?
I notice one more 'krill' ISP has gone the way of all the rest of them and over the past week I have noticed an increase in the '...wonder whether you would be interested...." emails from various third parties 'alerting' us to the fact that various ISP businesses are for sale. I don't know how big Blitz Telecom was in terms of customers - no more than a few thousand I would have thought from the little information that is publicly available - but I have no real idea - but the 'offers of interest' ISP type companies that are for 'sale' that Exetel has been made aware of over the last year are seldom larger than 3,000 customers based on the brief details provided.
The ABS six monthly report 'chronicles' the decline in the number of 'ISPs' operating in Australia and from what can be seen from those reports it's unlikely that too many, if any, krill will be in existence beyond the end of this calendar year. That's sad in a way but then, if you look back over the past 15 years, almost no ISP has lasted very long and the number of companies that have survived more than 5 years can be counted on the fingers of both hands and one foot the handful of ISPs that have survived to grow to any financially viable size have all had 'flying starts' or other mainstream business revenues to fund their development and absorb their losses and/or provide their development capital.
So what do these 'figures' tell anyone (assuming they are true) about an 'industry' when less than 15 'start ups' have survived more than five years out of at least 2,000 that have attempted to grow a financially viable ISP business?
I don't know other than it must be very difficult and the overwhelming majority of people who attempt to do it don't have enough knowledge, ability or money to have sensibly thought they could make the attempt.
These thoughts crossed my mind because of two documents I read over the last two days providing details of ISP businesses that are for 'sale' plus being made aware of the Blitz 'opportunity. I don't know how many of Telstra's and Optus' wholesale customers have disappeared over the past 12 months but I would have thought it would have been quite a few. This raises the interesting question of who would be potential customers for either of those companies ADSL2 services over the coming two years. While the krill never amounted to anything very much 'singly' as a group of, say, 500 wholesale buyers the could have had as many as 200,000 or so ADSL customers and they would have been 'aggregated' via various, largely defunct, wholesale buying groups of one type or another.
What is the real market for Telstra's wholesale ADSL2 services should they ever decide to actually do that? Much more limited than it was for their ADSL1 services back in 2002 I would have thought. With, probably, less than 30 ISPs left in Australia by the end of this calendar year and with the largest of those (Optus) unlikely to buy any broad band services at all from Telstra with AAPT, TPG and iiNet also likely to take that view (if not from truly commercial reasons, possibly from other reasons) the marketplace looks very 'sparse' - probably less than ten realistic buyers?
Perhaps that guess at the possible marketplace is totally incorrect and/or far too pessimistic.
But what effect would Telstra's possible wholesaling of ADSL2 services from its stated 900+ exchanges have on the minnows who have invested in their own ADSL2 networks? In principle it would be a relief to them that Telstra is at least considering that its own investment in ADSL2 means that it will ensure that any FTTN rollout would not invalidate the investment ROI for itself and therefore for them. Could be the case - could be wishful thinking. I think this set of statements by Simon Hacket (and do they have more than a whiff of hysterical panic behind each page or what?):
makes it clear that the 'rusting unused iron' scenario is more than present in the thinking of the financiers that optimistically funded ADSL2 roll outs by the minnows on 7 - 10 year leasing plans.
Maybe the FTTN will really happen - but personally I doubt it and I think Telstra doubts it too - or at least has decided that it is going to be a long, long way away.
So why soften its stance on wholesaling ADSL2?
There could be many reasons but given Telstra's attitude to wholesale customers to date only on real scenario is consistent with their previous actions and constantly reiterated views. That is to 'put a cap' on other companies exchange roll outs and to make it even more difficult than it already is for those companies who are committed to investing in DSLAM roll outs to get any sort of ongoing financial return on their investment. (I think I postulated this position last year when the FTTN was first mooted as a 'reality').
One of the more stupid statements made by Michael Egan in the article I commented on yesterday was:
"[The] idea of duplicated networks is economically crazy. It is as absurd as
having two competing Pacific Highways, one owned by the NSW Government
and one owned by the Queensland Government. It is enough trouble to
fund one to an acceptable standard, let alone two."
Poor, stupid and uninformed idiot that he is he was speaking for a group of ISPs that were all committed to duplicating the current ADSL national network!
Like Simon Hacket's little rant referenced above, he is simply attempting to make the dangers to his personal company (ies) appear to be things that are of real significance rather than just personal errors of financial judgement.
I don't see how you can make the argument both ways:
Duplicated ADSL = good
Duplicated FTTN = bad
but then I don't have to worry about a, possibly, catastrophic investment decision.
But once you start down the road of "duplication = bad" then you also have to take the view that 30 ISPs rather than one are/is bad. Or, as Terria would have it, "it's OK for me and my mates to have the monopoly but it's bad if Telstra has it."
So what is going to happen to the 30 (or whatever the real number is) ISPs that currently remain in Australia? Will they go the way of the 'krill' over the next 2 - 3 years - buried by their unprofitable ADSL investments just as the 'krill' were buried by their unsustainable plan prices and the increasing costs of infrastructure in their tiny ways?
Blitz Telecom gought G-Node who bought the ADSL component of Tel.Pacific not long before. (I was once a customer of Tel.Pacific - both G-Node and Blitz tried chasing me for a large amount of money that was never owed in the first place - quite quickly sorted when the right people were involved).
I believe Blitz was simply set up to try and revive the failing G-Node group.