Wednesday, June 18. 2008Forget About The Dangers To ADSL OF FTTN.......John Linton .........the 'real' mobile data 'war' is about to hot up. It has taken the best part of two years but Exetel has finally concluded a contract to allow us to provide HSDPA services throughout Australia (whether that is to 98% of the population or some lesser percentage would depend on the reality of the various interpretations of the mobile network's actual coverage which I have no ability to comment on). We could have signed up to become an 'agent' of an Australian mobile data provider in mid 2007 (or at any time since) but there was never going to be any real point in just becoming one more 'outlet' for the resale of a carrier's mobile data plans and receiving a commission. If you have read any of my previous 'rants' on the frustrations of looking for the means to provide what we perceived to be a real mobile data service with an open ended future to take that service as far as it becomes possible to achieve, you may remember that I set some simple objectives. Perhaps it's my naivety, but I believe the base contract terms we have now agreed, while not being exactly what a small company like Exetel needs, is a solid basis for building the services that will become a major part of Australia's internet future. So we would aim to offer the new services within the next three months as we have to develop our side of the B2B provisioning and fault resolution software and go through the cycle of branding sims and hardware as well as developing the processes of promoting, selling and supporting the mobile data services. If you've followed the various offers by the carriers over the past twelve or so months you would have seen a common pattern of 'duplicating' the low end offers from ADSL providers and then tearing each other to pieces by successive increases in data allowances and lowering of monthly costs with 'free' USB sim connectors being offered on 24 month contracts. There is a depressing "me too/exactly what they do but cheaper" copy cat theme running through each of the current carrier's offerings and that has been the case since the second offer was made - one day telephone carriers will actually employ someone in their product planning operations that won't simply participate in some sort of "if it isn't the same as every other provider I must have got it wrong" approach to product design. I read this yesterday: which, at first sight (head line) appeared to promise that, finally, a carrier was going to actually try and match the service parameters to the end user parameters. The content belied the head line though. However it did show the first glimmer of a carrier moving away from copying the other carriers and providing a mobile data service that begins to match both the end user's needs and also takes account of the actual 'user pays' costs of providing services over a network with discrete capacities at discrete pricing. I have two long time acquaintances in very senior positions within two different US mobile providers with whom I have discussed data over mobile for a very long time. They were the 'advisors' who told me what the actual costs of carrying data over mobile networks actually was and what it could be, profitably, sold for - it was this 'knowledge' that sustained me in never giving up until I found pricing and flexibility that would allow Exetel to offer a sensible service without asking for pricing that would be pointless for an Australian carrier to provide. The imminent release of the Apple iPhone will almost certainly 'kick off' a new round of me tooing price/download repositioning by the Australian data over mobile carriers and their associated distributors. If that does occur it will be interesting to see what 'innovations' they introduce in to their pricing models. From what I know, which could of course be quite wrong, the current models are losing a lot of money. This is unlikely to be a concern to any carrier at the moment as the losses in absolute dollar terms are minute in terms of their overall mobile revenues and would be regarded as start up expenses. Exetel can't begin to take such an attitude to money (to start with it's very scarce and it's our own) and we will need to find a way(s) of offering data over mobile services that suit our target marketplaces and that we can provide without losing money (for "2 - 3 years or so). I will look at the EU data over mobile services first hand when we are in the UK next month not only to see what has changed 'on the ground' since I was there last year but to check out just how close the different offerings perform in terms of speed and reliability. While, based on last year's analysis and the information we have tracked since then, I have a good idea of what we would offer 'today' we need to see just what transpires between now and August in terms of what the Australian mobile carriers will do in terms of service offerings - there is zero point in Exetel just trying to duplicate whatever Optus, Vodafone and three offer. My, complete guess, is that of the current 4 million ADSL users today over 50% of those users would switch to a data over mobile offering within the next two years and 80% of 'new' ADSL users would select a mobile rather than a fixed line solution from 2011 onwards. This is based on data over mobile being as fast and at a similar cost to any then offered ADSL2 service with the advantage of no telephone line and therefore portability between residences - more often required than you may think if you count weekends away and annual holidays as well as people who rent (or even buy) their accommodation. If I had to guess at the cost of a naked ADSL2service in mid 2009 I would put it at around $A45.00 for 2 - 3 gigabytes of downloads at an average speed of less than 10 mbps. I would think that an HSDPA service would be offered at slightly less than that pricing, perhaps around $A40.00 and would achieve around half the speed - perhaps a little better However the HSDPA service would be available 'everywhere' in Australia (not 900 exchange areas) and would be be totally portable. It could also be offered on a payu basis (1.5 cents - 1.2 cents per megabyte) that would allow for low/no usage months and, of course, it requires no new activation/deactivation charges when moving residences - or the fact that at the new residence you can't get ADSL2. It's very definitely going to be a major challenge to get whatever we do 'right'. The rewards for getting it right, or even pretty right, could be quite substantial. (I think it is one of those days when I tell myself it was a sensible decision not to 'invest' in a DSLAM roll out). Trackbacks
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Good to see you are finally getting some traction on a wireless offer after working on it for so long, you won't have long to wait to work out just how silly the offers out there will be, the iPhone will be the catalyst to data offers happening, none of the networks are perfect yet but they are getting better, your timing to enter this space is probably about right though
Comment (1)
"Exetel has finally concluded a contract to allow us to provide HSDPA services throughout Australia."
Would Exetel HSDPA wireless be able to deliver, in the near future a plan like this - 8Mbit speed 30GB of usage pm @ $65pm. Comment (1)
No.
The HSDPA plans wil only suit 'low' usage users for the next 12 months. Comments (3)
What is the current feeling about the capability of the mobile data system being able to handle the extra 2 million users in two years?
Will the available bandwidth be sufficient to feed the expectations of the users? Will there be enough "Cells" or the equivalent in mobile data terms? Comment (1)
I don't know about Austtrlian capacities and could never know.
Based on what I've been told by my US friends capacities aren't an issue there either now or in the immediate (2 - 3 years) future. Comments (3)
I was looking through australia's wireless offerings for my grandma to get onto the internet. The only thing that came close was $20 for 1gb / month for a 24 month contract. Not really a plan for her.
What the Australian market is missing is a 'pre-paid' data plan. Similar to mobile plans where you pay up front for a set mb quota and can take 6 months to use it, that would be great. We had that when I was at uni, you paid $5 and got ~2.2c/mb I think. It was dialup back then and it suited me very well. Is that the sort of plans Exetel is bringing in? I'd totally pay for a USB wireless modem thing sign her up for it. Comment (1)
Our aim is for a $5.00 a month access and 1.5 cents per mbyte.
Pay As You Use - no fixed quota. Comments (3)
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