John Linton
In a recent post here I expressed my concern with the Telstra claims by their head of BigPond that:
"BigPond CEO, Justin Milne, told Telstra's investor day briefing last week that: "We reported in August that we'd continued to grow our market share and achieved 47 percent. Today I am very happy to inform you that we've continued this upward climb. Today our market share is around 48 percent, with no sign of the trend changing. 50 percent is an extremely important goal to us and we expect to be having that party pretty soon."
As Telstra is a major corporate entity with compelling regulatory reasons to never make misleading public statements I took this statement at its face value and lamented that it was impossible for me to see any future for independent ISPs (especially Exetel) if the Australian marketplace, according to Justin Milne's statement, so significantly preferred BigPond's massively overpriced and slow service to that of every other offering in the marketplace.
But then.......I re-read Justin Milne's follow on statement:
"The growth represents a return to levels last seen in the early years of the decade. In December 2002 Telstra had 46 percent of retail broadband but this declined rapidly to 37 percent in December 2003 with a number of new players entering the market."
...and I thought.....hang on a minute.....this doesn't make sense......every time BigPond or some other major provider issues reports that include customer numbers BigPond always has twice as many as the rest put together....are Telstra really saying that Optus/AAPT/iPrimus/iiNet/TPG/Internode etc have, combined, more than 2,500,000 ADSL customers?
For those readers of my random thoughts here whose memory or experience doesn't stretch back to "the early years of this decade" let me share the benefit of my failing memory which is that Telstra/BigPond had an absolute monopoly on the provision of ADSL services for more than two years up to early 2002 at which time, by definition they would have had 100% of the ADSL marketplace.
In early 2002 small ISPs such as iiNet and Internode (and they were very small at that time) began to buy ADSL tail circuits from Telstra Wholesale and would obviously have begun to reduce the marketshare held by BigPond from 100%. But did they do such a magnificent job that they reduced a massive incumbent with over two years start from 100% to 37% in less than two years? (bear in mind there was no churn available at this time and most BigPond customers, including me, had taken up the free modem option and lower monthly cost with the 24 month contract lock in.
I suppose that BigPonds ADSL customer base could have been so small that their two year start didn't matter much and their pricing was so sky high that as soon as customers had an option they would stop buying from them and buy in much larger volumes from the two small State based ISPs which few people would ever have heard of in the major markets of NSW and Victoria where 70% of customers are.
However....it doesn't really seem to stack up.....so..I got hold some previous year's Telstra's annual reports....
Now unless I'm reading the figures in those reports incorrectly (or they refer to something other than what is in the column headings) they seem to tell a very different story to the figures allegedly stated by Justin Milne. According to that annual reports Telstra's broadband marketshare in July 2004 was 60% - a long way down from 100% but probably more likely than the 37% allegedly stated in the recent briefing.
It would seem much more likely that BigPond's broadband market share has fallen gradually from 60% in July 2004 to 48% in July 2007 than it would have climbed from 37% to 48% over the same period.
Then again - Justin Milne would not mislead the public. There must be something I don't understand about the figures I read.
Perhaps there is a place in the Australian marketplace for independent ISPs after all?
It's all very confusing.