John Linton
Looking at the available figures about ADSL and broadband take up in Australia, and they seem to be at best incomplete and some just look plain rubbery, there is a 'feel' to those reports that the take up of broadband in Australia has slowed over the past year or so.
I base this view on the available figures plus two other Australian factors and some recent data from the USA.
The first is what I see as almost 'desperation' in the ongoing advertising activities of Telstra and Optus and, to a lesser extent, other companies who spend money on advertising. I don't think I could count the number of times "free" was used in the weekend papers either in ad space or on brightly coloured inserts.
Whatever you may personally feel about the use of advertising I don't think that so many companies spending so much money on so many give aways indicates a booming broadband market. I understand that some people say when things are booming "make sure you get your share by increasing advertising spending" but I don't think that 'they' also say "and by the way sell everything at a loss" to make sure you benefit from these boom times.
The second indication comes from what my acquaintances in the modem business tell me about their unit sales which are lower than at any time they can remember which is another indication that (despite so many ISPs giving away modems) the number of new DSL take ups is lower than its been for a long while. I give credibilty to these statements as they are backed up with ever lower prices for modems which seem strange to me as Exetel isn't a big buyer of modems. Even at our low volumes we are being offered prices that are 20 and 30% below what was being offered less than 2 months ago.
If this in fact the case then I'm encouraged. A strange thing to say? Perhaps - but the reason I'm encouraged is that it means that more peope will already have ADSL and therefore will have real experience to judge whether their initial ISP actually delivers what they want. It also means that Telstra and Optus will lose the advantage of being abe to give away modems and the cost of new activations (around $140.00 per new customer) which a small company like Exetel can neither reaaly justify investing in the finance nor would ever make enough money on the monthly plan charges to ever recover the cost even if we invested in the finance.
A third 'straw in the wind' is in reading that the US broadband market has slowed down quite appreciably and there are, according to some commentators, real reasons to think that the broadband market in the USA has reached saturation point. As the US situation generally is a little in advance of the situation in Australia these figures, assuming they're accurate are very revealing.
You can see these articles and the related links here:
http://gigaom.com/2007/11/13/3q-2007-broadband-report-card-b-minus/#more-10672
which basically say:
"For the third quarter in a row, U.S. broadband growth lost steam - UBS Research’s John Hodulik in a note to his
clients pointed out:
Roughly 53% of the nation’s 111M occupied housing units, or
58M homes, had broadband at the end of 3Q. However, only 77% of
households have a PC (June 2007, CEA), and we estimate 90% of homes
currently have access to broadband service. Assuming the 77% of homes
are evenly distributed among that 90%, then 69% of the 111M homes, or
76M homes, have a PC and can get broadband. This puts penetration of
eligible homes at closer to 76% and suggests the days of wireline
broadband connectivity as a major growth driver of U.S. telecom are
largely over.