Thursday, February 26. 2009ADSL1 - A Needlessly Expensive Broadband Service........John Linton .....and uniquely so and only in Australia. I have been struggling to find some way of making ADSL1 services more appealing to customers as the inexorable increase in the percentage of ADSL2 to ADSL1 applications continues to reduce the number of new/churn ADSL1 applications we receive each day and the HSPA applications are moving in a similar direction. We have tried many different things to 'promote' new and churn ADSL1 business but have, largely, been unsuccessful in doing that. We have a cross over situation where we would very much like to grow our ADSL1 user base in those exchanges that are not already equipped with ADSL2 capabilities to ensure that our smaller PoPs have enough usage to allow us to increase the capabilities faster than we can by just adding ADSL2 users. When we first made ADSL2 available (July 2006) there was not much movement in the relative percentages of the two services ordered each day - around 10% in the first 2 months moving to 15% by December that year. Over 2007 the percentage increased to around 25% and then through 2008 it progressively climbed to around 40%+. Two months into 2009 the percentage of ADSL1 applications has dropped to less than 40% of all broadband applications and will obviously continue to fall. While the 'net' application intake is not falling - it is continuing to slowly grow (excluding the HSPA contributions) - the falling 'contribution' from ADSL1 is something we would like to see slowed. Part of that decline is, of course, because of Telstra's ADSL2 offerings on so many more exchanges and also their aggressive, a person less kind than me might say predatory, "special offer" campaigns on all their older ADSL2 exchanges. With El Sol's resignation yesterday there is, I suppose, some hope that his replacement will not regard wholesale customers in the same way (parasites) but any change in that attitude, assuming it happened, will not see any change for at lest twelve months in which time Telstra will continue to 'plunder' other ISP's ADSL1 user bases. Part would be the wider general acceptance of ADSL2 and the obvious And that's the major problem. Even a tiny company like Exetel can buy wholesale an ADSL2 service at 50% of the cost of a Telstra 1500/256 service and at less than 30% of a Telstra 8192/384 ADSL1 service. Obviously companies larger than Exetel, or with their own ADSL2 networks, can 'buy' ADSL2 services at much lower costs than Exetel. This makes a mockery of setting sensible pricing for ADSL1 and ADSL2 services for Exetel because the slower service costs more for us to buy than the faster service. Something that I think must be unique in the history of commerce. This is further complicated by HSPA which, as it becomes generally faster and generally cheaper, provides another faster service at lower cost than ADSL1. Because of current costs it isn't a sensible replacement for all ADSL1 users but it is both faster and lower cost for current 256/64 and 512/128 ADSL1 users and over the coming 12 months will present a very real alternative. I have been looking at how to make more sense of the Exetel ADSL1 plans/prices for some time and especially over the past two days since I returned to Australia. No matter what I try and manipulate the basic stumbling block remains that the Telstra Wholesale prices for the base monthly connection are so much higher than an ADSL2 service there is no solution that I can see. Exetel definitely is not going to abandon its current ADSL1 users by making no further efforts to improve the ADSL1 service offerings and plans but the Telstra Wholesale pricing is impossible to get past. With the use of hind sight it is obvious that Exetel should never have offered an ADSL1 service in the first place - but that isn't very helpful to anybody now - at the time it seemed to be the right thing to do. Until HSPA becomes a viable ADSL1 replacement we need to make our ADSL1 plans more attractive than they currently are. For most/almost all customers this means lower prices. It has defied any mental efforts that i have put in to thinking through this issue and I still can't see how ADSL1 can be made more attractive than it is. As far as I can see Exetel offers the lowest ADSL1 prices from any realistic provider and also offers more 'add ons' than any other supplier. So if anyone has any 'break through' ideas on how to make ADSL1 more attractive I would welcome the input - I've reached the mental equivalent of a 5 meter thick brick wall that is a 1,000 meters high. Trackbacks
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Hi John,
In some way I must be missing something. About six months ago you discussed the need to build POP's to support growing the ADSL1 business massively to make it viable due to Optus removing themselves from reselling Telstra ADSL1 wholesale. Then the path was to move all/most ADSL1 users to ADSL2/HSPA through the lower cost line rental etc offers. I would love to take up but its not availible on my service. Now you lement the decline in ADSL1 business through churns etc. Any ADSL1 customers you gain through a churn will then be a target for another wave of migrating ADSL1 customers to ADSL2 - so why are you concerned that these customers are just moving directly to ADSL2 when they first join with Exetel? Isnt ADSL2 customers what Exetel wants- else why try so hard to move ADSL1 existing customers to ADSL2? Comment (1)
Don't regret the ADSL1 offerings, as thanks to Messrs Rudd & Conroy's insight my rural-dwelling family members have no other way to enjoy Exetel's services. Not even HSPA. Some are less than 100 miles from Sydney, and even ADSL1 is rationed. Don't start me about New England - see a recent forum thread.
Comment (1)
In the last 2 days 3 potential Exetel customers have sought me out about Exetel services.
2 have Bigpond ADSL @ roughly $40 per month - with download allowance of only 400 MB/mo. Both exceed that allowance regularly and spend a lot of time trying to make sure they don't do so (asking rellies/friends to not send photos, etc....). 1 is on an Optus exchange (with limited ports). 1 is on an exchange with only ADSL1. Both have Telstra mobile phones. I tried to focus their attention on their total communications costs - and demonstrated significant overall savings going with Exetel. Both are seriously considering a move to Exetel.......... and that seems to be the point..... both are considering a change, which they have instigated. The 3rd person recently purchased HSPA from Exetel.... and is happy with the service - even though he reckons it is "useless" between 4 pm and 7 pm daily...... He is now considering a ADSL2 service for his home (which he only occupies 1 week in 4 - he's a miner). So my second point is that many people are still on exchanges that only have ADSL1 available...... so please keep the ADSL1 products available. Harry Comments (2)
I keep thinking you're creating a problem for yourself regarding what to do with ADSL1 where none exists. What's wrong with ADSL1; if a customer wants such a service and you continue to price it as best you can then that is all you can do. If it costs more than ADSL2 so what, that's a customer choice.
There are still numerous valid reasons to remain on an ADSL1 service, even for someone that may have access to ADSL2. I think rather than worrying about cost etc, you would be better focusing on those things that you can change that are inhibiting people from moving from ADSL1 or taking up ADSL2 in the first place. In the longer term, I expect your right regarding wireless but I think it will be 24 months before it's an atractive and realistic option for many when you factor in up-front cost to changeover existing central modems etc. For many, ADSL1 with VoIP for outgoing provides the best solution right now and moving to ADSL2 doesn't get you the same bang-for-buck that VoIP does. I'm imagining many will skip ADSL2 completely, going from ADSL1 to HSPA when circumstances eventually allow. Comments (2)
I think you'll find it was 12 months ago I made the comment about being concerned about Optus withdrawing the ADSL1 service they offered.
We have been moving as many customers who can/wish to move from ADSL1 to ADSL2 as possible but we have over 30,000 ADSL1 customers for whom that option is not available. Our ADSL1 customers are being aggressively targeted by Telstra which accounts for 50% of the customers who churn away from Exetel and there is nothing we can do to match those 'special offers'. We want to keep as many of our ADSL1 customers as possible which was the topic I was commenting on....I thought. Comments (15)
I love my 8Mb connection with Exetel and I can't get any ADSL2+ other than Telstra at my exchange.
I sense from reading your blog over the last few months that you're keen to drop Telstra ADSL1 from your plans. Can I implore you to at least delay your decision until at least later in the year and see if conditions change after the new CEO has settled in? Comment (1)
Exetel has ABSOLUTELY no plans or is even thinking about stopping offering ADSL1.
However there is a possibility that decision will not be ours to make. While it's almost impossible to conceive how any new Telstra CEO could be worse for wholesale customers, sorry - I mean parasites, than Trujillo it's concerning that McGaughie is involved in the selection of his successor. Comments (15)
Now I'm totally confused. in November/December you said you will look to stop offering new ADSL1 services within 6 months, now you want to increase the ADSL1 services.
It sounds like this has changed (thank goodness!) and you will continue to offer new ADSL1 services. Maybe you could offer an all-in-one service, line rental & local calls, it would make life easier for people who prefer a single bill. Regardless of the price, let the customer decide what they prefer, don't try to make their decision for them. Alternatively offer modems or connection "free" or "cheap" on a 24 month contract, at a slightly higher price like you do for HSPA modems. I can't see why HSPA can offer a "interest free 24 month pay-for-modem" when ADSL & ADSL2 doesn't. Maybe make it the RTA1046VW only, so that people can upgrade to voip at any time. You could offer "modem and connection" for say $10 per month for 24 months for the same price as a churn ($35 connection). Comment (1)
"there is nothing we can do to match those 'special offers'."
Not even actually match them? Aren't the offers 50% for a set period at the start of a long contract? Is it not viable to exactly match the terms of the offer, except for the ADSL2 part? So someone on a $45 512k plan would get: *$69.95/whatever plan on 24 month/36 month/whatever Telstra offers them contract *FIFTY PERCENT OFF FOR SIX MONTHS !!!!!!!!!!!!!! *Same line speed as they are on now *Maybe double the offered quota (or offered quota plus off peak bonus) as compensation for not getting "high speed ADSL2#@^&speeds advertised may not actually be physically possible" I imagine you are going to say it is not ethical to make such counter offers... but if it was actually possible to do (figure out Telstras targeting methods) and it meant retaining your customers... Comments (4)
I have been concerned about Telstra's intentions on ADSL1 for some time and my concern deepens or alleviates based on what 'collateral' information I receive.
Either I write very badly, more than possible, or people have trouble understanding what I write. I thought I wrote about the problems Exetel is having making the ADSL1 plans more attractive so that telstra's "special offers" have less impact on our CURRENT ADSl1 users - not that Exetel wanted to increase it's ADSL1 user base. I used some general statistics to demonstrate that less and less new customers/churn customers were selecting an Exetel ADSL1 service. The issue remains: Given Telstra's very high charges how do we make the Exetel ADSL1 plans happy to stay with Exetel. Comments (15)
.....you're spot on.....I'm going to say if Exetel ever became that unethical I would end my life.
Comments (15)
Trujillo hangs up on Telstra
http://www.abc.net.au/news/stories/2009/02/26/2501696.htm Don't know if this will help, but it's great news. Wonder how big the parachute will be? Comment (1)
John,
I applaud your vision for Exetel to provide affordable and appealing internet experiences for your customers. With regard to your concern about Telstra's intentions with ADSL1 there is the situation I find myself in, that I think would cause an uproar if they decide to move away from it. I'm behind a RIM on an exchange (HAMN) that has all the usual DSLAMS installed. Due to the RIM I can't upgrade to ADSL2 unless I go with Telstra (or a reseller). For Telstra to move away from ADSL1 it would mean (to upgrade) I would have to pay around DOUBLE for an equivilent d/l plan. This is just NOT ON, particularly in the current economic climate where economy is vital. Paul Comment (1)
I haven't recieved a special offer from Telstra; guess it's probably a matter of time. Nonetheless, I would have no intention of moving, the convenience and $ saving for the additional (such as SMS) services along with 3 x (low usage) mobiles on $0 plans saves me a shed load. I wonder if people fully realise the value provided by Exetel. God it must be one hell of an offer or there's a lot of people niave to believe they'll get a better ADSL plan with Telstra.
Comments (2)
John,
I still don’t understand your obsession for not marketing ADSL2+ through Telstra enabled exchanges. I was one of the ones who had to leave Exetel to finally get an ADSL2+ connection - I ended up at Pacific $75pm for 30GB. Each customer you lose to this type of transfer is one customer you may never see back at Exetel. You worked so hard to get these customers and your letting them go without a fight. In the time since I left the Exetel the 8Mbit plan I was on has risen $10pm , plus some extra download allowance. I didn’t want to leave in the first place I was a happy camper at Exetel. Bite the bullet --- offer ADSL2+ through Telstra dslams even if you only break even, offer something like the plan I’m on. Eventually you will be able to swing these captive customers back onto possibly an Optus dslam / or an 14.4Mbit HSPA plan as technology progresses or as Optus puts in new dslams. Why worry what price you can do the ADSL2+ (on Telstra Dslams) just give the customer the choice. Personally I will return to Exetel but many others may not. cheers Bill Comments (3)
HarryL noted...
The 3rd person recently purchased HSPA from Exetel.... and is happy with the service - even though he reckons it is "useless" between 4 pm and 7 pm daily.... I recently completed 2 HSPA installations on the QLD Sunshine Coast and would agree with this, fortunately the customers were able to accommodate the time limitations. Hopefully that limitation is temporary but the HSPA service still has and is always likely to have reliability limitations that must be hidden before it can be considered as an ADSL1 replacement. Exetel could gain some advantage by choosing the specifications of the "Exetel Perfect Router" (EPR) to match the functionality and SUPPORT to the first socket that customers limited by FUD or availability expect to get from a Telstra ADSL1 service. Some specifications to consider... All customer functionality is managed by the Exetel Customer Facilities, aspects that require interaction with the router are automatically managed by remote configuration commands. The EPR hardware factory reset state should enable basic communication with the exetel server so a customer can do a cold start and configuration restoration without any configuration commands. The EPR should have a high level watchdog function (like a regular ping to an Exetel server) that confirms the link is functional and if problems are detected repeatedly resets and re-establishes the link until successful communication is obtained. The EPR should have a non volatile event/error log so remote Exetel support can provide meaningful information and if hardware problems are suspected then a no nonsense exchange service should dispatch a replacement unit and pre-paid satchel for return of the old unit. Provide some antenna kits that are easily installed, professional installation of a high gain antenna is expensive, and tedious on rental or MO buildings. Dual frequency indoor antennas that can be used through a window like the Cellink ANT493, ANT496 or ANT512 would suffice in many locations and could be installed in minutes by the customer, referrer or agent. (cellink data is available at http://www.wagner.net.au/catalogue/17.htm) Get all this to work at once and you could provide a complete phone/internet service independent of Telstra - and in other countries as well. Regards C Bumkin Comment (1)
The problem is that $75.00 for a 30 gb Telstra ADSL2 plan would be below our cost.
Comments (15)
We continue to work on it - and sourcing the antennae for half the current price.
Comments (15)
It would be impossible to be clearer than that.
Have you ever considered using a default customer homepage? This might allow Exetel to communicate certain things via 'news' updates, which you may otherwise never have the chance to communicate, to some customers. Comments (4)
John,
are your Telstra adsl2+ pricing figures a knowledgeable guesstimate or have you actually talked to them. How can companies of far lower stature than Exetel achieve pricing like I mention. -Personally I’d never heard of Pacific Inernet. Your getting caught in a real conundrum here, your damned if you do and your dammed if you don’t. Don’t sacrifice your market share when you don’t need too. Comments (3)
Taking over customers web browser home pages, with a specialised page containing links to useful things (facilities/forums/etc).
The advantage would be that you could also use it as a means to deliver news to those customers who didn't opt-out. I thought of it because I was pondering ways of delivering information (pointing out the catches) about Telstra offers to customers. I will be surprised if it is not something that has been considered briefly in the past? Comments (4)
If you look at the other Telstra resellers of ADSL2 you will see they price the service higher than Pacific Internet
Comments (15)
I see. No, we have never considered it but will now.
Comments (15)
I'm guessing he means a page like: http://www.iinet.net.au/customers/
where the user sets that as their homepage in Internet Explorer where not only do they get news/weather etc but also ISP Specific stuff like a member services login section / ISP relevant news/announcements etc. Comment (1)
John,
Have you ever done a comparison of ADSL1 and ADSL2+ with the amount of time expended by Exetel staff for service supplied to customer problems. I’m guessing ADSL2+ customers would be consuming a far greater time from Exetel staff to service your customers with sorting out problems and questions. From my experience in changing from ADSL1 to ADSL2+ ---- ADSL2+ is a far more finicky connection and I would think is costing Exetel extra money compared to ADSL1 customers . To me ADSL2+ IS A TECHNOLOGY FOR THOSE THAT ARE SOMEWHAT TECHNOLOGY CONVERSANT. Strange things like weird sync speed changes and other problems are some of the things I have witnessed. Maybe ADSL2+ is costing you more than you think when you add in time expended by your service staff. Comments (3)
I think you are being too hard on yourself in saying
"With the use of hind sight it is obvious that Exetel should never have offered an ADSL1 service in the first place - but that isn't very helpful to anybody now - at the time it seemed to be the right thing to do." If Exetel didn't create the ADSL1 products in 2004, it wouldn't have grown the business at the rate it did, creating all the automated processes etc. By doing so Exetel was primed to move to ADSL2+ when it arrived in 2006. I joined around August 2006 and the service was mature already. If you had not had ADSL1 then all those lessons learned would have started in 2006. As for advice on making your existing product more attractive, make sure you really highlight everything you think is great about your products. Competing ethically, you could list the positives of your products, and compare them to what they get when moving to Telstra. Telstra would offer a faster product, but less downloads right? Moving your phone to Telstra would mean you pay for phonecalls right? (I don't know) With Exetel the first 100 calls from the Exetel VoIP phone cost nothing, saving them upwards of $20. If they call 100 people. You could produce a graph with what you save on phonecalls. Maybe make a flash app where Exetel look at their past download history and estimate based on that usage what they would spend on over-quota costs with Telstra if they continued to download the same. The same could be done with a phonecall thing, where you ask the user how many phonecalls they make a month, local and national, then have a little graph comparing Telstra with Exetel. If these two flash apps mean that Telstra would be cheaper for them. Let them know and wish them all the best. If the customer leaves thinking Exetel was ethical enough to almost promote a competitors product, that would cerate some sort of customer loyalty so then you can offer them a better product in the future. On that thought pattern, I guess you could ask, as they leave, if they want to be contacted if Exetel ever can offer them a comparible or better product in the future would they like to be contacted to come back to Exetel. If these ideas are silly, maybe they've got your creativity buzzin Good luck, I'm glad I live in an area with ADSL2+ Comment (1)
Thank you for taking the time to put that together. There are some really interesting ideas there.
I'll see what can be done - we are in the process of re-vamping our web site. Comments (15)
Just my 2 cents...
I think Exetel's ADSL1 offering is quite competitive, as an agent in an area only serviced by ADSL1. Telstra offer ADSL2 in the area - the only signups I'm aware of take advantage of $0 setup promotions, or telemarketers who promise the customer more than Telstra intend to deliver (usually a cancellation follows). Only the activation/setup charge on a new line seems high on ADSL1. The agent commission bonuses seem to indicate Exetel could run a "free churn" promotion. Because of the bonuses, I was offering this to agent signups for a time last year and found signups literally walked in the door. Although you'd likely need to ditch the commission bonuses to offer this I applaud you John for your relentless reviewing of Exetel's products, and how you can improve them. Comments (2)
I will put a free ADSL1 churn in place by SOB tomorrow.
I won't change the agent commission. Comments (15)
Another one here for adsl2 telstra wholesale.
Being on a Tesltra only exchange I love my 8mb but the temptation of faster speeds is always there. A 12gb plan for 70 bucks would be great for me Comment (1)
I would like to see an option in the bundled plans to allow for a choice between whether a Vodafone or Optus mobile plan is chosen, depending on the customer's coverage area.
The vodafone option is currently $5/month, $5 included calls, 30c/min & 15c sms With the HSPA M1+HA plan, you have a mobile plan with $5/month, no included calls, 50c/min call cost & 25c sms With the HSPA M1+HB plan, you have $15/month, $10 included calls, 25c/min & 25c sms Even if the pricing can't be adjusted, could the optus option be added, if just for a trial period to see if there is any interest. On another note, i would consider re-working the mobile section of the website to add the Optus HSPA service as a mobile service. I think you may be missing out on mobile customers in non-vodafone areas. Comment (1)
If the new Telstra CEO has a different view of wholesale customers things may change.
Comments (15)
I also use an 8192 connection. I simply cannot fathom why anyone would need (a possible) 50% more speed???
The attraction of ADSL2 to me, if it were available, would be cheaper pricing - including the ability to drop my PSTN line. Comments (4)
HI John,
I agree with #6 and #11 "I love my 8Mb connection with Exetel and I can't get any ADSL2+ other than Telstra at my exchange." I would be the third person to sign up if Exetel offered ADSL2 on Telstra. Comment (1)
I pay ~ $70 a month for an 8Mb connection, only use less than 5gb a month, but i love having the speed there when i need it. Id pay for ADSL2+ just to know that on the occasion that i need to download something it will be quick.
Comment (1)
A couple of people I have been "encouraging" to join exetel now say they are going to make the move to exetel on this basis... at 7day before the end of their current billing cycle.
H. Comments (2)
I'd love to migrate my Exetel ADSL1 service to the special parity naked ADSL2+ offer... but I'm on pair gain.
Any advice, JL? Telstra don't want to know, and I appreciate there's a limit to what can be done, but I figure if there's a way, you'd know! Thanks in advance. Comment (1)
The only way I know is to sign up for a short contract ADSL2 BigPond plan and at the end of the contract 'churn' to Exetel.
Comments (15)
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