Friday, March 12. 2010Today's, And More Importantly, 'Tomorrow's' Unlimited Scenarios.....John Linton ..........in providing ADSL2 to current and future Exetel customers. At the current pricing of the AAPT unlimited offer of $99.99 and the promised pricing by TPG of something less than that the appeal of this sort of unlimited service remains constrained to something like (and I have no real way of knowing) 10% of the total ADSL user base in Australia - some 600,000 (more probably much less than 500,000) current users. A sizable market but not something that many ISPs are involved in and a problematic demographic in that 'heavy usage' is much more difficult to manage than lower usage. This demographic is also constrained by the fact that the total available market of 6 million ADSL users is constrained by the actual number of exchanges that either AAPT or TPG have ADSL2 DSLAMs installed at. AAPT's obfuscatory pricing (shown at the bottom of this page: http://www.aapt.com.au/services/personal-small-business/personal/legal-unlimited-24/7-adsl2 is, even after reading back and forth a few times not clear to me whether the service is $A100.00 per month or $A110.00 per month. Whatever it is it is priced way out of reach over 90% plus of Australian users and is not going to make much of an impression except on the sort of user who downloads more than 150 gb per month - I wonder just how many of such users pay their own internet bills? So I think the AAPT offer is unimportant at this time though as it will decrease over the coming months it will become more important. TPG's possible $A75.00 (internet only) unlimited plan seems more attractive than AAPT's $A100.00 unlimited plan except the AAPT plan includes phone line rental and TPG's plan doesn't seem to do that - add $A25 - $A30 for a telephone line and.....except that TPG is offering an $11.00 per month (inc $10.00 worth of calls) quasi telephone option via the old Comindico network POIs which is a plus but not clear whether the end user still has to have a Telstra line and what charges TPG will make for telephone calls - all that will become clearer soon - again at $A86.00 per month - not all that exciting to very many users and the detail may be even less so. So....not really much to worry about today....we will lose some high end users which will be a profit neutral or profit plus situation for us so it doesn't really matter. However things won't remain the same and it can be argued that today is just the start of a wider adoption of such offerings by more ISPs as the pricing of IP has fallen so much so quickly and if TPG's bid for Pipe is voted for at today's shareholder meeting TPG will have some interesting numbers to 'crunch'. But what about 'tomorrow'? Exetel would expect to more than halve our current buy prices for IP over the coming months from a mixture of $A125, $A90, $30 (Peerap generated IP) and 'Zero' (Akamai and Peering generated IP) per mbps which gives us a 'blended' cost of sub $100.00 per mbps. If we are successful in the current negotiations this would give us an effective $A35.00 per mbps or an effective per customer gbyte of around 16 cents (ex gst) compared to over 40 cents we pay today. That cost is attractive in yesterday's ISP land but not particularly attractive today and certainly nowhere near good enough moving it to calendar 2011 if the current uncertainties in the residential market places persist. Our major problems remain, as they have always been, the very high prices we pay for ADSL ports and, in the context of the ever downward moving prices of IP - the ludicrously expensive back haul charges we pay. Unless we can reduce port monthly charges by 25% and back haul by 50% IP could be free and we couldn't compete in 'tomorrow's' ADSL2 residential marketplaces. The lower IP costs will help us over the coming 4 - 5 months but almost certainly not beyond that. Whether we can find a realistic supplier of DSLAM ports and sensibly priced back haul is doubtful but slightly more promising than it has been over the past few years. If, and it's a big if, we are successful in our current 'negotiations' we could establish three simple ADSL2 plans along the lines of: 1) ADSL2 (plus telephone line) - $50.00 per month - downloads/uploads @ 50 cents per gb - capped at $A75.00 per month 2) ADSL2 (byo line) - $30.00 per month - downloads/uploads @50 cents per gb - capped at $60.00 per month 3) ADSL2 (naked) - $45.00 per month - download/uploads @ 50 cents per gb - capped at $70.00 per month We are close on two of the elements and a bit too far away on the third element at the moment to make this a 'sure thing' but if we don't succeed in making something like this happen then I'm pretty sure someone else will in the not too distant future. PS: Despite Ludlam's personal lack of knowledge maybe the greens won't rot in hell after all: http://www.smh.com.au/business/telstra-gets-a-break-in-fight-for-its-future-20100311-q1o9.html Trackbacks
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I like the concept (and the fact that you have sought feedback from customers) as it has elements of pay for what you use with a way of minimising risk of excess costs (which are admittedly low per GB).
Are you still thinking this is by invitation only to long term customers? Will these become your only plans or additions? While it effectively makes most of your current plans redundant, I would be concerned that if you removed all other plans you may not attract as many customers through sites like broadband choice (whirlpool) that allow users to search by expected usage. Based on a comparison to your current naked plans, I think the only customers on those plans that would 'lose out' would be some on the Z21 plan that make use of offpeak but don't do too much peak downloading. I do have a concern that some very high users would be subisidised by lower users. If I have interpreted correctly, based on the 16c per GB you start to lose money on the downloads part if users download more than about 156GB. As a lower user, I would prefer to see a slightly lower per GB charge and slightly higher cap level. That way there would be less subsidisation across users. You would still be slightly behind some of your competitors on low use naked accounts especially when you take into account the need for voip (which is included in some other plans). Dumb question - is backhaul a fixed cost like ADSL ports or one that varies according to usage? Comments (4)
Exetel supplies VoIP/Inc DID accounts to its customers at no charge except for call costs. Exetel even ports landlines and mobile numbers to VoIP.
No user is being subsidised by any other user under this revised version (suggested by customer feedback in the Exetel Forum). It's pay for what you use. Exetel buys back haul at a fixed rate per mbps and matches Ip to ingress/egress customer connectivity. ie. if we have 6 gbps IP we have 6 gbps ingress/egress. Back haul bandwidth is now twice as expensive as IP bandwidth which is ludicrous. Comments (8)
"Exetel supplies VoIP/Inc DID accounts to its customers at no charge except for call costs."
Yes, I've got one of these as a back-up to my main VOIP account. Your recently introduced add on VOIP pack is great value too. My comment is that some ISPs include call costs to landlines as part of their naked packages and when you include that they come out cheaper overall. If you don't include VOIP in the comparison they are about the same (or you could save a few $ with exetel if you are a very low user). Comments (4)
I didn't know that.
Please give me, if you have time, the urls of lower cost Naked plans than Exetel offers. I have never found one. Comments (8)
Having recently done a price comparison of ADSL and 3G wireless for my father-in-law, it quickly became clear that ADSL costs are primarily determined by port costs while 3G wireless is primarily determined by usage.
I kind of understand why the costs of ADSL are higher - there is far more infrastructure and that costs money. But when 90+% of costs are the connection costs, you've got to wonder. "Last mile" delivery of IP has been changing and will continue to change over the coming years. Will ADSL simply be the dinosaur of the market - much like landlines are for phone calls? By the way, the byo plan mentioned is more expensive than the current plans. Comment (1)
There aren't that many. It is only for certain usages and has only emerged since you changed pricing recently (and mostly only when you take VOIP into account). If you send me an email I will reply with examples rather than post your competitors offers on here.
Comments (4)
OK, my interest has been at about 5GB peak level. Your current offering at this level is $50 (was basically the cheapest at $40 when I signed up). I attribute about $5 value to included VOIP calls when making comparisons. Exetel offers more offpeak but offpeak is of lesser value to me.
https://www.mynetfone.com.au/Residential/Home-Internet/NakedDSL-Plans $10 cheaper no VOIP. http://www.iinet.net.au/naked-dsl/plans.html same price but includes VOIP calls. http://www.netspace.net.au/broadband/naked-dsl/ same price but more peak data http://www.internode.on.net/residential/broadband/adsl/nakedextreme/pricing/ same price some (limited) voip calls http://www.tpg.com.au/products_services/ull_pricing.php TPG has 2 offerings at same price with more data. 1 includes VOIP There are a couple more at same price point as exetel Comments (4)
Thank you - on first glace it doesn't seem that way to me but I'll have a look over the weekend.
Comments (8)
In regard to the link to the Telstra separation story. Am I missing something, or is everyone else missing something.
If Telstra gets separated and shifts it's customers over to the mythical NBN, who will be the wholesalers. Why will Telstra need a wholesale arm when it has nothing to wholesale? Comment (1)
Have you been reading my blog, JL? ;P
http://thebernoullitrial.wordpress.com/2008/08/25/how-isps-cost-average-their-plans/ "...a possible solution would be to offer a flat fixed rate per GB plan with an optional “maximum monthly spend” limit. Under this option you could elect to be shaped beyond a dollar limit ($100 in a month for example) rather than a data limit. Such a system would be fair, equitable, transparent, flexible and safe for all customers. And still profitable for the ISP." Comment (1)
I'm sorry Stanley but I didn't now you had a blog.
The suggestion was made on Exetel Forum thread by a customer- I don't remember by whom. Comments (8)
Wholesale naturally opposes operations being heavily checked /underminded by ACCC.gov processes which regulate the broadband market and thus interfere with 60%+ margins designed for shareholders single interest "to cash in". Really, then its no surprise they hate this setup when the need exists to charge an arm and a leg. Not to mention slow down near every innovation you can manage to insulate that income.
Well I consider that a hijacking of the Australian public's future, interest. it is just so shameful it has continued unabated for the past decade, and seeing greens party appear be prostituting themselves that monopoly/reign may be extended- standard, old, "rip off", T$. Under k.Rudds NBN, TLS.Ltd would simply follow that which it has always wished itself to specialise in, that is - sell its technology DIRECT to all HFC + 3/NextG customers - of which it numbers millions unaffected by this project to replace Copper line with pure fibre. Therefore, T$ remains having & servicing those customers of the best kind: you know, the 3-2year contract ones/careless over price...100/2mbps NOW instead of later.OR perhaps "3gbytes Anywhere" for A30 a month. But, they dont really require 4G spectrum for enabling HSUPA to 84mpbs, because who needs faster than that??? Comment (1)
John,
Have you relooked at the prospect of supplying via Tesltra dslams for those sitting on Telstra only exchanges ? I know it has always been an unsettling proposal for yourself but I continue to wonder what the future holds for those of us trapped into telstra infrastruture. Comments (2)
Thats good news. The NBN announcement has been the nail in the coffin for those on Telstra only exchanges ...ironically, and leaves us with such limited opportunities.
Comments (2)
John,
How about an unlimited ADSL+ 8mb Plan for those loyal customers who have been with exetel for 5 years, but who are not in an adsl 2 enabled location? Comment (1)
ADSL1 is provided by Telstra and the cost of both ports and back haul make Telstra services very expensive for a company like Exetel to provide.
An 8192 Telstra port costs Exetel almost three time what an ADSL2 monthly rental is and the back haul is more than twice as expensive. Even a 1500 port is just short of double the cost of an ADSL2 port. While we have approached Telstra each year for better ADSL1 pricing they have never responded other than "it isn't possible". We will keep trying. Comments (8)
Perhaps in time as Telstra see more exodus to realistically priced competing isp's they'll lower the port costs to retain customer/wholesale base.
I for one would be on adsl2 in a heartbeat if I could be, but a rim is all I can have for now (hell it took them till 2004 to dslam it) Comment (1)
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