Thursday, July 3. 2008Why Doesn't Exetel Give 150 gb Free In Off Peak?John Linton One of the nice things about operating forums where 'decision makers' read and respond to comments, questions and suggestions made by customers is that a small company like Exetel gets a stream of ideas that have not occurred to us and over the time we've been in business we have implemented many hundreds of the suggestions we've received. Apart from the 'public posts' many customers take the opportunity of sending their detailed thoughts on subjects via 'private message' to one or more Exetel personnel forum members pointing out how competitors appear, or actually do, offer better options than Exetel does. Over the last few weeks there have been an increase in people asking why Exetel 'limits' its off peak allowances to "a mere 48 gb" when other ISPs are offering over 100 gb and some are offering 200 gb of off peak allowance. I constantly look at the actual costings of our ADSL plans and continually try and improve them whenever Exetel gets better buy pricing from the suppliers who contribute to the costs of providing an ADSL service. From its beginning, Exetel has always offered more for less than any other ISP who has stayed in business and it has always surprised me when someone points out that another ISP is providing better/more/cheaper broadband services than Exetel does. There is no doubt that all of Exetel's larger competitors have lower costs of bandwidth and base ports than Exetel does due to either their much larger buying power (based on their much larger size) or their deployment of their own lower cost infrastructures in the case of ADSL2 services. It's also equally true that the same larger competitors have far less efficient operational processes than Exetel and, in the case of the public companies a primary need to deliver sufficiently 'fat' profits to reward their shareholders with a sensible commercial return on their investments. Over the time that Exetel has been in business I've never seen any of the larger competitors ever offer a lower cost solution than Exetel has with a few exceptions that are run as 'promotions'. The facts about providing 'huge' data allowances (such as 150 gb in 'off peak') for 'free' is not something that Exetel can do because there is no such thing as 'free' in commercial life - all there ever exists is marketing 'smoke and mirrors' and a whole lot of small print. The cost, in terms of bandwidth only, to Exetel of delivering 1 gb of data has reduced quite a lot over the past 12 months and is now at its lowest ever point in our brief 'commercial life" - however it certainly isn't "free". It's a little more difficult to determine the exact cost of delivering data today because of two things: 1) The caching engines from Akamai and PeerApp deliver different levels of data at different times of the day 2) The Net Enforcer constrains P2P speeds at different times of day (all data is delivered but only when bandwidth isn't being used by other protocols) However the base equation remains the same - cost of ingress/egress bandwidth plus cost of customer connectivity bandwidth divided by number of gb able to be delivered. The peak demand for bandwidth usage is from 8 pm to 11.30 pm each week night and that is the time frame that we address in provisioning bandwidth on a contentionless basis. The costs of doing this are set out below: A) Ingress/Egress IP Bandwidth Our IP bandwidth costs Exetel less than $200 per mbps for Southern Cross/AJC etc which based on peak time (12 noon to 12 midnight usage) costs Exetel around $1.50 per gb delivered in 'peak time' if only Carrier bandwidth was used. Cached bandwidth from PeerApp costs us less than $100.00 per mbps which costs 75 cents per gb. Cached bandwidth from Akamai costs us less than 50 cents per gb. Bandwidth available from PIPE/WAIX/Etc costs us less than 25 cents per gb Given the 'mix' of bandwidth sources used on any average week night the actual ingress/egress IP cost is something close to $1.00 per gb in the noon to midnight period and $0.00 in the midnight to noon period. (Based on absorbing all IP costs over a twelve hour period when you want to ensure no contention). B) Customer Connectivity Bandwidth All Exetel customers are connected to Exetel's PoPs via infrastructures provided by Telstra, Optus and AAPT. There used to be major differences between the charges made by the three different carriers but they are now pretty similar. Taking in to consideration the interstate back hauls that we have now put in place ourselves the cost of each gb delivered to a customer over these infrastructures (again amortising the full cost over the noon to midnight period) is around 35 cents per gb with zero cost incurred from Midnight to Noon. So, allowing for GST on top of the 'raw' charges, the cost to Exetel (of bandwidth only - not taking in to account routers/servers/rack space, network personnel, support personnel costs) to deliver one gb of data to a customer is around $1.50 during the noon to midnight period. Exetel has over 3 gigabytes of IP and the same amount of Customer connectivity band width which can be considered to be available at no charge for twelve hours each day - in other words it's 'free' but only in terms of how I'm attempting to explain this scenario. This amount of bandwidth (divided by number of customers) is very, very generous and is unlikely to be available from ANY other ISP.
However you don't have to be very mathematically skilled to work out that 2.5 gb (on a twelve hour time frame) allows a theoretical 150 gb 'free allowance (at 100% utilisation for the full twelve hours) to be provided to a mere 5,000 users. If you cut the off peak allowance from Exetel's 12 hours then the number of customers to whom the 'free' 150 gb allowance can be provided is proportionally less. Again, if the whole 12 hour period isn't used at 100% capacity then the number of users also declines in a linear fashion. Exetel, which is a pioneer of large (or what I used to think of as large) off peak download allowances has never used more than 60% of the off peak time capacity since March 2004. What obviously does occur, unless the ISP uses P2P to 'smooth the demand', is that at the start of the 'free period' too many 150 gb free people try and use their allowance and the bandwidth can't cope with it making them unhappy that "I'm not getting what I paid for". So for Exetel's broadband users there is, in provable terms of the daily, weekly and monthly MRTG reports, more than enough bandwidth for every user to use whatever part of their 48 gb off peak allowance they choose to use with more than 40% spare capacity. However that would not be the case if the allowance was 150 gb and therefore Exetel can't afford to provide such an amount (and, in my opinion based on 15 years experience of providing IP services) neither can any other ISP - the math just doesn't work. It's all marketing smoke and mirrors aimed at the gullible and those who can't count. Trackbacks
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Hey John,
You've made it very clear that there is nothing for 'free'. The higher off peak downloads offered by other ISPs have different off peak times to those of Exetel. Would there be a time frame during off peak that could be better utilised? You could have a set of high end plans that had a higher download allowance in a smaller off peak period (e.g. 3am - 9am). This is the tactic used by most providers offering 100GB+ in off peak downloads. On a side note, is there any plan to make use of international IP connectivity via PIPE's international cable when completed? Rohan. Comment (1)
what I was trying to say was that there is a limit to what can be provided "free". 48 gb from Exetel using a 12 hour daily window and 2.5 gbps is achievable (as the MRTG reports clearly demonstrate).
150 gb is not possible, not just by Exetel's 2.5 gb, but by any amount of Bandwidth that is required to meet a peak use requirement.(the two are interlinked). TPG reduced off peak to your suggested six hour period and all that will do is cause contention (even on their very lightly loaded network) If PIPE offers competitive pricing to Exetel then Exetel would consider it - they haven't done that to date. Comments (3)
A bigger off peak allowance would probably attract the wrong type of customer anyway, leave the leechers for TPG, 48Gb is already generous enough
Comment (1)
We agree; and are considering reducing it or modifying how it is allocated.
Mind you, we have often considered reducing it in the past but never have - to date. Comments (3)
The battle to craft competitive plans that appeal to as many people as possible never ends. Your post today provides us readers with a lot of facts that are very interesting. Especially compared to your post http://forum.exetel.com.au/viewtopic.php?f=4&t=27321&st=0&sk=t&sd=a&start=60#p210748 when you said you have been considering making part of the off-peak time uncounted. It would appeal to many, many people, and wouldn't have any negative impacts on customer growth. Have you since ruled this out or is it still on the table?
You clearly demonstrated that Exetel can not offer 150GB to every single customer for off-peak. However, I think on a minor portion of Exetel's customers would reach it. How many people currently reach even half of their 48GB? Why doesn't Exetel change it's "48GB for all" policy and offer say 30GB off-peak for the lower end plans and up to xxxGB for the higher end plans? Most customers, I imagine, are on the lower to middle range plans so if their off-peak is skilfully changed to between 30GB and 60GB, depending on their plan, it could use up a bit of that spare capacity. Then you would only have a small % of customers on the high plans with the xxxGB off-peak, instead of everyone. Another thought.. how about allowing people to condense their off-peak hours? Offer them the ability to change in their User Facilities to a 3am-9am period (which is the least busiest period during off-peak) for an increase in quota? Comment (1)
Have you considered having usage counted as a rolling 30 day total like iinet? Or at rolling over usage counts on the anniversary? That would smooth out the demand of people trying to use all their allowence.
Comment (1)
We've considered a number of issues but, rght now, we have a purpose for the off peak allowances and we wouldn't want to move away from that concept.
Of course, if people continue to endanger themselves and Exetel by using the generous downloads to steal other people's property then we will use the abilities we have in place to remove that ability. Comments (3)
I think your current strategy has worked quite well.
Instead of reducing the offpeak, increase the peak as bandwidth becomes available and keep the offpeak where it is until you are satisfied with the ratio. I also agree that 48Gb is more than enough. I think there would be quite a few exetel users willing to give up some of that volume if it resulted in better performance, but there is also a large number that would not like to cede any download allowance at all. Given the picture you painted in the article, your current strategy seems sound. Comment (1)
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