John Linton
As we get closer to making decisions on what, if anything, Exetel will do in 2008 to continue to meet the needs of our customers and as our VoIP services continue to operate at levels equivalent to the quality of PSTn and ISDN services we also get closer to making a decision on a "naked" ADSL services (or a telephone line that doesn't have a dial tone and is used only for data services (which these days mean also for VoIP telephony.
I read the recent product releases by Amcom and iiNet with interest and believe they will be relatively successful in the limited exchanges in which they offer services. However they didn't appear to me to be particularly aggressive - and maybe they don't have to be at this stage.
Now that I know a great deal more about the costs of providing dsl from an 'owned' dslam in a Telstra exchange I was surprised at the iiNet pricing which seemed very high to me given the costs available to a much smaller company like Exetel.
As far as I can see the costs of providing a 'naked' dsl service from your own DSLAM would be around $26.50 (inc gst):
$9.50 for the Telstra ULL
$8.00 for the backhaul per customer with unlimited data (dropping to $4.00 per customer over time)
$6.00 for the lease of the DSLAM port (dropping to $3.00 over time)
at the low numbers of dslams that Exetel could finance and would be far less than that for the numbers that iiNet or Optus or TPG would have already deployed. To that you would need to add approximately $1.20 for each gb of data provided which at iiNet's low end offer of 2 + 2 would cost around $3.00 per customer at most.
So it's hard to see how such a service could cost more than $30.00 a month (inc GST) for a small company like Exetel on 'day one' and this cost would be expected to steadily fall to around $23.00 per customer over 12 - 18 months.
It would seem to me that an 8 gb plan on such a service with 'unlimited national and local calls' could be offered for around $45.00 and would make a higher profit than any current ADSL2 or ADSL1 plan.
Of course such plans could only be offered where the ISP had its own DSLAMs and my estimated back haul costs are major city metropolitan.
Exetel will see what our current carriers can offer in terms of a 'naked dsl' service over the next 2 - 3 weeks now we know what the actual costs to a provider are for delivering such a service but based on the current prices from Optus (around $50.00 per month) we doubt we'll have too much success in that direction.
Who knows? Maybe Telstra will wholesale a service that can be provided at a realistic price as their costs would be a fraction of the ones I've used in the above calculations. However it's difficult to see Telstra offering a SSS ADSL2 wholesale service 9as they don't offer it via BigPond. By mid 2009 there will be more pressure on Telstra to wholesale ADSL2 which, possibly they might consider doing if for no other reason than to make life more difficult for those ISPs who have invested in their own DSLAMs.
Then again, it is also going to be interesting to see what sort of wholesale market there is going to be for broadband services by the end of 2008 - my prediction is that almost all the 'krill' will have gone broke or been absorbed in twelve months time and the market that Telstra and Optus will have for 'wholesale' of broadband services by mid to late 2008 will be a fraction of what there is even today.
Those 'minnows' that have invested in their own DSLAMs will be caught between the pincers of a Telstra/Optus wholesaled ADSL2 and an as yet unknown new fibre broad band with 3G/4G wirless tearing part the highly profitable lower end of the broadband market by that time.
Maybe a viable 'naked' broad band remains the only 'space' for the minnows?