John Linton I'm not sure I can remember a time in the last 8 years when there wasn't going to be "another shake out in the ISP 'industry'. So I read this article in the Australian with something less than rapt attention:
http://www.australianit.news.com.au/story/0,24897,23235902-15306,00.html
As any sensible person who is in some way responsible for planning different aspects of their company's operations I try to keep my knowledge up to date but I continually wonder where the people who write such articles get their 'facts' from. For instance, and I may well have missed the various public announcements by all of these companies:
"Westnet has emerged as one of the most attractive targets, with 200,000 subscribers, alongside Adelaide-based Internode (130,000) and NetSpace (100,000)."
...as far as I have read each of these companies are very 'secretive' about their number of ASL customers (no-one counts dial up customers as having any relevance or value) so where did the writer of this article get these numbers? (no ascription was provided).
Similarly:
"South Australia's Chariot, West Australia's Eftel, and PeopleTelecom are also potential brides, with between 100,000 to 150,000 subscribers."
...There is NO chance that EFTEL and PeopleTelecom have got even 50,000 ADSL customers let alone over 100,000 and, as the writer is reporting on the TPG/SPT merger he/she should have known that Chariot is 70% owned by TPG and the merger announcement stated that Chariot would be fuly acquired as part of that process.
So much for factual reporting. The ABS ISP analysis for the period ending 31/12/07 should be available shortly which will report on some general trends but as that report is based on unverified data provided by the ISPs included in the survey it, like the Australian article, can't be regarded as providing anything but an indication of what's happened over the past 12 months. However the "ISP shake out" so often commented on is 'happening' but it's always been an ongoing process very similar to the same trends in every other area of commercial endeavour. Underfunded start up business continue to fail in ISP land in identical ways that under funded businesses fail in every other sector of commercial life.
Companies, such as OzEmail that start up when there is no competition eventually run out of ideas and desire and get taken over by companies with, current to the time, more enthusiasm - few such purchases deliver any real financial advantage commensurate with the purchase price. (in contrast to say TPG which started up shortly after OzEmail but had much better ongoing management (remember the founders of OzEmail found their Alan Bond at the peak of the dot.com madness). Telstra/BigPond under the TMT has certainly made being a Telstra Wholesale customer far more difficult and now passing through down right unpleasant to new lows, the depth of which remain to be seen.
So this, along with the other problems of inexperience and under funding, has drastically reduced the previously large numbers of tiny, mainly regional, ISPs who were enthusiasts rather than serious business managers. But has the number of customers serviced by 'independent ISPs reduced or even seen the percentage growth slowed? I would doubt that based on the few 'real' numbers that reach the pubic record. I suppose if you count the ISPss who have disapeared/been swalowed up by larger ISPs who had a few thousand, often less, customers then there has been a continuing reduction in the "number of ISPs operating in Australia. I doubt that's a very sensible way of looking at the ISP market place as those companies were always irrelevant as start ups (including Exetel) always are.
The real issue is whether there is any ongoing commercial benefit in having more than three or four ISPs in Australia. Personally I think that the mobile phone scenario in this and other countries demonstrates that you will get very low end user prices from four large and cut throat aggressive competitors who will be forced to speedily and continually bring innovation to their products and services while keeping their prices as low as can possibly be made to happen. Australia definitely doesn't need a dozen or so mobile phone companies and it similarly definitely doesn't need more than 3 or 4 ISP networks.
So the ongoing "shake out" will occur in the start up DSLAM network builders that will be unlikely to survive beyond December 2009 and the companies that have invested in those structures (as the real lesson from the TPG/SPT merger should have indicated) will sell out to either Optus or a third company that will be the sole survivor in the very difficult business of staying in the ISP business which, of course, by December 2009 will not be an ISP business at all in terms of how each of the current ISPs operate today.
You know it makes sense - and I'm still very definitely not Sam Kekovich.