John Linton
I see the news media have finally picked up on the 'whispers' that Telstra is considering wholesaling ADSL2 from its 900 or so enabled exchanges:
http://www.commsday.com/node/237
and:
http://www.misaustralia.com/viewer.aspx?EDP://1213059191092§ion=news
As Exetel nears the completion of its 'discussions' with various ADSL2 providers to determine what can be offered in the coming year we have considered the impact of such a move by Telstra as we have tracked Telstra Retail's 'campaigns' of marketing to our ADSL1 users on their ADSL2 enabled exchanges. There is no doubt that Telstra Retail has made concerted efforts via below wholesale cost 'bundling' of services to get as many ADSL1 customers of other ISPs to move to Telstra's ADSL2 services as possible over the past 6 - 12 months and I've referenced some of the offers they have been making in these musings since September of last year.
It would be naive to think that those 'campaigns' have achieved all they could achieve and that now Telstra has done as much damage to the competitors as could be economically achieved over a realistic time frame it would now be 'safe' to offer ADSL2 services to increase its market share - though that could be possible it isn't at all likely.
However the suggested pricing for a Telstra wholesale ADSL2 service that is bandied about by people who could be expected to know what they are talking about is clearly based on targeting the sort of pricing being offered by the next largest owner of ADSL2 DSLAMs - Optus; then again it could simply be a coincidence. As, as far as I know, there is nothing in writing with Telstra's 'signature' on it any ADSL2 offer, should one ever be made, and the various pricing 'tiers' for such an offer is completely unknown. I said a few days ago that one of the issues that Exetel had to consider in finalizing its own plans for FY2009 was what Telstra Retail (and to a lesser extent Optus Retail) would be doing post June 15th regarding both ADSL1 and ADSL2 pricing.
My metaphorical pen is hovering over a metaphorical contract that I had hoped would be already in place so that we could get on with the final detailed implementation planning for next year but three of the suppliers we are still considering for different services continue to equivocate on just what any final offer may be. What has become clear is that many people have much more knowledge than I do of what new pricing parameters may be available in the not too distant future. I can only go on what I have in writing and what we are actually prepared to accept - and that gap has yet to be closed.
It seems obvious that Telstra's possible entry in to the ADSL2 wholesale market is causing at least two other possible ADSL2 suppliers to Exetel to hesitate on just what they are prepared to offer in terms of pricing - alternatively they are just taking even more time than usual to work out what their offerings should be priced at. There is definitely an uncertainty in their communications that wasn't previously noticeable. Having said that about possible suppliers to Exetel I have grave concerns about what both Telstra and Optus will be offering ADSL services for over the coming weeks and months so perhaps I should be more understanding.
Maybe we should just re-sell whatever Telstra comes up with for the time being?
One thing we have decided to do, irrespective of what provider(s) we use is to go ahead with the decentralization of our customer connections by terminating them in each State and Territory capital city. This is an expensive exercise for us but it is well under way with the Perth PoP already live and the Adelaide PoP about to go live by the end of this week. Our intention is to not only terminate our ADSL1 services in these locations but to begin to terminate ADSL2 services (from whichever supplier(s) we end up using in the different capital cities as well as expanding our business user coverage to every State in Australia. Part of our reasoning for doing this was the expectation that we would need to terminate ADSL2 services in different States as the cost of national back haul from Telstra was too expensive.
What the future of ADSL1 now becomes, assuming that Telstra at some stage does decide to wholesale ADSL2, is an interesting question. Who would buy an ADSL1 service if they could get a comparable ADSL2 service? Not many people if the pricing was equivalent - which there is no reason for it not to be based on what is currently offered in the marketplace by Telstra and every other provider of ADSL2 services.
When we were considering implementing our own DSLAMs in Sydney we established that, at relatively low levels of customers per exchange, the cost per 'port' plus the back haul from the exchange to our Sydney PoPs was approximately $A10.50 on top of which had to be added the PoP overhead and the IP costs. This was based on a SSS service. The cost of, our preferred, ULL solution was some $A7.00 more expensive. In the end, given what we saw were the many risks, financial and technical, in doing this we decided to keep buying ADSL2 connectivity from a much bigger company than we could ever hope to be and pay what now turns out to be a relatively small premium for a much wider coverage than we could have hoped to achieve - with no financial or technological risks.
Maybe all will become clear in the not too distant future but, in the meantime, small companies like Exetel have to operate their businesses day to day based on the facts, or what they believe to be facts, available to them at any given time.