John Linton .......and I caught up on the industry news on the long flight.
I'm not sure whether Michael Malone is stupid, he thinks everyone else is stupid or iiNEt really buys IP bandwidth very badly. I'd like to be able to give the reference but I'm not sure where to find it but, if I remember correctly, he said something very close to:
"IP bandwidth cost around $A300.00 per mbps last year and it's dropped around 30% to $A200.00 per mbps this year." His comments were supported, or at least added to, by various other industry spokespeople about how bandwidth pricing is dropping but customer usage is increasing - pretty much what I said some days ago and I doubt any ISP is finding it any different.
What I find disingenuous about M Malone's comment is that he must know it isn't true. Bandwidth 12 months ago cost between $A210 and $A250 per mbps at the sub 2 gbps level and that price has dropped to $A130 to $A150 for bandwidth being offered today - very different pricing than he was quoting.
It's also true that IP bandwidth in 2.4 gbps 'chunks' is being quoted at sub $A100.00 by some carriers from early 2009.
This will mean that there will be the ability for ISPs to increase download allowances from now onwards (as most have already done - including Exetel) but, as customer usage continues to increase, and increase quite rapidly, the actual cost of a monthly ADSL connection may well stay pretty much the same.
ADSL2 plans from those providers who have their own DSLAMs could decrease significantly because their back haul costs have fallen to less than a tenth of what they used to be, perhpas to as little as a thirtieth of what they used to be, and those ISPs don't seem to have passed on even a part of those savings to their customers (perhaps one reason why TPG keeps stating it is making monthly profits of more than Telstra - at least in percentage terms).
It will be interesting to see what prices for low end broadband services fall to over the coming few months, or alternatively, how much ISP profits increase over the remainder of this calendar year.
Just as I was almost getting on my flight this afternoon I got a phone call from a decently credentialled IP provider who wanted to ensure I had got his latest proposal (I hadn't) which based on a quick two minute phone conversation may indicate that IP costs may fall closer to $A60.00 per mbps by mid-2009. Talk is always cheap and it will be interesting to see what offers materialise in written form over the coming months - right now it seems that pricing may halve in twelve months time.
Maybe we are getting closer to DODO's "free ADSL"? The problem for every ISP is going to be different - Exetel's problem remains to stay in business while keeping our pricing below those of every other significant competitor.
In any event it's something to think about for the next 11.5 hours of the trip - and there's my boarding call.