John Linton
Exetel had a very good order day yesterday - the best for three months or so. There was one extremely strange characteristic about it. For the first time ADSL1 churns from other ISPs equaled ADSL1 new applications. Since Exetel first started in business our percentage of ADSL1 churns to new applications has fluctuated between 15% and 25% on any given day with an occasional 'blip' that was statistically irrelevant. Now that I look back over the almost four months of the current year I can see that the daily ADSL churn percentage has slowly, but continuously, been increasing each week for the past 16 weeks. However yesterday demonstrated the magnitude of this change in 'source of business'.
Its possible, as a spokesperson for Internode was quoted as saying some months ago, that the ADSL1 market has reached a point of 'slow down' in terms of new ADSL users though that hasn't been evident from our sign up figures until very recently in terms of the increase of churn percentage of ADSL1 applications. For this sort of percentage change to occur in such a short time frame you would normally look for another explanation than that. Which brings you to the inevitable conclusion (seeing that Exetel hasn't made any changes to its pricing for some time other than to de facto increase some current user's prices by withdrawing older plans) that the 'dramatic' increase in churns from other ISPs is being caused by other factors.
Not just a 'slow down' because the actual number of new ADSL1 applications hasn't decreased in absolute terms and ADSL2 numbers have continued to increase.
There is no change in pattern, as far as I can see, in terms of which ISPs churn customers are leaving to come to Exetel except for the slight increase in the 'other' category of round 10%.
The churn statistics over the past six completed months show no 'ranking' change - only a general increase in gross numbers of churns.
1 - Other Small ISPs - 1,278
2 - Telstra - 710
3 - TPG - 191
4 - Optus - 190
5 - AAPT - 174
6 - EFTEL - 142
7 - WESTNET - 99
8 - INTERNODE - 91
9 - NETSPACE - 95
10 - IINET - 56
The increase in churns from very small ISPs is to be expected given the number of inquiries we receive from small ISPs looking to sell their businesses. The increase in churns from ISPs from whom the bulk of our churns come from must indicate something else - possibly the first indications that people want to keep their ADSL service but need to find a service at a lower monthly cost. Maybe it doesn't mean that, but I'm not able to think of any other reason for this sudden increase. We'll have to wait and see whether its an anomaly or actually the start of a real trend and if it is the start of a real trend - what is causing it and how long will it last?
Our overall order levels are up significantly over the same period last year (around 50%) so it isn't a case of just a change in sources of business. The actual gross numbers of churns are up very significantly and have increased as a percentage as the new ADSL1 applications has also increased. For the number of churns to have increased so much and so suddenly from a four plus year 'history' of quite a tight 'spread' there must be some underlying change in what is happening in at least some parts of the marketplace. This change is even more apparent that the start of the Telstra Retail marketing programs to 'win back' Exetel ADSL1 customers in mid 2007 so there must be a reason - I don't believe that such marked changes occur for no reason.
Another indication that times may be getting tougher that I've noticed in the past few days is the increase in requests Exetel/I receive to participate in various 'industry' meetings either under the aegis of some State or Federal government 'department' or some sort of 'industry association'. In the time I was away I received 8 such invitations and yesterday I received four more. In the past five years I would not get more than one such 'invitation' every 4 - 6 months. If it keeps up at such a rate I would be able to spend more than half of each week traveling to and attending 'discussions' and 'presentations' on matters of vital interest to Exetel. I don't know whether this is a pre-cursor to the 'silly season' (which I think will be whole lot less 'silly' this year) or an indication that the herd is feeling the need to shuffle together in the face of unseen dangers and/or the bitter cold winds of winter/recession.
I have declined all of these 'invitations' to date and am likely to continue to do so. I have never learned very much if anything from 'industry' conferences and I have never learned a thing from any discussion initiated by any government authority. Life is too short to waste any 'spare' time on such 'events'.
So - two indications that something is 'happening' in ISP-land - "happenstance and coincidence" - if there's a third then, like Goldfinger, we may have to take the view that all are indications of "enemy action" and make some unplanned changes.