John Linton ...apart from a consistently fast, 100% reliable internet connection at no cost?
I rambled on about 'unified communications' yesterday more in terms of corporate users but with the view that young 'residential' users had adopted and adapted to more of the 'unified communications' aspects of today's telephone and data services far more quickly than any business user. That 'subject' had been on my mind for quite a while as we move towards a 'different' communications offering for business users and also for residential users over the next period of time.
Since we started Exetel we always understood that high speed/100% reliabilty/low cost (no cost was never going to be achievable for us) were the three prime criteria or becoming successful in the Australian internet provider maket....and, of course, we recognised that every other sensible internet provider understood those primary requirements to have a viable service.
We knew that, sooner or later, we could achieve each of the three primary objectives on a consistent basis and that the only differentiator would become price which we could never expect to win with against companies such as Telstra or Optus when the market stopped growing - which is pretty much now. Why couldn't we win? Because Telstra has the lowest cost base for simple comunications services that we would have to buy (directly or indirectly) and Optus would always have to offer lower pricing than Telstra until the early teens of this century.
So, eventally, it would always come down to how it might be possible to compete with Telstra once 'natural growth' stopped and it could no longer rely on the 'inertia' and 'stupidity' of its customer base to maintain any sort of 'premium' pricing. The obvious answer is, as everyone with eyesight to read Telstra's "marketing hype" or has received their "special offers" would know is that Telstra will/already has cut the prices of their internet services to 40% - 60% below their "published prices" so that they can "win back" other ISPs customers without slashing the prices they are charging to their current customers.
It doesn't really matter if that crude description of how stupid customers get to remain paying high prices for the same sevice that new customers pay much less for is an exact description of Telstra's approaches to the Australian ADSL marketplaces over the past two+ years or not; but you either get the point or you don't.
So Telstra and Optus defacto discount their current customer's high prices (who are locked in to long contracts) to "win back" customers of other communications providers relying on a market share number increase to take care of both revenue and profit erosion. No real problem; sleazy but 'legal' - it's been done since the beginning of commerce - its called wielding maket power and some poor souls in the USA a long time ago passed some laws (the Sherman Anti-Trust Act) in a vain attempt to prevent such things happening. Of course, like the Volstead Act, it was never ever going to work - with the possible exceptions of Standard Oil and US Steel I suppose if you want to nit pick.
So, we always considered that we would have to find a way of competing on something other than price if we were to remain in the residential business.
It didn't take too much 'brilliance' to work out what that needed to be and how to go about putting it in place. It was and is going to be an awful lot harder to actually do it. Like any second year marketing student doing a maketing course you have to make a list, and after checking it twice, you have to have a series of advantages over the companies you think will be your competitors that are sustainable over many years. These advantages not only have to be sustainable they have to be 'uncopyable'.
Not so easy when you come right down to it.
So how would you go about it? I would welcome your input in determining how a small company like Exetel can compete with Telstra and Optus and those companies most predatory 'marketing practices' over the next five years?
I will 'publish' my list and my reasoning tomorrow.