John Linton Back in Australia, a five and a half hour time difference certainly makes getting out of bed more difficult than usual especially on a strangely grey and chilly 'summer' day in Sydney. I caught up with the Australian financial and technology press which did nothing to brighten the day and thought about what could be done over the coming week - nothing new came to mind. So a strangely flat return home.
I can't seem to detect any new 'initiatives' from the various carriers and service providers in the industry press and if I scan the 'news sections' of those companies they are totally bereft of anything even vaguely interesting with many having no real recent entries at all. Perhaps the forecasts of increasing financial problems in Australia has caused this or maybe there simply are no more ways of presenting the same services when no underlying changes have taken place for so long I've lost track of when the last one was?
I suppose I'm becoming a victim of my often stated view that 2009 won't be a very 'exciting' year in Australia and it would be a good time to go to the UK and take the series of risks involved in setting up an HSPA business in the EU. From my recent discussions with people in UK telecommunications things are really very, very tough in the UK and there are major problems for not only the smaller service providers but for the main carriers with whatever different business models they have had in place during the UK's boom times totally failing to deliver as the recession in the UK worsens.
Right now we could buy HSPA data at less than 0.15 pence per megabyte and get a Layer 2 connection plus interconnects at the 12 UK aggregation points for zero set up and the first two years transit charges from those points at effectively zero. When I look at the end user costs being charged by the more aggressive UK providers I don't see any change, except slight increases, from the charges being made while we were in the UK last July. As, presumably, the carrier charges for HSPA have gone down in line with what Exetel is now being offered I'm not sure what to make of this lack of change - the only thing I can think of is that the prices we are now being offered were already in place back in mid 2008 for the current service providers.
I am now very tempted to find a way of seeing whether there is some way of 'testing the UK market' for some better idea of whether we could provide services there competitively. I keep re-calculating the costs based on firm pricing offers and my best guesses at the other costs we would incur and the numbers now make a lot of sense (assuming we could actually sell in the UK in the volumes we would need to do).
With the HSPA buy prices on offer, and a 14.4 mbps service that will, according to my contacts, deliver a pretty consistent 8 mbps in most of the UK you can put together a series of plans that will out perform any current UK provider's plans by quite a margin. The per gb data costs are less than one third of what we are currently paying in Australia (of course we have only just started here and have only sold a tiny number of connections) but the UK pricing BEFORE we have sold ONE connection makes it possible to sell an 8 mbps HSPA service at below the cost of the equivalent ADSL2 service in Australia!! It also makes it possible to sell an HSPA service at well below the current UK offerings from the aggressive service providers and still make considerably more money than we do in Australia.
So, I remain puzzled at why with sales 'plunging' (my contact's description) and obviously very low carrier pricing on offer the end user pricing hasn't changed at all downwards and, if my 'research' is correct - have actually drifted slightly upwards. Perhaps the answer is also provided by my UK conacts who are losing wholesale customers at an increasing rate and are holding doubtful debts long after they should have cut their losses. From what they say, and from what I can see, all the aggressive suppliers in the UK use the same two approaches neither of which is likely to provide a profit:
1) Saturation advertising with "free" splattered everywhere
2) Selling through "High Street" retail chains which decimates their margins
My principal concern is taking scarce management and development resources away from our very small Austalian company to do the work that is necessary to even trial the level of interest. and to involve the 'infant' SL operation in providing the support and other services.
Something interesting to think about.