John Linton's Personal Musings

John Linton

Well it took a week or so longer than I expected but the 'offer' of a $15.00 a month phone line (with very low cost call charges) plus the reintroduction of the Powertel/AAPT SSS service has dramatically increased Exetel's ADSL2 sales to a point where they are sometimes running at three times the number of daily ADSL1 sales. Up until this time ADSL1 has been around 50% of total broad band sales but now, including HSPA orders, it is sitting around 20%. The recent trend is so marked that it can't be confused with collateral issues - but then again it is so recent that it is hard to actually determine what's behind it. If I was a braver/more confident person I would say that the "GFC" is beginning to 'bite' and low cost service providers like Exetel are beginning to benefit from that scenario. But that can't be true...can it?

This turnaround over 2 - 3 weeks has been remarkable as I was almost 'in despair' at what could be done to make ADSL2 more attractive than it apparently was to new customers (I have given up trying to make it more attractive to our current ADSL1 customers). So yesterday we had a record broad band order day (counting HSPA orders) and by 8 am this morning we had received as many new broad band orders as we usually do by 11 am - so something has changed in either how Exetel is being perceived or, possibly, how one or more other ISPs is being perceived. Such distinct changes are worrying in themselves because, as the responsible person within Exetel, you assume that you know what is going on in the marketplaces you are meant to understand and 'manipulate'.

I am not so foolish as to take one days figures and extrapolate a trend from them - my observation is based on what has been happening since the beginning of the new year and particularly since we changed the pricing 'presentation' of ADSL2 services on our web pages. Of course, it may not continue as such a very strong trend and it is also partly because more ISPs have signed up with Telstra to sell Telstra's ADSL2 in areas where ADSL2 was previously only available from Telstra - this has certainly had a negative effect on new ADSL1 sales in those areas (as it has on churn aways from Exetel in those areas). While we factored in the decline of ADSL1 new and churn orders based on Telstra's widening of their ADSL2 distribution channel, we didn't expect this rapid decline in ADSL1 orders. We certainly didn't expect such an increase in ADSL2 orders.

It's a pity that the 'NBN' fiasco has, as Telstra manipulated it to do, ended Optus' roll out of new ADSL2 exchanges and while 400 exchanges does cover a large proportion of the broad band buying demographic they continually run out of ports on some of the more 'popular' exchanges and in this 'NBN' hiatus seem reluctant to invest money in adding ports quickly enough to meet demand in those areas. I don't know whether this is true for the other larger DSLAM deployers but the 'NBN' and now Telstra's three pronged "Death Star" of 100 mbps fibre, wholesale ADSL2 and very high speed HSPA would make it harder to invest in a technology that has some doubts over its longevity. Perhaps ADSL2 is going to reach its end of life long before we expected it to

So what does it all mean? I don't have a clue. I see strange 'announcements' from Internode that:

1) They thought it worthy of announcement that they had signed a wholesale agreement with Opticomm to sell broad band services over fibre into the housing estates where Opticomm has installed fibre. While that's very good news for a few thousand people who may take up the service over the next year or so it's hardly "news".

2) They had signed with Seven/TIVO to provide expensive movies via a set top box to those potential customers for such a service.

Interesting in a '30 second' way but hardly mainstream communications strategy - and for it to be described as "Internode's Video Strategy" seems more than a touch excessive. More an indication, perhaps, that Internode's ADSL business has "flattened" as their CEO remarked last year.

It will be interesting to see the next set of ABS figures to understand whether the trend away from ADSL has continued and, if so, by what magnitude. It will also be interesting to see whether, and if so by how much, the number of "ISPs" has declined over the last six months of 2008. As the dial up user base continues to disappear the amount of ADSL increase slows in direct proportion based on previous ABS reports. I would think that HSPA would now take an increasing amount of the remaining dial up users of which a high proportion would most likely be in areas where there is no ADSL.

We are still waiting for the test units of the Yagi aerials and the 'magic' box to attach it to to see if the combination will prove to be a viable rural/country HSPA offering and I regret the endless delays in moving this project forward. Telstra continues to power ahead with its HSPA network improvements and, now price reductions, which will pose a very real challenge to Optus and Vodafone in this key area of data service provision. From what I see and hear - neither company has any real desire to lit their investment in this area of their operations - but I don't have any real knowledge of their plans.

So looked at one way it appears that Telstra's three pronged approach, irrespective of whether it kills off the 'NBN' of itself without Telstra court action, has significantly changed the residential data communications marketplaces very significantly and will continue to change them over the coming 12 - 24 months.

I wish I understood more about today's broad band market places and future directions but I am increasingly glad we never had the courage to invest in ADSL2 DSLAMs.