John Linton
I watched throughout February and the first half of March ADSL1 new/churn orders continuing their slow decline which I thought was the inevitable result of Telstra's ADSL2 offerings in more and more exchanges together with the efforts of those ISPs who had signed up to re-sell the Telstra ADSL2 service - plus the fact that I wouldn't expect anyone on an exchange where they could get ADSL2 to sign up for ADSL1 (not because of any speed difference but because of the lower price of an ADSL2 service.Our overall 'plans' are currently based on ADSL1 services continuing to decline as a percentage of total services to around 30% of ADSL services by the end of calendar 2009 and to less than 10% at the end of calendar 2010. Over the past two years these predictions have been pretty much in line with what has been seen on our own customer base and in line with the general comments by other people in the industry I talk with now and again.
So it's been a little puzzling to me, a person who is often puzzled by events in Australian communications, to see the trend of well over two years 'reverse itself' in around mid March and by early April see new/churn ADSL1 orders getting close to total new/churn ADSL2 orders and yesterday (a record 2009 order day - partly due to being the first working day after the Easter long weekend) actually exceed the number of ADSL2 orders received for most of the day. When this began to happen I put it down to a slight aberration that is always likely to happen in any statistical examination of rough trends that 'suffer' from multiple stimuli but as it continued i have begun to wonder whether it is something more serious.
As we are preparing to again offer ADSL1 services in Tasmania this 'trend' is welcome as we don't, at least as yet, have an ADSL2 solution for Tasmanian users though we are getting much closer to making that decision. I have tried to understand what has happened, and I realise that Exetel's tiny volumes aren't sufficient to believe there may be a general trend, and to guess at what we are now seeing will continue in to at least the medium term future. Personally I can see no reason for it at all especially when I do a rough analysis of the exchange codes the new order volumes come from and see no discernible pattern such as "mostly from non-ADSL2 exchanges" as logic would suggest. In fact the largest 'ingress' of ADSL1 orders are from three exchanges that have multiple ISP's ADSL2 DSLAMs.
It certainly isn't because we have put in place more attractive ADSL1 plans - they haven't changed in basics for several months though the schedule of small changes and added benefits have been the same as for the ADSL2 plans over the first quarter of 2009. It also isn't because ADSL1 orders are 'cannibalising' ADSL2 orders which are steadily growing month on month. So there is nothing that I can determine other than the increase in the percentage of 'churn' versus 'new' ADSL1 orders - though I can ascribe no meaning to that other than the usual two main sources of churns to Exetel continue to increase their percentage of total churns.
We were going to discontinue offering the 512/128 services to new customers by the end of April but we may need to re-think that now as there is a 'surge' in that speed as a percentage of total ADSL1 orders received where before there was a noticeable decline (we stopped offering 256/64 speeds almost a year ago and it crossed my mind that it might be interesting to re-offer that speed for a time to see if there actually is any current interest). Perhaps being a small company we feel the small 'bumps' in the road more easily than much larger companies with obviously much, much lager daily order inflows and this strange situation will return to 'normal' over the next week or so.
One, too small to really call a trend yet but now quite evident, piece of data is the number of 'new' ADSL1 customers that are 'transferring' from other ISP's ADSL2 services back to ADSL1 with Exetel (and I can only assume that is happening to other ISPs). Now that is a circumstance for which I can't think of any explanation at all (price/download allowances/bundled telephone). This 'almost a trend' is happening on some exchanges where Exetel has ADSL2 so it isn't a question of these customers becoming disillusioned with their current ADSL2 ISP and being forced to move back to ADSL1 because there is no choice. Those situations truly defy understanding. I can't think of any situation where a customer would prefer a slower AND a more expensive service when presented with such a choice.
So a bit of a puzzle. ADSL2 is now around 40% of total ADSL users and has been growing as a percentage of total ADSL users at a rate of around 1% a month - but that won't happen this month. What, if anything, it means for the near or medium term future is completely beyond me to work out but we obviously need to do some much better analysis. However, my view is that, even if we actually invested the time in doing such a detailed analysis we would get a set of figures but would still have no idea of why those customers made such decisions which is what we reallly need to know.
In the mean time any plans we had for running down our ADSL1 business have been thwarted by 'market forces'.