John Linton
...and according to the latest ABS six monthly report actually marginally declined in total number of users in the period 1/1/09 to 30/6/09.
Every time I regret not being 'brave enough' to invest in an ADSL2 DSLAM network the ABS reminds me that all the original thinking of three years ago that ADSL was already reaching its 'sun set' phase was 100% right. Whereas HSPA, effectively non-existent 3 years ago, passed the 2,000,000 user mark earlier this year - the most rapid uptake of any communications technology ever in Australian communications history - at least I think it is - far more rapid than ADSL, incredibly more rapid than dial up internet and even much more rapid the mobile telephony.
The ABS bi-annual report shows that ADSL didn't grow at all over the past six months (something I earlier commented on when the various communications companies released their FY2009 annual reports). It makes for an interesting consideration of how iinet, among others, will address their ADSL growth figures in their FY2010 half and full year reports based on their claimed 'annual growth' for 2009 on which they predicted their 2010 growth - as I pointed out Telstra, Optus, iinet reports all showed zero growth in the second half of FY2009 - despite their respective spin spivs dressing it up differently. Now the ABS figures show no growth at all in ADSL it will be interesting to see what happens to all those DSLAMs that have been installed? Some very big cuts in ADSL2 end user pricing as the various ADSL2 'owners' fight with each other for the 'natural growth' that could well not be available.
Not that Exetel has gained even a 'toe nail hold' in the HSPA market but it does mean we don't have to worry about our 'investment' in about to rust iron in various Telstra exchanges around the country nor worry about the debt we incurred in taking out a vendor lease to finance that 'investment' - nor do we have to worry about 'cannibalising' our own ADSL2 customer base in seeking to grow an HSPA market share. So three things we don't have to worry about as we attempt to establish a way of making HSPA from Exetel more attractive than HSPA from any other provider - something we have totally failed to do to date. The lack of growth in ADSL will just make it even harder in the HSPA market with the more public statement conscious ADSL2 network 'roller outers' having to put in place an HSPA offering and then play catch up with Telstra, Optus et alia to make their 'new' HSPA offering more appealing than those of the well established vendors.
So now Exetel is faced with having failed to benefit from its own decision not to tie its future to its 'own' ADSL2 network but to put its efforts in to understanding and promoting HSPA. Though, to be fair, I believe we do better understand HSPA than we did two years ago and we do understand how to 'market' it better than we did two years ago and we certainly have a lot of the required processes and procedures in place and fully tested in a National customer base environment. We just don't have any compelling differentiators nor do our attempts at generating those differentiators seem to be bearing any serious fruit. I have no ideas (new or old) but I also haven't given it any thought over the past two weeks of holidaying and concerning myself with much more important things. It's clear that we will have to come up with something over the coming few weeks but the current constraints as a wholesale buyer makes it a truly difficult challenge.
When you think about what the ABS figures mean in terms of what the larger suppliers will do, you get an unnerving impression that they have never had to deal with a marketplace that just isn't not going to grow but may well start to decline in absolute customer numbers. Only Telstra has had to deal with such a situation recently - the decline in people using telephone line to make telephone calls. Some ISPs have had to face the decline in a residential dial up base but that was a completely different magnitude of problem because that was effectively a one for one swap from a cheaper dial up service to a more expensive ADSL service. Now all of these companies that proudly reported their 15% ADSL growths in FY2009 have to deal with the real possibility that they might have a shrinking number of customers or, even if they manage to aggressively promote their services, thy will have a shrinking revenue as the only way such conditions get dealt with is a vendor 'price war'.
Interesting time NOT to have shares in an ISP.