John Linton
I began a serious re-examination of ADSL pricing from the 'top ten' providers yesterday and will complete the 'analysis' some time tomorrow. I had expected to see reductions in pricing from most providers or a significant increase in what was included in current pricing but so far I haven't found that to be the case. This has surprised me because several ISPs have made public statements to the effect that, for instance, that their use of the Pipe fibre to Guam would reduce their IP costs substantially. Similarly the recent ABS broadband report showed ADSL had reached a 'saturation point' which would normally indicate that support costs for ISPs would have fallen (no new and inexperienced customers wanting help setting up basic aspects of the service) and a need to compete harder for new customers to shore up their projected growth in customers and revenue announced in the annual reports.
I am surprised that there was absolutely no indication of lower overall pricing from the 3 ISPs I have now looked at in some detail and 7 others I have looked at in overview. Of course a web based analysis can't detect the 'special offer' situation that Telstra, and other companies, base many of its "promotions" on so it isn't really a 'locked down' fact finding operation and never can be. I have little doubt there are many "free" offers that the processes I use will never be able to quantify. Even so, I have been surprised at the apparent situation where there is absolutely now real 'evidence' of overall falling prices. My reason for saying this is that Exetel is a very, very small ISP but we have been offered a series of cost reductions for many of the base components of our services on a scale we have never seen before in the 5 + years of our existence.
IP pricing, and I am assuming that the imminent availability of the new Pipe offering has something to do with this, has now fallen to well below $A100 which is getting close to half the price it was at the beginning of 2009 (and bear in mind that is to a small company like Exetel - I assume the large/huge companies would be offered far less than is offered to us). Even this price is being further reduced by a number of innovative provisioning options that cover a wide range of 'new thinking'.
Similarly, both wire line and mobile telephone call costs have fallen significantly even in the time I have been away and are now at 70% of the really good new pricing we 'negotiated' only a few months ago. Doubtless this is due to the ever more visible impact of VoIP land line usage and increasingly mobile usage but even VoIP mobile call costs have fallen sharply. There have also been indications that HSPA per minute costs are beginning to fall and the ridiculously high prices of HSPA modems may have become fading memories. So something is clearly happening in communications land that has not happened before - at least in my time associated with this industry.
We make a practice of re-negotiating our supply contracts annually (usually by March 31st each year for pricing to come into effect by July 1st each year) and so our 'new' cost prices have only been in place for less than three months - and they, generally, delivered a very significant saving over the previous prices of around 30% for all but the ADSL1 port costs and end user to Exetel fibre costs. However, virtually since the day we agreed to terms on the supply contracts we entered in to we have been offered much lower pricing, particularly on IP and telephone and mobile per minute charges, resulting in 'on the table' offers that reflect a further 30%+ reduction on our already much lower costs now in place.
I think that there can be no doubt that if a company of Exetel's small size is being offered 30%+ cost reductions on a wide range of cost components then our much, much larger competitors are being offered/are negotiating even larger cost reductions and therefore, given the ABS report's indication of a no growth/slightly declining ADSL scenario there should be signs of lower ADSL prices from EVERY ISP even if those lower prices are not offered to current customers but are "disguised" as promotional offers to 'new' customers - but there is absolutely no sign of this that I can see. I will wait until I have completed the analysis before reaching any real conclusions but I am very surprised so far. Perhaps it just means I have completely lost touch with ADSL scenarios in Australia?
...and as this is Grand Final day.....and I have a significant interest in today's game....I will leave further musing on this unexpected situation until tonight.