John Linton
.....in almost every area of providing ADSL2 services....and I'm beginning to wonder why.
I am a lousy 'commercial negotiator' in almost every sense of that term as I was brought up and educated in a period when/where such things were despised in terms I can still remember, one of which was along the lines of "such practices should remain where they belong - in the back alley bazaars of Cairo". Having been made aware of such disdain by then very influential people, from such an early age, plus my innate impatience and boredom with detail, I suppose there was very little chance that I would ever develop the ability to conduct backwards and forwards price "negotiation". This has always been re-inforced in subsequent life by the degree of 'sliminess' I associated with the type of people who involve themselves in such practices.
I have always taken a 'take it or leave it approach' to buying and selling in both my personal life and as a natural flow on in my commercial life when I became "senior" enough within an organisation to become involved in buying products and services. So the past year or so has presented new 'challenges' to me in that so many of the products and services that Exetel needs and buys seem to have no real 'price' with any 'proposal' we receive almost always containing either the spoken, or increasingly written, proviso that "the price is negotiable". Perhaps its always been the case and I just never noticed until it has become so blatantly 'up front'.
One of the most expensive 'building blocks' for tiny companies like Exetel in offering ADSL2 services has always been the monthly rental of the exchange port which, as an example, in the case of Telstra's ADSL1, often comprises 90% of all costs in providing the service. Over the three or so years that Exetel has been providing ADSL2 services there has been some reductions in ADSL2 port costs but they have not been much and they have not been frequent (a euphemism for very infrequent). With the current port capacities on an increasing number of exchanges reducing (at least to companies like Exetel) there seemed to be little chance of this major cost reducing but that now appears not to be the case via unexpected sources. If this proves to be the case then even this 'set in stone' pricing may change downwards by a, relatively, significant amount in the not too distant future.
In the mean time, just as I thought that Exetel had obtained an extraordinarily good price for our latest and future IP upgrades - along comes a new offer that is almost 15% lower than the latest price which was itself more than 25% lower than the, what I thought only six months ago, was an exceptionally good price at which we contracted the major share of our IP buying. So in far less than 12 months the price of IP has fallen by over 60% and now gives every indication of falling further. My guess is that the $A's continuing rise against the $US is a major contributor to these rapid changes but that wouldn't seem to explain it completely. Whatever the reason it allowed us to pass almost all the benefits of these lower prices on to our customers.
It's hard to see, at least it is for me, where end user 'average usage' is going. Part of the reason is that Exetel has been providing very high 'off peak' download allowances and over a very long time our relatively stable user base has adapted their habits to use the off peak period very extensively for major downloads. We have been 'so successful' in doing this that the old 'peak' time is now almost the lowest usage time of the day with the new peak being 2 am in the morning. This initially prompted us to suggest to our bandwidth providers that they should use a two tiered pricing 'model' with "off peak" bandwidth priced at a much lower cost than "peak". We received three proposals along those lines around the time I was due to take holidays so we left the decision until I returned by which time this 'new' pricing had begun to appear and by the time we were ready to make a decision the 'free off peak' pricing model had been 'blown away' by the new general IP pricing.
The net result for Exetel's customers has been lower plan pricing, more downloads for the lower pricing and, finally, the restoration of the 12 midnight to 12 noon 'off peak period' which we had to move away from less than three months ago! An amazing turnaround caused by an amazing set of price reductions.
I think it means that I should go away more often and for longer periods as quite clearly other people in Exetel are much better price negotiators than I am.