John Linton
Having spent some time over the weekend looking at ADSL and wireless broadband prices it seems to be pretty much as any one with half a brain would have expected it to be at this time. I won't repeat my previous comments as to why the ADSL marketplace will continue to become a blood bath as the various contenders try and make their FY2010 projections/business plans 'come true' - which at least the majority of them will fail to do. It will be interesting to see what happens in the balance of December as the true awfulness of the current repositionings by Telstra and TPG pan out but it is all pretty predictable and a bit scary in some ways......bearing in mind all this is going on before any attempt by the 'gubmant' to try and convince the population that the 'NBN2' is actually going to be built in any meaningful way.
I had turned my attention for an hour or so to re-vamping our wireless broadband offerings which are more important in 2010 to us than they were in 2009 and, I think, will be more important to Telstra, Optus and Vodafone over the coming months than they have been to date. I have kept my own records of how wireless broadband prices have fallen since their introduction which don't quite tie up with the ones published over the weekend here:
http://www.itwire.com/content/view/30007/127/
in which it makes this assessment:
"In the three years Venture Consulting has collected data the cost per
month of a 1Mbps wireless broadband service with 1GB of usage has
fallen from $100.70 to $25.00, a decline of 75 percent. In contrast,
low speed fixed broadband access prices have remained stable over the
last three years"
Now, ignoring all the recent changes to the ADSL $A50 per month price point offerings, (with over 100 gb of downloads now becoming "standard", it needs to be remembered that the vast majority of broadband users (of all types) actually prefer to pay around $A30 a month and use less than 2 gigabytes of downloads a month with over 40% using less than 1 gigabyte a month. (a telling example in our small world is that the average usage of our wireless service is just on 1 gigabyte of downloads plus uploads per month). The reality, as far as I can determine after being involved with residential ADSL for almost nine years is that the overwhelming majority of broadband users simply don't download the mega quantities that constantly get the 'headlines'.
To put it in perspective TPG has been offering internet services since 1996 (over 13 years) and after that time has accumulated a user base via its own efforts of around 400,000 customers - a not inconsiderable effort and a great commercial success albeit with a 'market share of around 5% of the total broadband market - and almost all of that market share at the highest end usage level - and all of its high speed 'growth coming in the past three or four years.
Compared to:
The growth of wireless broadband that has grown from no customers to over 2,500,000 customers over the past three years and, subject to the next ABS report which will be gathering statistics this week for publication in February 2010, looks like it will be over 3,000,000 users with a continuing steep growth curve.
I'm only using those figures to compare how much faster the 'lower end' of the broadband market is growing compared to the higher end - and before you dismiss the wireless growth as being additional usage to ADSL in the same homes let me tell you that, as far as Exetel's customers are concerned that is not the case. Undoubtedly there are customers with both a wire line and a wireless service but, at this moment, they are the minority and although that may well change in the future it isn't relevant to today's scenario - it will only make tomorrow's scenario worse. I have no way of knowing how the various markets will actually grow but it seems inevitable that wireless broad per gb prices will continue to fall over time and deliverability will continue to increase in speed over time.
So, Telstra's recent announcement was that it 'had seen the light' and now considered 2 gigabytes as a low end user requirement (up from its stupid 200 megabytes it has clung to for so many years). I believe that is correct - something over 60% of all ADSL users never download more than 2 gbytes in a month. Which is not good news for ADSL, where the cost of bandwidth is now less than 50 cents a gigabyte but it is good news for wireless where 'bandwidth' is much more expensive and makes a wireless offering for 'low end' users a better financial deal and if they are brave enough to use VoIP for their telephone services it brings wireless broadband to an unassailable financial advantage.....removing the need for the telephone line rental and the still very high wire line telephone call charges.
So after the hour or so I had spent re-checking the various wireless broadband offerings I had gained a fairly sensible view of just how much progress wireless had made over the past year in becoming more financially attractive than ADSL1 and at a lower price (without using VoIP) and how immensely more attractive it is going to become in the first half of 2010 - if not from Exetel then from some other providers. Generally wireless broadband will suit a growing demographic's needs for broadband far better than the current wire line offerings and much faster than the wire line broadband suppliers apparently think.