John Linton
.........but there appears to be no prospect of any abatement right through 2010.
I see that Internode has "listened" to their customers and announced a new set of ADSL plans. I think they didn't "listen to their customers" at all but did look at their churn aways over the last few months and and also noticed the lack of new sign ups and were 'forced' to attempt to stop the increasing level of customer loss and make an attempt to more closely match the plans of the suppliers to whom their customers were churning. Perfectly understandable and sensible business decision but no need to try and dress it up as "listening to customers" - Internode like the rest of the commercial ISPs ONLY 'listen' to their month on month new sign up/churn figures. Internode's plan changes just mirror the other changes currently being made by the other ISPs that are reliant on 'growth' in the ever more saturated ADSL marketplaces confront the realities of too few customers to meet too optimistic forecasts.....
....and the bad news is that it will only get worse as the various ISPs (from BigPond downward) get ever more desperate to meet the growth forecasts they have planned for and notified their shareholders to expect.......except, unless all the readings are wrong, it simply isn't going to happen.....because there is no growth to be had without significant price reductions and none of those companies appear to have ANY ability to reduce their prices from their 'comfort points' because of the devastation that will wreak across their current customer's revenue/profit generation on which their companies are dependent.....
and that's the REAL problem of 'umbrella' pricing 'strategies'. Each one of the 'leading' ISPs is completely dependent on retaining their current customer base AT THE CURRENT CUSTOMER SPEND LEVELS. They can't afford to actually reduce their prices - all they can do is to try and repackage the "PRICE" they charge at the moment to appear more attractive than their current prices currently do. So as they watch the stagnation/reduction of their customer numbers as their competitors try their 'Titanic deck chair shuffles' they try 're-packaging' in various ways but the one thing none of them can do is to reduce the charges to the customers....apart from being locked in to the growth forecasts they have made they are also locked in to the high operating cost levels that years of 'easy profit money' generated in a constantly growing market that would never stop growing.
I only briefly looked at the Internode changes but they seem, at first sight, just to be knee jerk, if not panic, reactions to the various changes made by Telstra and TPG. As far as I can notice iinet and iPrimus and, to an extent, AAPT have not, yet, made their contribution to the 'me tooism' by announcing their own new plan versions (inevitably at the same prices as they currently offer) but you would have to bet that would happen before Christmas or just in time for the 'new year'. Depending on the sales results these companies see by the end of February (when any obscuration by the 'festive season' downturn evaporates) I think it is highly likely that this 'beggar your neighbour' process will continue for the remainder of FY 2010 and then right through to next Christmas as even the most poorly prepared of the current 'major ISPs' confront the fact that ADSL is a saturated market where the price of even retaining their current customer levels will only be possible at the expense of their bottom lines - an even more unpalatable prospect than a falling 'market share.
Something different will have to be tried to make any difference - just raising download allowances at the same old price points won't achieve very much, if anything at all, in a market place where each of the providers offers the same service. Now that Telstra has been forced to move away from its starting plan inclusions of 200 megabytes to a meagre 2 gigabytes the rot has well and truly set in for cheating customers via huge excess charges and any ISP that copied that pernicious scam will have to replace that evil blood sucking income with 'real' money. Similarly the ability to add telephone line rental and, even more ridiculously priced, PSTN telephone call profits will continue to wither away as even the more timid of technology adopters embrace the savings of VoIP - so quite a problem confronting the 'umbrella' pricers.
Maybe innovation will have to be tried?......but that would require several qualities the large providers simply don't possess and they would need to find a way of breaking the titanium steel shackles of being locked in to their current sky high price points. Maybe it's time for true innovation?.......somehow I doubt that.
PS: Exetel's December ADSL orders are 25% up on December 2008 - for whatever that means.