John Linton
........A New End Of The Beginning.
I have been disappointed with Exetel's lack of progress in meeting our, admittedly ambitious, wireless broadband sales over the last six months of 2009. Everything we have tried to do hasn't achieved anything like the results we had hoped for and we are in the process of changing our approaches and the markets we are targeting almost completely. I scanned through the carriers offerings yesterday after seeing yet another "half price" ad from '3' on television and saw the usual cut price promotions and 'free' offerings which have become the norm since early 2008 and have moved in stages over that two year period with prices continuing to fall and data allowances continuing to increase. Our buy prices, based on our very small volumes, haven't changed since we started offering a wireless broadband service so the 'tolerance' we have to produce "new" offers/bundles/promotions is very, very limited.
It will be interesting to see what the ABS statistics reveal about the growth, or otherwise, in the wireless broadband market when they publish their update some time early in 2010 and also what those statistics show about the wire line broadband market - particularly whether wireless broadband is eroding wire line broadband at the low end usage levels. Low end users, despite what anyone might gather from scanning the ISP pricing pages still, as far as I can see, account for 60% of all users - that's based on our user base which I am pretty certain is skewed towards higher end users. Our figures are irrelevant as we have such a tiny percentage of the total market but they are the only 'facts' I actually have - everything else (including the ABS survey results) is indicative but not precise.
Although, at least in terms of coverage, '3' is the least attractive of the wireless carriers this latest offer of a 'free' USB modem and 3 gbytes of data for $A15.00 a month is very, very attractive:
http://shop.three.com.au/broadband/Broadband-3GB#tbl_select_device?cmp=S0137
and it will be interesting to see what effect it has on the market which should be pretty easy to gauge - how long it takes for Vodafone to duplicate the offer using its own brand would be a pretty good indication of whether it is a success or not. I understand it is only for six months but then 3 gbytes for $A30.00 a month is still a very good price and the 'free' modem is also attractive. An effective offering of $A5.00 per gbyte sets a new low mark for wireless data and, even if it is for only six months (right now) it presumably is an indication of wireless price direction over 2010. The 'free' modem offers will become less attractive not only because a much higher percentage of notebooks and lap tops will have wireless chipsets built in but because with 3,000,000 or whatever the correct number is of USB modems already in the marketplace many wireless buyers will already have a modem or can easily obtain one for less than $A10.00 on eBay etc.
Telstra continues to push its coverage and higher theoretical speed as the reason people should pay more for less but I wonder how sustainable that position is as 2010 plays out - it seems more than possible that Telstra's pricing of wireless wil come under the same pressure as did its ADSL pricing - it became unsustainable having been pushed beyond the tolerance of even their least technically ware customers. Far too soon to tell but I think that even their business customers who get 'special' pricing will begin to find it just too expensive...so their may well be competition at the lower end of the pricing offers from Telstra for the first time...and they are a lover of "half price for now..." offers and Optus 'me toos' that.
So it's likely that some form of $A5-6 per gbyte will become the 'standard' wireless broadband offering between no and the end of February which will put even more pressure on the low end of the ADSL market (at least 50% of all ADSL users) not only because per gb it will be a better deal but because it continues the pressur already exerted by mobile telephones to get rid of the increasingly expensive telephone line completely - adding a further $A30.00 in to the cost savings for an increasing percentage of buyers. Although some ADSL users think high speed is the key driver of internet usage I very much doubt that's true. While there are a small percentage of "OMG my thieving downloads are taking forever" it is likely that their percentage is less than 10 - maybe far less than that. It is certainly true that more than 50% of Exetel's users would not download more than 2 gbytes per month and the AVERAGE download of our wireless users hovers around 1 gbyte per month.
I think '3' have picked it exactly right in selecting 3 gigabytes as the included data allowance and have been very brave with their $A15.00 pricing per month for that download. I think it will put the feline amongst the grey flying things in wireless broadband land as we enter the new years but, to mix metaphors, will only be the first shot fired in the re-ignited wireless broadband war.
We will now have to see what we can do to meet our even more ambitious 2010 wireless targets having failed so miserably in 2009.