John Linton
I spent some fruitless time yesterday trying to come up with some inspiration to improve our wireless broadband offerings for residential users - something I have been doing on and off for the past 3 - 4 weeks. I had looked at the new Telstra wireless plans earlier in the week to attempt to work out what Telstra thought was happening in the wireless market but I couldn't detect much other than their switch from very expensive 'excess' charges to 64kbps once a user reached their limit must mean something as Telstra is not known for removing huge revenue rip offs from its dumber users. The only thing I could come up with for Telstra forgoing that huge revenue source is that they must 'sense' that there is a noticeable switch of their lower end ADSL users to wireless - but it's a guess with nothing to support it. The only thing that is certain is that for Telstra to reduce any price means that they aren't doing as well as they need to do with that particular service.
Our wireless sales are up around 300% from the same period in January 2009 (when we had only begun offering the service) and around 30% over the same time in December which means the small changes we have made to date have had some effect but not nearly enough. One thing that remains puzzling to us is that we use the Optus 3G network yet, since we began, delivering wireless services (via Layer 2 direct connection not just re-selling the retail service) in October 2008 the speeds on our Optus service are consistently much faster than the speeds on Optus own service by a quite considerable margin. We tested this out with the Optus Product manager on two occasions over the past year and he agreed that he duplicated the results and mumbled something about 'firewalls'. I also have an Internode/Optus service (I purchased late in 2009) which is, as far as I know using Optus Layer 2, and that service whenever I test it over the past three months is far slower than the Exetel/Optus Layer 2 service in identical locations (strangely it almost looks as though Internode are just using the Optus retail service based on the speeds being nearly identical - but that can't be so based on Internode's public statements) - I have no idea what this means but I do know two acquaintances that use all three services and say that it's a consistent result. It would be nice to find a way to use that anomaly but if, in fact there is a way, it continues to elude me.
So the reality is that with the 'wars' between the carriers resulting in explosive growth the only result is, as would be expected, round after round of price 'adjustments' on their various retail offerings which ensure that they generate enough new user traffic to ensure their tower upgrade/back haul plans are only just keeping up with their new usage volumes. This is a really good thing in many ways as it ensures that wireless is more heavily promoted than it would be otherwise and that pricing for variations of the service are at the lowest possible points. Finding ways of effectively competing in that environment become very hard and show no signs of becoming easier as 2010 progresses - at least not as far as I can see. When you consider why Telstra gave up the revenue it earned from excess usage charges it becomes a little clearer that it was aimed at trying to cut off the profitable part of the other carrier's 5gb type plans rather than to offer its own customers a better deal. So with no excess charges to 'balance' the gambles on setting download inclusions Telstra has made "shaping" a benefit to the end user (until they try using wireless at 64kbps) that only benefits them. Looking at the rest of their plans and their data/cost equations they are very, very unremarkable.
We will work on trying to come up with something today and tomorrow but if that produces no great new ideas we will have to give up on any further promotions in the residential marketplace and just tough it out until we can find a new way of approaching the residential marketplaces. We can't take too many risks as we make only a few cents per service with the current pricing which means we have to re-jig the pricing bases to make any impact(unlikely at the moment) - or just gamble with our future which I'm not inclined to do.
I am not hopeful.