John Linton
....presents a set of problems/challenges that requires a simple, but far reaching, question to be asked by any small company of itself....why do I need to be here?
If you assume that the current government will be re-elected later this year then it seems inevitable, irrespective of what Telstra manages to do about separation and selling its PSTN to Krudd's pipe dream, the 'NBN2' will lumber on and less and less companies will invest in adding ADSL2 DSLAM capacities around the country and ADSL generally will go past the 'flat growth' stage and, because of faster and lower cost wireless broadband, will decline at some as yet unknown rate. While the 'NBN2' even under a continuing government may never actually continue to exist, even as a pipe dream, the effect it will have on the ADSL market will be severe and if, by some tax payer funding it actually delivers some sort of service it will kill ADSL completely over time but while it slowly does that the ADSL market will continue to shrink more rapidly.
Under almost any scenario I can conceive (and I would be the first to agree that my ability to comprehend how this can be happening is far from comprehensive) there is no place for small communications companies like Exetel in such a set of marketplaces. Of course, if I hadn't lost my pair of rose coloured glasses some time ago I could imagine that the ongoing 'NBN2' would wholesale services to Exetel at a similar cost as Optus and AAPT do today and that Exetel would be able to use its very low operating costs to be able to continue to offer residential internet services with a seamless changeover from the ADSL2 services we offer today. Perhaps, despite all the obvious reservations that will be the case.....and it may very well turn out like that or even the alternative that the 'NBN2' comes to a halt under either the current or a future government......but in the meantime and that meantime is likely to last for at least 12 months the current ADSL uncertainty will continue to exist with all of the current and likely immediate future problems.
While I'm really glad that we made the decision not to proceed with the very attractive DSLAM proposal we came so close to accepting some two years ago and don't have the additional financial and operational concerns of paying off a large debt against static/falling customer levels that would have entailed, it doesn't really help us much. Our key issue is to manage to 'improve' our current ADSL offerings and to retain the current current levels (or in my better dreams continue to grow them) while the current scenarios become clearer and to survive the changes that are an inevitability in a saturated or declining marketplace. This is not something I have, personally, nor Exetel more generally has had any experience in dealing with. Dealing with the reactions by the major companies to falling customer levels is going to be the most difficult because they will be continuous and continuously unpredictable.
We also need to change our approach to the ADSL residential marketplace from the base tenets we have used for the past six years relatively successfully. We have already gone a long way towards doing that in terms of providing 16 hour a day support (365 days a year) that has the fastest answer times of any ISP in Australia and as each month goes by the experience levels and competence of that operation continue to increase. That's something we didn't have before very recently. We have also, in pure download for money terms, significantly increased the 'value proposition' of our new plans and have significantly changed our Australian network to deliver those increased volumes - a two year plan that has now been, largely, completed. So both our network and our support capabilities are very different to what they were two years ago. I am of the opinion that Exetel's residential support, sales and provisioning operations are now better than those of any other ISP in Australia and are widening the gap.
We also, in these ever more difficult times need to change at least some of the market demographics we are most attractive to.....which is the hardest thing for us to move away from....because it will disrupt a part of our current user base. But, in these likely rapidly shrinking 'sun set' years of ADSL continuing to do what we have done for the past six years simply isn't going to work. One thing we have to do is to remove all of the discontinued plans that lose us money which, over time have built up as we made a decision some 3 years ago to not 'force' customers to change plans when we introduced new plans and we now have a situation where over 50% of our current customers don't even make us the $1.00 per month profit we have always aimed for....more than a few of those plans lose us more than $A5.00 a month and we must remedy that situation.
Whatever happens with the 'NBN2' and whatever happens with the developments of wireless broadband and whatever Telstra and Optus do with their own fibre roll outs in the major capital cities (which appear to be continuing to happen) the 'picture' forming for ADSL2 over the next six months is one of significant change and the changes are likely to have a large impact on all sorts of current providers of residential ADSL services.