John Linton
...............provides some interesting possibilities.
One of the great unknowns about the provision of services over one or more of the current proposed networks is will the 'NBN2' ever be built and if it is on what basis will it be offered - in terms of pricing and the differentials on which it will base 'discounts' to the various different sized wholesale customers. Given that there is no 'NBN2' at the moment and that there may never be one if there is a surprise result in the next Federal election this issue is not capable of being factually addressed at this time - at least not by a company such as Exetel.
So at various times yesterday I attempted to work out a pricing scenario for the three fibre networks that Exetel may have access to by July 1st 2010 - Telstra's Point Cook 'trial', Opticomm's wired housing estates and the NBNCo Tasmanian 'Phase 1' towns. The most logical scenario is to take the 'known' pricing from Opticomm and assume that Telstra will price in the range it uses for ADSL and then assume that the 'NBN2' will factor in discounts that massively favour Telstra leaving competing with Telstra as difficult as it is today - in terms of buy price differential. This makes any decision about offering fibre a pretty easy one - you wouldn't begin to think about doing it as you'd just swap the untenable mess of trying to provide ADSL services over a Telstra owned infrastructure for using a Fibre infrastructure on pretty much the same basis.
It seems to me that the only scenario that would work for Exetel is the one that the 'experts' is saying won't work for the 'gubmant' - the scenario where Telstra doesn't sell out its customer base and PSTN and proceeds to offer its own fibre services. In a strange way you then have 'competition' in fibre networks - assuming the 'NBN2' (as claimed by the gubmant) can exist without Telstra's sell out. After you try and get your head round those different scenarios for an hour or so you inevitably reach the conclusion that you don't have enough facts to make any sensible decisions - however you have to because come June 1st 2010 you are going to have be offering services at contract prices for fibre using three different networks and three different pricing structures (none of which are likely to remain the same for very long) and you are also going to have to spend the money required to inter-connect to these three networks in at least three different States....or you could just ignore the whole thing and do something based on real facts with some sort of realistic 'picture' of the near future....
......but that would be a cop out and would, quite possibly be the first step of the process to abandon residential services....so we won't be doing that, not out of choice but out of perceived necessity.
So I reached a 'semi' conclusion that the best thing for a company of Exetel's size to do was to restrict its 'ambitions' in terms of future fibre customers it could provide services to by aiming it's possible future fibre offerings to the low/medium ends of the marketplaces by pursuing a pay for what you use pricing strategy that eliminates having to deal with 'averaging' plans as has become the de facto 'standard' of today. 'Averaging' plans always punishes people, approximately 70% of Exetel's current ADSL users, who use very little of the monthly allowances and rewards people who use all of their allowances by effectively reducing their cost per gb to a quarter of what the majority pay. (I'm sure you can work out how that is the case).
So it seems more sensible to me to provide fibre services at low costs to 50% plus of the likely user base than to cater for the other 30% or so of the user base for broad band services and rely on some sort of 'level playing field' in terms of access pricing that, at least in the first year or so, will allow Exetel to compete on much better terms than it does today in terms of volume purchases. This would result in, using an ADSL-like model charging a base access cost for the three different speed services plus a per gb charge for actual downloads - an ugly model but one that will almost certainly be used by ISPs who are already or who will start offering fibre services.
Having so little firm data to work on I then gave up and did something more interesting and productive with the rest of the day.
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