John Linton
.....more doubtful now than at any time since February 2001?
I spent some time looking at future ADSL2 plans yesterday as Telstra seemed to step up it "come home all is forgiven" direct approaches to Exetel's, and I assume other ISP's, ADSL1 customers in country and rural areas and some city areas. As usual their offers are below the wholesale cost they offer Exetel. One long term Exetel customer sent me the offer which in summary was:
ADSL2 including 25 gbytes for $49.95 per month
In rural/country areas there are no other ADSL2 offerings and, without breaching any pricing confidentiality, I can say that this price is lower than TW sells an 8192/384 to Exetel for - excluding the cost of the back haul and the cost of the IP. Now 'city dwellers' wouldn't find such an offer at all exciting but for people who can only get ADSL1 via Telstra (either from Telstra Retail or from a TW wholesale customer) it looks pretty good - particularly if you are a user of an 8192/384 service for which you are paying much more. Certainly I would think this current offer will make it difficult/impossible for any remaining TW ADSL1 wholesale customers to remain viable selling Telstra's ADSL1 services much beyond the end of this calendar year....almost certainly Telstra's direct intention.
So....what to do........it seems to be getting harder and harder.
While we had anticipated 2010 being the most difficult since we started up Exetel it seems to be even more difficult than we had expected - and our expectations were for an extremely tough time. I am becoming convinced that we will have to change our approaches to ADSL over the coming months and either find a radical (new) set of operating plans to maintain our planned level of customers at a realistic level for the next 14 months or find something else to do with our time and money. What those plans may be is completely unclear to me at the moment.
Maybe things will become a little clearer when/if the Telstra/NBNCo 'discussions' reach a conclusion? At the moment Telstra appears to be making every possible effort to 'recover' the customers it has lost over the past twelve months by keeping its pricing at unsustainably high levels.....even a monopoly reaches that point eventually. It seems, at least to me, that Telstra is signalling that it expects to operate in the future without a wholesale business, at least in its current form, and has thrown caution to the winds in making impossible to refuse offers across a broad range of services including ADSL and wireless broadband. While that can only be good for current and future customers of those services it means that companies of Exetel's size have no future in being a TW customer much beyond the end of the next financial year.
This is not a problem of itself - we have never been able to make a profit on reselling Exetel's ADSL1 services and actually look forward to the day when there is a real alternative that we can offer our current ADSL1 residential users. However that is some time in the future right now and it is the right now that we have to deal with. Between now and the end of this month we need to make up our minds on how we address FY2011 and it can't be in any ways related to what we have been doing over the past 6 years. Pity that I have not got any really good ideas on what we should be doing for residential users that would make sense to them and not lose us money. The two seem mutually incompatible to me at the moment.
I do know where I would like to see Exetel being on July 1st 2011 - I see that very, very clearly.
My very real problem is I have not got much clue about how to get there given the current market scenarios.
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