John Linton I 'played around' with the basic figures that relate to the supply of wireless broadband services by Exetel using the revised 'offer' from our current suppler and an alternative offer from another provider. I didn't make any headway in finding a way of offering anything that would have any appeal to the residential market places that we currently sell to and I, yet again, wonder how anyone achieves break even let alone making any profit from offering wireless broadband services in Australia. In the event that they do they must buy at a far lower cost than we have been able to achieve or they have found some 'magic' formula which completely escapes me after juggling with buy pricing and two years of actual customer usage 'patterns'.
I have come to two conclusions:
1) If you make the assumption that it MUST be possible not to lose money at the current price points offered by both the carriers and the wholesale customers of the carriers who resell their product at Layer 2 (in other words don't simply get a handsome commission from reselling the carrier's retail products) then the task is easy. All I have to do is make the pricing the same and assume that the various buyers will use less than half of the monthly allowance and.....you don't make much money but you don't lose any.You also have no basis for being in the market because you aren't offering anything that isn't already available from other providers.
2) If you under provision the actual bandwidth you buy to connect your 'customers' to the supplier network you can make a little bit of money and use the general belief that all mobile broadband carrier's networks are unpredictably congested from time to time to explain away poor performance you can make a lot of money.....(relative to option 1). To do this you have to have the sort of personal standards that are the equivalent of offering a new car with a four cylinder engine while stating that it has the power of a turbo V6.
What this means is that 1)'s a gamble and 2)'s a sure thing. Doing both 1) and 2) would be be much less of a gamble and pretty much a sure thing. But I have a great deal of trouble with 2). Even if you did both 1) and 2) and sold at the same price as the multiplicity of other sellers in the market places - what have you achieved? A 'me too' scenario - and what's the point of adding no value to a market place? None whatsoever. You also have to lie to every single customer who buys the service. We currently make a derisory amount of profit from wireless broadband which falls each month over the past few months and will make an actual loss either next month or the month after so we have to do something quite significantly different to what we do now....and we've run out of time to 'think' about what we should do.
The issues that to me are irresoluble are the fact that the cost of providing the service is around $A4.00 for a monthly 'port' charge and around $A16.50 per gb downloaded. With a marketplace that seems to think that any port charge is unthinkable and anything over $A10.00 is "daylight robbery" it makes it very difficult to offer an "attractive" residential service....without ripping the residential customer off in the ways that have been suggested to me. I am no "saint" - but I can't deliver a service based on lies.
I have always seen absolutely no point in 'copying' but I think the time has passed for people like me to make decisions in the Australian communications business - if in fact there ever was a time. Maybe its only the current turmoil that is making everything so difficult but even if that is the case that turmoil will continue for the foreseeable future. So we will have one final meeting this morning and make the decisions required to be able to continue to provide viable wireless broadband offerings without losing money. Business life....not really much of a life at all at the moment....then, as Steve sometimes reminds me.....it never was.
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