John Linton
I read this with some amusement yesterday:
http://www.smh.com.au/technology/biz-tech/were-overpriced-telstra-ceo-admits-20091028-hk9a.html
As I have previously commented (based on Telstra's last annual report) it was obvious that Telstra had zero growth of ADSL customers in the first half of this calendar year and, along with the ABS figures subsequently published showing zero growth for the whole ADSL supplier agglomeration seemed to indicate that new ADSL connections may in fact be declining. My prediction that this scenario would result in a round of price decreases (totally obvious of course to anyone who cared to think about it for a second or so) as the companies publicly committed to "growth" find that not only is there no growth but their customer base is actually declining. Presumably all of those other companies had already worked out what was going to happen and had/have already put in place the appropriate pricing changes.
I guess Telstra has been benefited from customer inertia/laziness for so long and they have been able to control the ADSL market so completely that they have never before been confronted with a semblance of competition from the rest of the ISP suppliers. It was less than a year ago that Telstra was pronouncing themselves delighted with their growing ADSL market share and Justin Milne was making aggressive comments about how far above 50% Telstra would drive that market share. They would have also been cushioned' from the effects of their ludicrously high prices by the decision of Optus (and some smaller suppliers) to stop reselling Telstra ADSL1 services and effectively 'abandon' their ADSL1 bases which have consequently largely migrated to Telstra giving them a 'one off' market share boost over a period of a year or so. Then again it could be for completely different reasons unrelated to what I have just said.
For the Telstra CEO to state that their ADSL prices are too high to his shareholders is an unusual event in itself but in the context in which he did it (indicating that Telstra would be "imminently" reducing prices) is also unusual because, depending on how nit picking the ACCC is they could construe that as attempting to 'damage' competitor sales of ADSL via promises of future lower prices from Trelstra....not a situation that I have ever seen Telstra put themselves in before which I found quite remarkable and wondered at what devastating figures Mr Thodey had recently become aware of that caused such an unguarded comment. I suppose 'imminent' must mean before the end of this week - for a November 1 start?
I was amused by the comments because Exetel has completed its, admittedly cursory, annual review of pricing we get from Telstra and got the predictable (the same every year) response that Telstra is unable to reduce any prices for Exetel - which seems to be contradicted by the cited comments on Telstra's pricing being too high by the company's CEO. Never let it be said that Telstra would ever resile from its Red Queen attitude to public speaking.
So we are still in the process of putting the finishing touches to Exetel's new October 1st plans and have been waiting for the 'smoke to clear' before making a final decision. It's now time to do that with November only a day or so away and I was hoping to see the end results of the various competitor's announcements before finishing that task. I am glad to see that TPG has been panicked into making changes to its ADSL2 plans by the actions of other ISPs and it must cost a fair bit to remove all their recently put up advertising of 40 + 40 on buses and signs around Sydney with their hastily upgraded 50 + 50 new plan. Someone at TPG got their strategy very wrong and will get a slap over the wrist for wasting all that money.
I still think the AAPT 10 pm to 10 am is the absolute best of the 'new' round of marketing/pricing initiatives and am very tempted to do something like that - though it still goes against the grain to copy someone else's idea. It also raises the question of just what other companies will do to address a slowing/falling ADSL market if that is in fact the case. Clearly TPG, like Telstra, have had to quickly change their thinking as the first quarter sales results and almost oneĀ month of the second quarter begin to show what their first half progress, or lack of it, will be. I am, as I said, very happy with Exetel's first quarter which was a new record for the company by quite some margin in many respects and October is already well past a 69th consecutive record month. I would like to see what iPrimus is going to do before applying any 'final touches' and now that Telstra has so clearly stated it is going to make changes it might be prudent to wait and see what they will actually do. So there will need to be ongoing changes, I would have thought, to most of the price/plan positioning by many suppliers especially those who simply try and stay some percentage under Testra's pricing as their policy. If Telstra does in fact do something sensible with their ADSL2 pricing, which I cited the timing and reasons for more than two years ago as it was so patently obvious, it will be interesting to see what then ensues.
As I said during the results season - it is going to be a very challenging year for people who rely in any way on ADSL sales growth for their and their company's financial health.