Thursday, September 9. 2010Broadband Wars - Episode CCXXIII........John Linton ....going pretty much as predicted but now reaching the ultra silly stage as the Empire doesn't only strike back but the Death Star wasn't destroyed as originally reported and a lot more ISPs have gone the way of Alderaan.....and the rebel leaders are quarreling among themselves. I saw that Internode have released a "terabyte" plan and also had yet another go at Telstra Retail for "selling retail below wholesale cost". What 'magic kingdom' have they been residing in not to have noticed that Telstra Retail have been doing that for the best part of two years in their latest iteration? Perhaps it's only now that they have begun to lose customers on a big enough scale to notice? I get asked by current customers on a more frequent basis "when will Exetel release "it's" terabyte plans. My answer is always - "when we see a demand for them and can provide them at a cost people are prepared to pay and that we could afford to offer which at the moment would be never". Perhaps there are one or two people who could actually find a terabyte of data to download in a month; month after month....I would personally doubt it - even accepting that the vast majority of such data would be illegal copyright theft. Then again could a provider, of any size, provide a terabyte of downloaded data for $100.00? Of course not. So we have the, to date, absolute silliness - a broadband 'plan' that no-one can use and that no provider can provide without losing mega dollars per customer. (Internode very sensibly pitched its price at 50% above the other offerors to ensure no-one took them up on the offer). The ultimate stupidity in this particular silliness was a company called 'Spin' (whom I had never heard of) 'announcing' a terabyte plan which five minutes of 'research reveals is based on Optus ADSL2 wholesale pricing and, should they ever be unfortunate enough to sign up a customer on it would lose them a great deal of money at even one tenth of that download allowance. So what is it all about? I don't have the slightest idea beyond achieving some ephemeral 'awareness' among the ultra-stupid/teen age ADSL users (and the teenage media who write about it) who could never afford even $100.00 a month unless their parents pay for it. Beyond the stupidity it is a sign of total desperation by more than one provider as Telstra continues to spend whatever money it takes to 'win back' market share in the residential ADSL product categories. We have an increasing number of days where the churn loss of customers is 100% to Bigpond and we offer very competitive ADSL2 plans to those Telstra offer on the Telstra customer to us network. What we don't have is the $200.00 plus of cash incentives to 'lure' the innumerate nor the multi-billions of dollars to pay door knockers and telephone pests to call up all Bigpond's customers with 'amazing offers'. I am pretty sure even Optus (who continue to single handedly decimate the forests of the planet to provide the shiny paper to fill my letter box and pollute my newspapers with inserts proclaiming the wonders of broadband) cannot 'out spend' Telstra in the current onslaught let alone the less sizeable providers who are smaller and far less 'wealthy' than Optus. Even someone with only a passing acquaintance with the Australian broadband marketplaces would realise that a 'terabyte plan' is going to generate very, very few users and that the cost of actually delivering such a nonsense is going to be money losing. It would also have absolutely NO effect on stemming the customer churn away via the current Telstra Retail promotions - so why have the companies that have done it ....well...done it? The two words that come to mind are stupidity and desperation....at least they are the words that seem to describe the scenario. For those of you who have bothered to read my jottings for a while you may remember that I wrote some 18 months ago that 2009 would be very hard for broadband providers but nothing like as hard as 2010 would be? I think that forecast was very accurate and 2010 is turning out to be very hard indeed. As in all 'price wars' the only thing that can be done is to raise prices (nothing can be achieved by lowering them) and looking after the percentage of customers who value the services you provide while reducing your expenses via the customers who do not value your services transferring to other providers with different views and thus lowering the bills you get from your wholesale suppliers. One more thing to worry about. PS: Amazing what can be done when people care enough: Copyright © Exetel Pty Ltd 2010 Trackbacks
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Tricky indeed.
Mind you I think I prefer Optus using paper rather than Telstra using cold calling if that's what they're doing. It's an interesting toss-up between giving a family a piece of prettied-up bark, and causing Aunt Thelma to break her hip as she rushes to the phone. Both have a bad environmental impact. I don't really mind being an Ewok (Agent) Comment (1)
I think the Optus TV ads that intrude into the tennis and football have reached a new low in dumbness.
What 11 - 12 year old boy in Australia doesn't know how to use a download scheduler? What goofy middle age 'Asian' woman would be in a position to know what relative speeds internet providers deliver? ....but think of the money that ad costs to be so intrusive? Comments (3)
I've read your comments about Telstra's "cash incentives" a number of times and the terminology puzzles me. I presume you are referring to the bundling discounts - which lets face it are no different to offers such as buy one pair of shoes, get another at half price. Not so much "cash incentives" as discounts.
For some they offer value, such as when you need a second pair of shoes. There is no value when you don't need a second pair of shoes. Telstra provides no value if your total access fees a month (internet, landline, mobile and Pay TV) do not exceed $89 per month - in which case (provided you have 3 services) they will discount it to $69 per month. On the other hand, we have a total monthly access fee of $73 per month for ADSL, landline and 2 mobiles - AND we're looking at options to reduce that to $53 per month with a few dollars increase in actual usage costs. There are parts of the low cost market where Exetel can excel and in which I suspect the larger ISPs cannot make the kind of money they need to make. And I would doubt that the "price wars" will target those areas. For example, if a user is looking for value and willing to control their usage, a wireless broadband with VOIP and $0 per month mobiles is a very cheap (ongoing cost) option from Exetel. Of course the problem for the customer is usage control as cost blows out quickly. By the way, what happened to prepaid wirelesss broadband? It has gone from the Exetel website. Comment (1)
If I was referring to bundling then I would have used that term....I have been in the industry for more than five minutes.
I am referring to cash back (via credit) sign on incentives. Comments (3)
Yes, my business partner just signed up for a new iPhone on the Telstra unlimited account ($180/mth) for the next years and got a 6 month credit.
Comments (2)
the cash incentives are I think refereed to by Telstra as a 'welcome back credit' or something worded very similar to that at least and worth about $200 or so
Same thing they have been doing in the mobile space for quite some time now Comment (1)
Here's a hint re: terabyte plans, their purpose is about what a certain element inside exetel at times loathes: good old fashioned 'customer service'. In practice I might only use a tenth, maybe one-twentieth, of that quantum. . But it sure assists to know that '1'TB is on its way down to the (common) consumer; granted, '$149.95' and '$129.95pm' will need to halve in price for it to become relevant but that is innevitably what always happens.
Did I just hear an nbn Company forward-projecting, oneday 1 Giga-bps(?)/ or a Minister of the Crown proclaiming 'unlimited'? ... Same thing, monsignor - " customer service" Comment (1)
"terabyte" is legal, "unlimited" has been tainted.
That's why I think we now have terabyte plans. Comments (2)
Australia just got a bit dumber.
http://www.zdnet.com.au/dodo-thinks-nbn-wholesale-339305922.htm "Yesterday, the telecommunications company launched a 3-terabyte (TB) ADSL2+ plan priced at just five cents lower than its unlimited plan at $39.85." wait for it... "It's really more to bring a bit of clarity, to call out the difference. I think when you start talking about numbers like 1TB, I think it's a joke. We're still talking about peak and off peak," he said. "I just think people need to have a serious look. 1TB is a lot of data." Comments (2)
Oh course.. it is theoretically possible to download about 6.6TB on a 20Mbps connection (emphasis on the theoretical).
Maybe they're just limiting their potential downside. Although surely it would still cost Internode a minimum of $120+ per month in transit alone if everyone used the 1TB (which they will not). Comments (2)
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