John Linton .......for an increasing number of Australian communications providers.
We will be leaving shortly to drive to the lower Blue Mountains to attend the auction we mistakenly thought was last Sunday - this time without the leisure of staying overnight to avoid the hassle of Sydney's Sunday traffic. I doubt that we will buy anything but you never know with these 'deceased estate house contents auctions". It is a beautiful, warm and sunny Spring morning in Sydney and all is right with the world in general if not with the world of Australian communications.
I spent some time yesterday going through the scant information we have on the directions of business services as supplied to the end user by Telstra and Optus - who hold the vast majority percentage of those marketplaces and in which, as the residential markets continue to become 'more difficult' for most data communication suppliers. We had a flyer dlelired to our office in North Sydney recently extolling the virtues of TPG's (Pipe's) 100 mbps fibre services at prices less than 50% of which they sell fibre services to Exetel as a wholesale customer - one sign of the times. I don't know how successful that will be but it seems to confirm what I said when it first emerged that Pipe was thinking of selling to TPG - "when wholesale contracts reach their expiry dates I doubt that Pipe/TPG will have any of the wholesale customers left that made Pipe what it was when it was sold". Not a problem for TPG, who would have realised that, but not a pleasant future for the remaining Pipe personnel involved in that business.
(I had to smile wryly at the fact that there is fibre in to our building only because we paid the old Pipe a huge amount of money to run it from the junction located 100 meters away)
However TPG's flyer (for businesses based in buildings where Pipe has fibre to - not that many in reality) does accentuate the problem facing the supplier companies (all of them) that have been content to build up a business customer base using Telstra's absurdly high business prices as the 'umbrella' they discount from to reap gargantuan profits from selling vastly over priced services themselves. By building businesses based on the huge margins that Telstra/Optus made available they have also built in a huge vulnerability in the future as those margins progressively, and possibly quite rapidly, decline. As with all markets the business fibre/EOC market will change and change quite rapidly.
Exetel continue to grow its corporate customer base and the means to do that more effectively and in larger numbers quite quickly but there is little doubt that the 'free ride' we have had to date (because we were so small) is diminishing day by day. Both of our major suppliers of business fibre tell us that our coverage is being noticed by their other wholesale customers who are losing business to Exetel on a more frequent basis. This will produce some sort of reaction from those suppliers, and other larger suppliers, which will make the task of continuing to build this business much more of a challenge than it has been to date. We always knew this of course and have put the required plans and developments in place to address the issues we foresaw and will have to deall with the ones we didn't as they arise.
Our major advantage, apart from no pricing services rapaciously, is that we have far greater knowledge and experience in dealing with corporate customers than we have, or could ever develop, in dealing with residential customers. Perhaps I'm wrong, but I don't think there is any competitor that knows better than we do how to make the most of the current situations in the business market places.
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