Monday, December 13. 2010Business Plan Asumptions Are Critical........John Linton .....to any business plan's value....a pretty obvious aspect of planning. I referenced an article a day or so ago that quoted some ACMA statistics on the increasing decline in residences that had a wire line telephone service and the surging use of mobile data services. Now, I'm not going through the 'arguments' I have made and referenced over the past three years about how and why mobile data services will seriously erode the ADSL or fibre usage - get over it - anyone who insisted that ADSL was impervious to that erosion were, and are, just plain wrong. The follow on "fact" is that the trend will continue and the fact that follows that fact is that any 'business plan' that's based on "100% take up of fibre to the home" is more obviously ridiculous now than it was when that statement was initially made. I read this earlier this morning: and was surprised at the rapidly increasing take up of Android. When Exetel commissioned a MoIP development, Symbian dominated the market and we didn't think it worthwhile to pursue an Android development. If these statistics are true then we had better do that. Even if the figures are not accurate they confirm the ongoing trend reported by ACMA of more and more people using data on mobile devices. Of course, this usage is not any indication on its own of anything other than the march of technology. But, taken with the increasing number of homes that have no telephone line it would be foolish to think that those home's residents haven't also decided to use wireless broadband for their mainstream internet connections. What should be more concerning, if you were basing your decision to build a fibre network, is the age demographics of the residents of these telephoneless residences - under 35. These people would be normally expected to conform to the "massive downloader/games player latency freak/on line movie watching categories. If they are, then 5 or so gbs and latencies around 80 milliseconds are, apparently, more than sufficient for their internet use today. It would also be a concern that people who haven't developed an addiction for on line games and the theft of other people's property in their late teens, 20's and early thirties are less likely to ever go down that path once they are over 35. With the rapidly increasing use of VoIP to make telephone calls the need for a telephone line is obviously decreasing. With the ongoing reduction in wireless data services the need for a telephone line for an ADSL service is similarly decreasing. For the people who insist that ADSL type services are essential for massive down loads the fact remains that even including the massive down loaders the average down load on the services Exetel provide is less than 15 gb per person per month.........over 90% of users down load less than 10 gb per month. While I very much doubt our figures are indicative of anything very significant they are, yet another, indication of the trends in current internet use - more wireless and more VoIP resulting in less ADSL and less PSTN telephone calls - they are very real, and very obvious, trends. Of course, it is not sensible to read to much in to trends in your own business - obviously such trends are heavily influenced by your own actions which may well have no relevance to the general market places in which you operate. Whatever view any individual might want to take it would be very unwise to dismiss trends that don't suit your personal agendas. Copyright © Exetel Pty Ltd 2010 Trackbacks
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John,
If early indications are correct, you may also want to look at a Windows Phone 7 application. I think Microsoft has a winner there, even if it will be competing with the popular Android OS. Comment (1)
Regardless of where WP7 might be in the future, if I was allocating development time/$ at the moment, Android would be my top option.
This is particularly the case thinking that the Exetel customer base is likely to be biased towards more tech savvy individuals, who would be classic early adopters of Android... Ben Comment (1)
The iPhone holds the majority of the smartphone business by handset but the number of Android handsets now means that Android combined have the largest share of the smartphone market, not all are suitable for VoIP use with a single application but a great majority of them are
From what I understand WP7 still has some issues from a developers perspective for a VoIP app, Android would be a better investment of time and money, in the immediate future at least Comment (1)
A further breakdown of the under 35's might be interesting. I suspect the market is fragmented. For example perhaps the "massive downloader/games player latency freak/on line movie watching categories" are still living at home with Mum and/or Dad.
When the realities of life hit and the costs of living in your own place are a reality, perhaps those things are less important and a mobile is all they need. Then if they are renting, entering any long term contract or paying set up costs are further disincentives to a fixed line service. Comments (3)
I doubt very much whether the rental vs home ownership equation has changed very much over the years - but I don't know.
I think the decline in telephone lines is purely due to the cost of installing a new telephone line and then the monthly cost versus the ease and ever falling cost of mobile services. Comments (5)
Just a side thought too with forward predictions on NBN v's mobile/wireless based on ADSL/wireline v's mobile/wireless. If you consider NBN just to be a replacement of ADSL and wireline, predictions may be valid. However if NBN proves to provide more (and possibly things not possible over wireless), then the predictions may fail.
For example, my understanding is many greenfield housing estates with FTTH will mandate no aerials or dishes. They are over the fibre. I wouldn't be surprised if other services such as "free to air" TV were delivered by NBN. That may change the equation. Interesting times ahead. Comment (1)
You could well be right.
At the moment, that's not what the business plan is based on. Comments (5)
look at http://www.computerworld.com.au/article/371362/conroy_proposes_terms_convergence_review/
Comment (1)
By the way, if "over 90% of users down load less than 10 gb per month", why are the lowest plans that are available start at 50 or 100 GB? It looks like 90% of users are paying for more than they need/use.
Comments (3)
Oh dear -
FCS, the MARKETING of other suppliers determines the price of anything in any market. If Most other suppliers are offering "unlimited" or 200 gb" for $50.00 a month then the overwhelming majority of buyers will select those plans rather the paying the same price for a 15 gb plan - although they may know their monthly usage is never going to exceed 5 gb which is what over 50% of Exetel's customers never exceed. Comments (5)
Right, the marketing of other suppliers (by which I presume you mean competitors) does determine price in a segment but if their pricing is wrong in some segment, then there is an opportunity to undercut.
So given for example plan ABA is $30 per month for 50Gb. Surely then there is an opportunity for someone to provide 10Gb for $28. I suspect the actual answer is no and that the 50% of users using 5GB or less subsidise the higher (but less than 50GB) users. However the market in these areas is heating up. There is TPG's "ADSL2+ with Home Phone Bundles" with 5+5Gb for $39.99, bettered (by call pricing) by comcen/spin at http://www.comcen.com.au/bb. Maybe those Christmas specials are coming. Comments (3)
What relevance does a company as tiny as Comcen have in today's market? The COST to Comcen of the port cost only for that service is above the price you quoted - let alone the back haul, IP and operating costs.
TPG is a significant influence in one, possibly two, part/s of the residential market but its "fake" telephone line offers are beginning to come unstuck on the parts of its network that are under provisioned. TPG's call charges are grotesquely high especially for the VoIP service they are providing implying it's a PSTN service. However we have no interest in what/how other companies offer other than to understand the influences on our current users and future customers. Bottom line - we aren't going to continue to lose money by providing residential ADSL services. Comments (5)
Hi John
One thing that might be worth considering is what's going to happen with IPTV. Since it is starting to be built into new TVs it's likely to be a growth area in the future; and will probably require ADSL due to the high download amounts usually required. Certainly at home we probably watch 5 to 10 hours of iView a month, and that's just a family of two. Comment (1)
Mike, please don't construe anything I say as meaning ADSL will disappear - I don't think that at all.
My point is simply that wireless broadband will suit more and more people as it becomes faster and cheaper - which it will continue to do. Whether IPTV replaces FTA or Foxtel type deliveries is far beyond my level of knowledge to comment on. Comments (5)
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