John Linton
We have started re-looking at residential ADSL offerings in light of various changes that have occurred and are likely to keep occurring. No real decisions can be made until the Telstra separation terms are finalised and, more importantly, the date on which those terms will come in to effect. As little progress seems to be being made that is a major 'road block' to any 'final' pricing and terms we can put in place. However we have been doing some of the preliminary work that is necessary to make those decisions when we have more direction.
Some two years ago we offered unlimited download plans to see just what such plans would produce in terms of longer term monthly usage. When we had acquired a statistically meaningful number of customers we stopped offering unlimited plans to new users and allowed sufficient time to pass to get a better idea of what such users actually downloaded after the 'novelty' wore off. After two years and some time to time check pointing across a fairly wide demographic of user types we have a much better idea of what unlimited download plans mean in terms of monthly bandwidth usage and changes over time.
Over that same two year period the cost of IP has dropped dramatically - partly because the actual cost of IP has continued to fall dramatically but also because the Google and Akamai caches (as well as the peering caches) have significantly increased their provision of data to the point where it is approaching 50% of all IP traffic delivered to residential users. For Exetel, this means that the only significant cost of delivering unlimited download plans is the back haul charged for by the three carriers we use and the profile of some of the people we provide unlimited services to. The port cost also plays some part but not a significant one....except for Telstra of course.
What these various cost changes mean is that, if the average downloads by unlimited plan users were to stay the same in the future as they have been for the past 12 months, then there is very little cost difference between an unlimited user and a user who downloads a few gigabytes a month in percentage terms on an AAPT service, more, but not that much more, on an Optus service and only on a Telstra service does the cost difference become substantial - to the point that it couldn't be considered. As we slowly cut over our curnet IP contracts to new contracts this scenario becomes more financially sensible and it must be the same for our much larger competitors. So it poses some difficult questions in terms of what will be offered to residential ADSL2 users in 2012?
It poses some even more difficult questions for the NBNCo where back haul costs, at least currently, make it impossible to offer major download allowances at anything like the prices that can now be provided on residential ADSL services. This isn't such a big issue today - where it could be argued that only pirates need large down loads - but as home internet connections are used to deliver FoxTel, and FoxTel like, services at ever denser resolutions 100 gb begins to look like an 'entry level' user and 500 gb is no longer automatically equated to illegal usage....just someone who watches a lot of TV/Movies at very high resolution.
The trouble remains that when amateurs (such as federal Governments) meddle in complex professional businesses (like Australia wide communications services) they never understand how swiftly commercial enterprises have to change to meet the rapid changes that occur in commercial life....and therefore they don't ever succeed....it's why all sensible western governments have sold off their commercial assets over the past fifty years...they knew they couldn't continue to run them.....there's no fool like a doctrinaire fool.
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