John Linton What is there left to do in providing ADSL services in Australia? Hard to know. The aim is to finish the final draft of the Exetel financial plan for FY2011 by COB today to allow for the reviewing of the sales processes we need to put in place to make the 'final figures' happen. It has been a different process this year with all of the number crunching and hard analysis being done by people other than me which has been an interesting process in itself. We have produced what should be a workable basis for maximising what we see as the opportunities in the coming year but it is, easily, the hardest period of Exetel's short 'life' and the planning has therefore been more conservative than for any of the six and a half previous plans (our first 'year' was effectively five months).
Among the key changes to the plans for next year is a reduction in the total number of residential ADSL customers after the first 76 consecutive months of Exetel's existence where ADSL customers increased. It was almost a sad number to agree to but, despite all analysis showing that for 98% plus of our current customers we offer the very best price and performance and support our belief is that the residential market, at least for us, will decline this year on a month by month basis. The reasons for that view are pretty straight forward - the overall residential ADSL market is saturated promoting an ever increasing number of providers to offer more and more at their 'bottom level' pricing points plus the 'depredations of wireless broadband at the lower end of the user spectrum and fibre at the top end of the user spectrum.
Right now it's impossible to determine what the impact of fibre will be on ADSL. We haven't been offering fibre for even a month yet and any 'figures' so far have to be treated as non-indicative as the combination of so many different factors in the Point Cook trial (lack of ADSL2/RIMS/Brand New Syndrome/lack of competitors etc) will all skew any figures upwards. However it would be true to say that our first three plus weeks of fibre applications in Point Cook certainly far exceeded my expectations. So the fibre impact will totally depend on Telstra's ambitions and how/if they provide wholesale fibre services beyond the Point Cook 'trial' and at what 'real life' pricing they do that at. To a lesser extent it will depend on what NBNCo does and how quickly they make services available outside Tasmania.
Our new ADSL offerings to residential users will be aimed at the peak usage usage customers who use less than 60 gb per month in that time period with far more emphasis on the 30 gb and below customers who comprise the great majority of our current users. How we end up doing that is a set of issues that we will deal with over the coming two weeks. We have a few ideas - but very few - and really have very little 'room' to move on pricing as things stand today and without significant supplier accommodations in the future we see no way that the current situation will develop other than to become even tougher than it is today. While that is not exactly a promising outlook it does recognise reality and it does provide for a sensible attitude to looking for ways to improve such a forecast.
One 'good' thing about planning to have less ADSL customers than today is that the losses we make on 'high end' ADSL customers 'go away' in the first quarter of FY2011 and provide more financial scope to do anything else. It makes a lot of sense financially to see a progressive reduction in total ADSL customers providing the customers that leave Exetel are the ones that cost us money rather than the ones that break even or make a dollar or so each month. However while that's the plan a plan is far from an accomplished fact. We will have to be very careful over the coming weeks to ensure our assumptions are closely monitored and validated.
One good thing - because all the hard work is being done by other people this has been the easiest 'planning season' I have ever had.
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