Sunday, October 15, 2006


Well, I was certainly slightly off the mark with my Orcon prediction.

Hats off to Vodafone, for what I think was an excellent move for their company.
Industry marks have noted that the purchase price they paid was higher than the valuation, but in my opinion they were buying more than the infrastructure and customer base.

ihug's marketing campaign has been consistently solid, and their image (especially their website) tends to reflect the fact they're a true alternative to Telecom.
TelstraClear I think has done a poor job with their marketing, and few residential consumers view them differently from the incumbent.

They had an opportunity with the purchase of Paradise, to split away from the grey corporate "Clear Communications" and really create a proper residential brand, but sadly have failed to do so.
Their branding seems confusing, and it appears that Paradise, Clear and "Telstra Clear" compete for customers as seperate entities with different pricing structures ... doh!

Vodafone now has a good base to launch some real 'triple play' with mobile, fixed line and internet access bundles.

The trend over the last 12 months has been for Internet Service Providers to become full fledged Telecommunications companies.
This has been driven by the low margins of UBS and dialup, and the increased cost of supporting those services, due to some fantastically crap Telecom infrastructure.

Lets look at the who "main" players are now: (Telecom and TelstraClear aside)

"Internet" meaning tradition dialup/dsl;

Compass - Fixed Line Telco + Internet + WiredCountry stuff
WorldxChange: Toll bypass Telco + VOIP + Internet
CallPlus/Slingshot: Fixed Line Telco + VOIP + Internet + Wimax
Orcon: Toll bypass + Internet
Woosh: Wireless + Toll Bypass + VOIP + Internet
Vodafone/Ihug: Mobile + Toll Bypass + Fixed Line + Internet + Mobile Internet

Clearly voice servies are the name of the game, and must be where the margins are.
Any of the other providers that currently rely soley on internet access, will either be nieche regional providers, or possibly ones with high numbers of small business customers who also do web design and hosting.
How long can they survive ?

ISPs are becoming Telcos and have to start competing for customers through:

Internet Access
Toll Bypass
Fixed Line Rental
Nieche services (Web Design, Hosting, Domain Name Registration, wacky email configs, security, firewalls, networking equipment, WiFi routers etc)

Time to circle the wagons, prevent churn and try and build some kind of base and brand to either sell, or borrow/seek investment for LLU and/or building an alternative network.