Market Reports

PRESS RELEASE

AUSTRALIAN DSL TAKE-up GREW BY 33% DURING July and AUGUST 2002 — over 178,000 DSL Lines are now in place

But pricing regimes still provide pitfalls for the unwary

Sydney, September 2002 - Following closely on the heels of the ACCC's recent report on Australian broadband take-up as of 30 June, Telsyte announced new industry figures based on interviews with infrastructure-based DSL providers. Since many infrastructure-based providers also supplement their services with other wholesale DSL products one of the keys to understanding the true size of the DSL market is to eliminate the potential double counting of services. Using this methodology, and measuring against the ACCC's DSL figures for 30 June, Telsyte determined that over 44,000 DSL lines were turned up during July and August.

During her keynote speech at IIR's 3rd annual DSL conference, Shara Evans, Telsyte's Managing Director, said: "The Australian DSL service market is growing at a phenomenal rate. However, there are a number of potential barriers to the continuing acceleration of this market: price, content (including value-added services), awareness, availability, installation constraints (truck rolls) and quality issues." Evans also believes that current market pricing strategies present potential subscribers with a confusing array of pricing plans.

She said, "Pricing plans are becoming more sophisticated. DSL providers are segmenting offerings into residential and business plans — and most plans have usage charges." Evans offers the following advice:

• Customers need to understand their usage requirements in order to pick the plan that is best suited to their needs
• Some plans charge for downloads — others charge for downloads and uploads
• Excess usage fees vary by service provider, and by service plan
• There are pricing variations between Metro and Regional plans
• There are pricing variations for Peak and Off-Peak traffic

As a result, comparing plans can involve a complex tariff analysis. Evans provided the following example, which shows the full spectrum (low and high usage allowance) of service plans from nine (9) different service providers for ADSL 256/64 Kbps services:

Looking at the sampled tariffs, the minimum monthly fee for a 256/64 Kbps ASDL service is $49.50, the median fee is $75.70, the average fee is $199.08 and the highest fee is $999.00. Each price point on the graph has different usage allowances — some charge usage fees in both directions, and others only charge for downloaded traffic. Additionally, a number of plans feature variable usage limits during peak and off-peak hours. Furthermore, there is no industry agreement on the definition of peak times. However, Evans pointed out that some of the higher priced plans allow unlimited usage.

In yet another example, Evans demonstrated why it is important for broadband subscribers to understand their usage patterns before signing up to any specific plan.

Looking at a variety of usage fee charges, Telsyte calculated the add-on costs for downloading a typical 650 MB movie if usage caps are exceeded — prices which range from $71.50 to $117.00 per movie. Evans said, "No one in their right mind would knowingly pay $117 to watch a movie." She cautions, "This chart shows how usage fees can have a detrimental impact on the take-up of value-added services such as online movie rental/purchase, Pay TV and other applications that involve large files."

Evans also noted that Australia appears to be one of the few countries that impose usage charges for broadband Internet access. She believes that "In order to stay competitive on the global market, we need to ensure that our broadband pricing plans are roughly comparable to overseas markets."

ABOUT TELSYTE

Telsyte Pty Ltd is an independent telecommunications strategic planning consultancy and research organisation that specialises in broadband technologies. The focus of the firm includes the technical analysis of networking technologies, the financial analysis of telecommunications services, the comparative analysis of service and product options and the application of telecommunications/networking products and services to solve business requirements.

A full 50% of Telsyte's time is spent researching both the Australian market and broadband technologies. This primary research allows Telsyte to bring up-to-date, hard-to-find information to client projects.

Ms. Evans was recently appointed to the CeNTIE (CSIRO-led Research Network Consortia) Advisory Panel and was a participant in the Broadband Advisory Group's recent Sydney forum.

FOR FURTHER INFORMATION, PLEASE CONTACT:

Michael Carpena
Starbuck Management Services (Telsyte's Public Relations Firm)
Phone: 0412 244 925
mcarpena@optusnet.com.au

Shara Evans
Managing Director, Telsyte
Phone: (02) 8297-4650
info@telsyte.com.au

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