This 'Lack Of Demand' BS

Sponge Bob

the entity still known as NTL announced a 6Mbits product yesterday, covered on silicon republic here

NTL have been in the forefront in the Irish BB market in offering a good package at a good price . The 6Mbit package is €39.99 a month.

What is of interest here is the takeup. NTL reckon they pass 175000 homes and that 25000 have taken their BB service. This amounts to a takeup of 14% of households . Do remember that this 14% takeup has been achieved in a territory shared with Bitstream, LLU and Wireless competition because you can only get NTL in Galway , Dublin and Waterford.

Can we take it that the price has something to do with it ???

crawler

Speaking as someone in the industry....

The is NO lack of demand. FACT.

Sponge Bob

It would be daft to assume that the areas where NTL has 14% of households as BB customers do not have an equal number of

((sum of all of ) Clearwire, IBB FWA (not ripwaves) , Digiweb Metro, Eircom Bitstreams of all kinds , BT LLU, Smart LLU, Magnet LLU 3G mobile data cards...at a push )

Thats because all those carriers offer services pretty well everywhere that you will find NTL witha few exceptions like no Magnet LLU in waterford.

It would therefore be equally safe to assume that where there is a choice , especially a pricing choice, the penetration of BB type technologies in the home is around 30% now and probably higher .

The Vodafone 3G datacard is normally supplied by an employer along with a laptop and while used in the home in the evenings it does not show up as a Home BB connection but as a business connection instead . A Million of the things have been shipped out of Cork in the past 2 years BTW . Lest anyone get anal about the datacard sppeds (max 384k and generally 250-300k) I would point out that Bitstream is a minimum 256k product !

watty

No the only issues I have with 3G is price and Video Hype. If priced at a fixed charge per month it definately qualifies as Broadband.

Maybe even 150k always on fixed price would qualify.

Actually are all 175,000 homes quoted actually BB/Digital capable today or does that include all homes passed by cable than have any kind of sub, or homes simply passed by cable, which may or my not yet have BB on it?

jwt

I’ll put on my devils advocate hat for a moment.

Lack of demand

For rough figures 50 % of the pop has a pc
60% can get BB
So in a worst case scenario at least 30% have a pc and BB (probably closer to 35%)

So why aren’t these people getting BB

(Gut feeling is Total Cost of Ownership, line rent + calls + BB + Mobile rent + mobile calls = big bill)

On the business side its worse.

Even though anywhere between 60% and 70% of SMEs can get BB we have a dichotomy where those who cant get BB are screaming for it, but those that can seem happy with dial up or at least not prepared top move to BB, in fact ISDN usage is rising and not in the areas where you’d think, but in larger BB enabled towns.

(Again gut feeling here is that the old “No one ever got sacked for buying IBM” motto is working here, business decision makers would rather stick with something that works, albeit slowly and expensive, rather than move to something new that might not work and hence get the bullet)

Lack of demand is a correct diagnosis if you accept that lack of demand includes any reason for not getting BB where it is available to you.

You could argue that there is a lack of demand for Bentleys, or super yachts. Or even elected politicians, given recent electoral turn outs.

How about lack of demand for 3G services or surfing the internet from your mobile phone. Hardly anyone does it, its available to everyone therefore it’s a lack of demand issue.

The definition of demand from an economic point of view is….

http://www.investorwords.com/1396/demand.html

“The amount of a particular economic good or service that a consumer or group of consumers will want to purchase at a given price. The demand curve is usually downward sloping, since consumers will want to buy more as price decreases. Demand for a good or service is determined by many different factors other than price, such as the price of substitute goods and complementary goods. In extreme cases, demand may be completely unrelated to price, or nearly infinite at a given price. Along with supply, demand is one of the two key determinants of the market price.”

To a reasonable degree you could argue that demand is inversely proportional to price but more likely is that it relates to Value for Money. This is a phenomenon whereby something you pay for is worth what you paid. I know this is a strange concept but apparently if you price your goods or services at a level where consumers feel they are getting good value for money rumour has it that they will want to buy it!

And lets face it, leaving aside the important bills like mortgage/rent, food, heating, clothes etc BB is competing for the wallets of people against SKY, telephone, mobile etc. most people I have spoken to who don’t have BB (but it’s available to them) have cited ADDITIONAL cost as the primary reason.

Our own survey last year found ADDITIONAL cost as the primary reason.

We have the highest line rent in Europe.

Our mobile ARPU is the highest in Europe.

Our basket of calls (the proper OECD basket not the Comreg maky uppy one) is middling

In all telecoms in Ireland is not cheap and for a lot of people the additional cost is not one they are prepared to bear.


John

paulm17781

The other thing is that NTL don't advertise like Eircon/BT/Magnet, NTL only flyer areas. It is just a shame they still only have ~50% of their customer base enabled. Considering this their take up is excellent.

Watty I think the 175,000 is BB capable areas.

SkepticOne

jwt wrote:

And lets face it, leaving aside the important bills like mortgage/rent, food, heating, clothes etc BB is competing for the wallets of people against SKY, telephone, mobile etc. most people I have spoken to who don’t have BB (but it’s available to them) have cited ADDITIONAL cost as the primary reason.

Our own survey last year found ADDITIONAL cost as the primary reason.

We have the highest line rent in Europe.

Our mobile ARPU is the highest in Europe.

Our basket of calls (the proper OECD basket not the Comreg maky uppy one) is middling

In all telecoms in Ireland is not cheap and for a lot of people the additional cost is not one they are prepared to bear.

But relative to line rent and the amount people pay on mobiles the additional cost of broadband is quite low.

People don't immediately order broadband just because it becomes available. There is a take-up curve involved. Marketing and word-of-mouth take time to work and Ireland is years behind other countries for prices even for the still comparatively low availability at present.

Urban Weigl

There is actually a lack of demand for broadband, when compared to many other European countries. The reason is simple: it has not been allowed to build up because of overpriced, crap dialup, and very slow rollout of broadband. As a result, people have not learned about the advantages of having the internet at home.

But when Eircom, or anybody else for that matter, claims that the reason the situation is bad here is due to "lack of demand", that is bull****.

uncle_sam_ie

Urban Weigl wrote:

There is actually a lack of demand for broadband, when compared to most European countries. The reason for that is simple: it has not been allowed to build up because of overpriced, crap dialup, and very slow rollout of broadband. As a result, people have give up on it.

But when Eircom, or anybody else for that matter, claims that the reason the situation is bad here is due to "lack of demand", that is bull****.

Expect in the areas were NTL offer broadband.