Core problem: People's perception of broadband and its benefits.

bk

Originally posted by DeVore
Games.

they are driving a lot of everything that is improving in tech terms.

Games and porn to be honest.

......

We should be pushing the alternatives to just web and mail usage. Video Conferencing with family in the states... downloading movie-trailers etc.

I agree with Dev here, the Vodafone Live! ads are a good example of how it should be done.

Vodafone doesn't mention MMS, WAP, HDSC, UMTS or any of the other technologies that make their new phones possible, instead they show us what you can do with the phones, play games, send and receive pictures, record personal ring tones, etc.

It is the same with BB, if you ask most people do they want broadband or DSL they say no, but then if you ask the same people do they want to be able to play computer games on their xbox and ps2 against their mates across town or watch music videos on Yahoo, etc. then they say give it to me now.

If you want to sell people bb, then you need to sell them the benefits of it, the new possibilities.

DeVore

Virgin megastores used to sell more games in the Dublin store then in the Oxford street one.

Thats not "more per capita" thats more in entirity.

We buy more games per capita than any other country ON THE PLANET. We also buy more consoles per capita. (we recently passed Japan on the games front).

Gaelcon is a board games convention and is the biggest independant convention for games in Europe (last time I checked).

We're a gaming country.... we dont realise because you would have to come from outside to notice it and even then its hard to spot a trend from a subjective point of view... (could you say if your friends played 50% more games in Ireland then in the US if you had emigrated here?)


Intel, AMD, Creative, all the big tech names are putting their bets on games being the next big wave. Look at XBOX and XBOX Live...

Noone needs a P4 for browsing or mail or Word/Excel ... but they need it for games and thats how its being sold.


Skeptic, its a chicken and egg situation. We need affordable broadband but we need to stimulate the market to show the "market forces" that the demand is there....


DeV.

SkepticOne

Originally posted by DeVore
Skeptic, its a chicken and egg situation. We need affordable broadband but we need to stimulate the market to show the "market forces" that the demand is there....

It's far more chicken than egg, so to speak. In every other country in the Western world, broadband is being thrown at people. Companies are stimulating their own demand.

Why is Ireland in this unique situation?

Eircom, for example, could tomorrow, make far more on broadband than they currently do now. This would be without any additional capital expenditure. All they have to do is lower the price. Lowering the price brings in a ten-fold increase in customers and those customers bring in the money. They have had the capability to do this for a long time.

Why are they not interested? It is because they don't want to undermine other revenue streams. Not long ago, there was a thread on this forum where people told of the money they were spending on ordinary crappy dial up, the vast bulk of which went to Eircom.

Even with UTVip, a huge portion of the money still goes to Eircom.

In most countries, broadband to the home is supplied by two means only:

1) Cable modems.
2) DSL.

We are without cable modems and there is little hope of them spending the hundreds of millions upgrading their networks.

DSL supplied via LLU has been a failure in most places where it has been tried.

With the exception of wireless ISPs (and associated LOS problems) we are forced, essentially to rely on the incumbent who has no interest in delivering broadband at anything other than exhorbitant prices regardless of demand.

That is why stimulating demand is fairly futile. It may help the wireless ISPs a tiny bit, but it won't solve the larger problem.

My worry is that we'll lose sight of the current objectives if we go down the demand stimulation route. Leave that to the ISC and other bodies where millions of euros are being spent on this already (needlessly I think, since the demand is there anyway).

I'm with Eircomtribunal on the chicken and egg issue.

DeVore

Ah skeptic, I believe you but you're logic is a touch loose in one place. Ten times? Can you prove that? Until we can show that, we've got a tough job convincing anyone that they should roll out DSL.

REmemebr in the UK they said "we'll roll it out if you can prove theres a demand" and came up with the system of requests for an exchange to be upgraded etc...

I dont disagree with you that Eircom are monopolising the market and we need the regulators to break that but we also need demand to fuel competition. You think its there, pent up like a dam... others think we might need a little more water-pressure.

DeV.

SkepticOne

Originally posted by DeVore
Ah skeptic, I believe you but you're logic is a touch loose in one place. Ten times? Can you prove that? Until we can show that, we've got a tough job convincing anyone that they should roll out DSL.

Right. Take a look at this report. Go to page 45. This shows that there are 7.5 times as many people 'very likely' to take up broadband at 40 euros than at 70. The survey didn't bother to guage demand at the even more extreme price of 107 euros, but the question was asked at the presentation. The answer was that demand was pretty much non existant at this level. It pretty much falls away to nothing at this level. This is what the man said.

If you go below 40 euros, the demand gets even greater.

What the figures show is that demand is hugely price sensitive. This is not surprising and has been the experience in other countries.

Essentially, there's only a tiny group outside of business willing to pay 100 euros and above for any form of internet access.

SkepticOne

A quick observation here:

I can understand the conflict. This forum is full of people who might be willing to pay 100 euros for broadband but it is simply not available. If more people wanted it then maybe it would be made available.

I just think it is unrealistic to try and stimulate demand at this price level. It just won't have any significant effect among most people, for whom 100 euros is out of the question.

Of course the telcos have repeating the 'no demand' argument like a mantra for years, but this is mainly just FUD. Of course they are saying that demand must be stimulated, because stimulated demand translates directly into money. It does not mean that there is an abnormally low demand at present.

Ireland is no different to any other country, we are just at an earlier stage. Hopefully, some day, we'll get out of that stage.

DeVore

You could have quoted that source to begin with! lol

[facetious]I'm always amazed that it takes a 70 page report to tell people that if you lower the price more people will buy it [/facetious]

Ok, but that may or may not translate to more profit for eircom as you claimed... if they sold it for 10 euro I'm sure 90% of households would buy it but they'd lose money.

if the profit on 70 euro price point is 25 euro then the profit on 40 euro is 2 euro (say) then you need 12 times as many and thats without counting the cost of provisioning 11 times as many per-line-overheads items (whatever the extra cost per customer is... support, equipment etc).

I'm playing devils advocate here but its not a straightforward as we'd like to believe.

(I bet you have another document thats going to show me profit margins... I just bet )

DeV.

SkepticOne

Originally posted by DeVore
REmemebr in the UK they said "we'll roll it out if you can prove theres a demand" and came up with the system of requests for an exchange to be upgraded etc...

But this is after the price was brought down to 40 euros or so. At 100 euros, this is pointless. Right now, Eircom with their 50 exchanges upgraded are losing a huge amount on DSL. More exchanges upgraded would mean losing even more.

DeVore

Er... isnt a flavour of DSL available at 50euro? (or soon likely to be)?


I agree that 100 euro is laughable but I was making my comments on the understanding that that was gone and 50 Euro was more likely to be the price...

DeV.

spongebob

Remember this Thread a few weeks back on the subject of price sensitivity and especially the fact that cable broadband has a relatively high penetration rate based on subscribers per home passed by the correct 2 way cable...not because of advertising or because of confidence in NTLChorus but simply because the products are available in the €30-40 price bracket.

SkepticOne

Originally posted by DeVore
You could have quoted that source to begin with! lol

[facetious]I'm always amazed that it takes a 70 page report to tell people that if you lower the price more people will buy it [/facetious]

Hey, you wanted it! I think I've established the point fairly well if not 'proved' it. No market research can actually prove something just make a case for it.

Ok, but that may or may not translate to more profit for eircom as you claimed... if they sold it for 10 euro I'm sure 90% of households would buy it but they'd lose money.

if the profit on 70 euro price point is 25 euro then the profit on 40 euro is 2 euro (say) then you need 12 times as many and thats without counting the cost of provisioning 11 times as many per-line-overheads items (whatever the extra cost per customer is... support, equipment etc).

I'm playing devils advocate here but its not a straightforward as we'd like to believe.

(I bet you have another document thats going to show me profit margins... I just bet )

In terms of profit per user, how is it being done elsewhere, Britain, US, Europe, in fact just about everywhere except Ireland.

Such documents on profit margin per user are available but only at a price. I've not been able to get my hands on any. I know that the UK consultancy Ovum did a study and found that with the cost of DSLAMs coming down so much in recent years, DSL could be run out of an exchange with only 50 subscribers paying 40 euros a month and still break even.

In addition, a group in the US installed their own community DSLAM in a rural area. Each are paying about $50 for the service. I think there was about 40 in the group.

The costs of DSL are such that there it is relatively high to enable the exchange but a relatively low marginal cost per additional user.

SkepticOne

Originally posted by DeVore
Er... isnt a flavour of DSL available at 50euro? (or soon likely to be)?


I agree that 100 euro is laughable but I was making my comments on the understanding that that was gone and 50 Euro was more likely to be the price...

54 euros, yes. But while I think this is still a little too expensive, I think you may be being optimistic here.

This looks more like a political game than a serious proposal. We know how Eircom like to string things out....

I guess my irritation comes from the fact that it isn't here yet. Yet we are already talking about stimulating demand.

Ardmore

Originally posted by SkepticOne
I think someone made the point about mobile phones. Initially they were hugely expensive and no one bough them. When they came down in price, people started buying them.

Mobile phone usage exploded with the introduction of pre-paid plans. They weren't necessarily cheaper, but they were controlled - people knew that they wouldn't get a nasty bill at the end of the month.

Unfortunately, the low download allowance available with the "residential" DSL products in Ireland raises some of the spectres associated with the early mobile phones - will you get a nightmare bill one day? Similiarly, I'm not convinced that FRIACO is going to be the boon that some people expect, but if someone come up with some sort of "pre-paid" plan, whether for dial-up minutes, or for additional downloads, I can see it removing the fear factor that scares some people off. (I doubt that we will see ADSL follow the phone model completely, with €100 setup charges, and "pay as you go" at €10/gig, but I think there's a large section of the market that would find that a very attractive offering, it was available).

Dangger

but if someone come up with some sort of "pre-paid" plan, whether for dial-up minutes

Eircom had this one designed and ready to unleash on the market some time ago. I remember clearly being talked through it in Eircom's head office in the summer of 2001. Personally I have a problem with such a system. Without FRIACO in place its of little benefit to the people who would use it in the long run.

Consider what would happen if people's usage did increase with such a product. They grasp the Internet and decided they will use it more often. They will need to

a) continue buying the prepaid cards for what we can only imagine would be a higher than average cost

or

b) move to ISDN cos gee whiz its fast and the future.

I was told that it would be aimed at school goers to enable them to go online to use the Internet for homework activities as it would take the sting out of on-peak access. Great! Get them hooked young and get them racking up those per minute rates as their usage outpaces the prepaid minute deals!

I seem to remember two part charging also being wrapped up in the prepaid debate and that the mobile operators were very much against two part charging as it would mean short calls would be more expensive on their networks if it was in place. I cannot recall exactly how two part charging was connected to the prepaid Internet option. Can anyone shed ome light on it?

dahamsta

Yeah, I remember this. I remember a friend of mine being in Siberia at the time and discussing much the same thing with the local ISP, simply because the locals couldn't afford a "proper" service. What was funnier, though, was the fact that Siberia had an active ADSL service at the time.

adam

Ardmore

Originally posted by Dangger
I was told that it would be aimed at school goers to enable them to go online to use the Internet for homework activities as it would take the sting out of on-peak access. Great! Get them hooked young and get them racking up those per minute rates as their usage outpaces the prepaid minute deals!

Ask your average teenager how much the spend on their pre-paid phones at the moment - and be prepared for a shock. They are prepared to spend what seems to me to be an exhorbitant amount, but the only credit involved is owed by the phone company to the users, not the other way round. This suits the users, who don't have to worry about bills (and it suits the phone companies, who charge more per minute, and get paid up front).

SkepticOne

Originally posted by Ardmore
Ask your average teenager how much the spend on their pre-paid phones at the moment - and be prepared for a shock. They are prepared to spend what seems to me to be an exhorbitant amount, but the only credit involved is owed by the phone company to the users, not the other way round. This suits the users, who don't have to worry about bills (and it suits the phone companies, who charge more per minute, and get paid up front).

I could see pre-paid internet cards being popular among certain groups of users too. It may have a role in introducing new people to the internet. Since the money is paid up front, it is likely to also be attractive to the phone companies.

It depends on what problem you are trying to solve. Flat rate dial-up will probably not cater to the same group that pre-paid cards would. The main group for flat-rate dial up would be moderate users who wish to control their costs via a fixed monthly bill rather than through cutting down their time online. Heavy users and those who want speedy downloads and quick loading web pages would go for broadband.

martinikarl

As a broadband provider myself ( I won't say what company for fear of pimping) I have a first-hand knowlege of the lack of demand for broadband. If you've never heard the word "Ferrari" and someone told you you could get one for €x per month, you wouldn't get exited either.

It's important to understand that there is a small group of people who would give anything for broadband (many of them are on boards). The rest are rather cool to the idea because of ignorance. Here's the main reasons people cite for not wanting broadband:

1. I have it at work
2. I use the free dialup service from IOL, Indigo, Eircom etc.
3. We don't own a cumputer (fair enough)
4. We don't use the internet enough

It takes quite a salesman to get around these opinions. If you're one of those salesmen, please call me.

It's the second point that gets me really steamed up and it proves that marketing based on the facts is not always the best policy.

Before I got into the business I thaught that the big telco's excuses about lack of demand were just that, excuses. It's one of their few points with which I am in agreement.

I think the market is still in the "early adopter" stage with techies, gamers, telecommuters and porn users being the first to sign up. The applications that the early adopters use are all bandwidth hungry. The good news is that when broadband goes mainstream, the cost will go down because simple web and email uses very little bandwidth.

Porn was actually the catalyst for the VCR explosion 20 years ago. An irrelevent point, maybe, but history seems to be repeating itself.

Broadband will eventually hit critical-mass, it just takes time and and effort to educate the public. It would also help if the government had a clue. A couple of years ago I heard Mary O'Rourke say "People can e-commerce into work" on RTE. When government ministers don't know the difference between 'telecommute' and 'e-commerce' we're in trouble.

Karl Martini

parasite

hehe ...porn is definitely the proverbial elephant in the living room

dahamsta

Before I got into the business I thaught that the big telco's excuses about lack of demand were just that, excuses. It's one of their few points with which I am in agreement.

Ah Karl, don't insult our intelligence. There's no demand because there isn't a product with reasonable value or a reasonable price. You want demand, you create it, don't come crying to us.

adam

nahdoic

I fully agree with SkepticOne.

You aren't going to get people interested in a product that is only available in a very small area and does not exist at a reasonable price. You could hold seminars and advertise till you're blue in the face, what will it achieve? Some people would be better informed as to what broadband is, and what it can offer them. And that wouldn't be a bad thing, but is it going to ignite a deep burning desire in them to take arms and champion the cause of broadband development in Ireland? What do you really want to get out of these people after you've educated them on the wonders of broadband? Do you think after an hour presentation, they'll start organising rallies to get eircom to install the DSLAMs in their local exchange? Honestly, what could you hope to achieve. You might influence a survey, so the number of people say they are interested in broadband increases, by say maybe 1%? Big whoop. The telcos would still be able to say there's no demand despite your best efforts.

Of course there's no demand, most people still wouldn't be interested in BB at E54 a month. We gotta get this figure down to at most E30 a month, educating the public is not going to get the public to buy a service that is too expensive. Dropping the price is going to get the public interested. Anything else, to be frank, is just distracting from the only thing that will work. Drop the price and increase the availability, honest to god that's all we have to worry about.

Look at Ryan Air, how did they become successful ... hmmm drop the price increase the frequency. Did they WAIT for demand? You gotta be kidding, they dropped the price, increased the frequency and wohey, people got interested all of a sudden. We ALL KNEW what planes were before, we ALL KNEW what they could do. Why didn't we use them as much? Because they were too expensive. Drop the price, drop the price, drop the price.

We could cite examples, all day long, just drop the price and we'll be blown away by how quick the up take is.

E54 for this crippled DSL that's due (fat chance) out in march according to eircom is still far too expensive. Make ADSL widely available and make it E30 a month, that's all we have to do. We have to lobby the government more to do this, they've already mandated FRIACO now we need them to mandate affordable BB.

SkepticOne

Originally posted by martinikarl
It would also help if the government had a clue. A couple of years ago I heard Mary O'Rourke say "People can e-commerce into work" on RTE. When government ministers don't know the difference between 'telecommute' and 'e-commerce' we're in trouble.

Oh God, did she really say this?

Dustaz

Nice to see an interested party contributing to this discussion, fair play Karl.

Having said that, i agree with Adams sentiments (tho, as usual not his tone ). ntl have shown that at the right price broadband doesnt even need to be advertised. Id wager a large part of my salary that the 'other' wireless company probably have a larger customer base than yourselves simply because of price.

As nahodic says, price price price.

martinikarl

Dustaz,

I beg to differ. The 'other' wireless company is only 60 cents cheaper than us and their install fee is €120 more expensive. I'm not sure what their market penetration is. They're not saying and neither are we. Best not to get into this discussion here, the risk of pimping is too great.

Also, regarding NTL cable broadband in Tallaght. I've heard they had a dismal takeup, even at €30 per month. I'm not saying that price doesn't sell. Maybe they chose a bad area, didn't spend on marketing or just wanted to test the technology.

Karl

MDR

I've heard they had a dismal takeup, even at €30 per month. I'm not saying that price doesn't sell.

who told you that ? , I heard they had an 11% take up which is comparable with figures from where broadband has been made available in the US (the broadband mecca). Affordable broadband will sell, with the greatest respect to IrishWISP and IBB, who have proven themselves to be innovative and customer centric companies, still the fact remains that €50 a month is outside of most families budget.

spongebob

Karl

Lets assume ... becuse we refuse to believe a word from Chorus/NTL ....that 40000 homes are passed by bidirectional cable.

Comreg stated yesterday that there are 2300 cable connections (in the quarterly report) . That means that 5.6% of passed homes have taken them up on their offer. This figure grew 13% over the 3 month period in question.

Neither NTL nor Chorus advertise this product while NTL customer care do not know where it is available. The growth was almost all word of mouth ......and yes there was a bit of Pimping too but it was such a weak effort as to be risible.

Eircom spend a Fortune during the period of the report. The took out full page ads all over the shop telling us about their famous 500,000 Broadband wotsits. During the period they had an increase to 2700 DSL connections from (2100 I think) . ESAT have 600 DSL connections and have most certainly not spent one quarter of the Eircom budget for this business. If we assume that eircom 'pass' 200,000 houses with DSL we can say that they have 1.7% of passed homes signed up....after all that advertising. What a dismal return.

The key difference between the NTL/Chorus products on the one hand and the ESAT/Eircom products on the other is that Chorus/Ntl are coming in at under €50 including VAT for a decent wedge of data

Despite the advertising, Eircom and Esat are having a hard time shifting product at around the €100 mark for a limited and capped product.

The only market worth developing is that for 512k (ish) 25:1 (ish) and 10GB and above Caps (ish) at not a penny over €49.99 a month. One penny more and its a rip off.

M

SkepticOne

There's been a reasonably good take up of cable modems in Ireland with around 4,000 users. This is quite good given that there are only about 40,000 homes capable of two-way services. It is greater than the total number of DSL sold in Ireland at just over 3000 despite the much wider availability of DSL.

I would agree that there is an element of education necessary, but this only becomes feasible when there are services out there that the 'educated' can take up.

There are good value broadband providers in certain areas, but these have the problem of making people aware of their services in the absence of national advertising.

STaN

Originally posted by nahdoic
E54 for this crippled DSL that's due (fat chance) out in march according to eircom is still far too expensive. Make ADSL widely available and make it E30 a month, that's all we have to do. We have to lobby the government more to do this, they've already mandated FRIACO now we need them to mandate affordable BB.

There is no point in any company having a product that does not make them money. Maybe we would get broadband at €30 a month but it would probably be:

- self install (most people WILL mess this up, and then call tech support, and maybe a technician out) >> costs
- bandwidth is relatively expensive in ireland so huge contentions
- degraded service in order to squeez as many people on as possible

Right they can do it in the UK, but their market is allot bigger, about 20 times. A product around at €54 or £33 is a standard price in the UK for DSL and Cable. Now i know you can get it cheaper than that, but as far as i know that is a standard. So in that sence we are not that far off the margin.

From what i can see, it will take about 8-12 months for people to be really educated in what broadband can do, why they need it and where it starts becoming a part of everyday life. We are at the bottom of a bell curve at the moment, but there is a peak on the way. We're not, not going to have broadband.

That make sence??

martinikarl

********
The only market worth developing is that for 512k (ish) 25:1 (ish) and 10GB and above Caps (ish) at not a penny over €49.99 a month. One penny more and its a rip off.
********

512k - pass
25:1 - Pass
10 gig - pass (12 gig)
€49.99 - pass (€49 inc VAT)

Karl Martini

SkepticOne

Originally posted by STaN
- self install (most people WILL mess this up, and then call tech support, and maybe a technician out) >> costs
That make sence??

Self install seems to be the way things are going.