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catallaxy in technical exile

Wireless Internet – Competition Hots Up

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It’s been a busy couple of days in the Australian wireless internet market, with new pricing and promotions from three of the major players and an announcement by Unwired that it’s started its network build in Melbourne.

It began Tuesday when ZD Net reported what it claimed to be a leaked copy of new iBurst pricing. Since its launch, iBurst has charged higher monthly fees for users of it’s mobile (laptop) plans, than users of it’s desktop solution. However the cost of providing ongoing service to both types of customers should be fairly similar as they are both using the same network resources. (assuming users are on equivalent speed and MB allowance.) The mobile plans should therefore have been a better contributor to profit margins for iBurst than the desktop plans.

The ZD Net article suggests that’s all about to change. The leaked pricing suggests the monthly plan fee for both desktop and mobile users will be aligned, with mobile plan charges dropping quite significantly in some cases. Whilst this is good news for users of the mobile service, it’s perhaps not such hot news for Commander (iBurst`s owner). It suggests that wireless broadband competition has now reached the point where iBurst feel they need to give up ARPU and margin to win more customers. But unless they can win enough customers to realise economies of scale and/or boost total revenues – it may not be enough to ensure iBurst remains a long term player in the market.

Optus launched their ‘Wireless Connect’ service back in November 2005. On Wednesday, three months out from launch, they changed their pricing. Prices across the board are down, but most significant is that they have dropped their entry level plan from $49.95 to $29.95. This sees them now match 3, Vodafone and the leaked iBurst plans – at this price point. Although the Optus plan only includes 75MB of usage (3 offers 200MB and Vodafone 100MB), the Optus plans can be used at Optus & Azure WiFi hotspots at speeds much greater than the 384kbps offered on the 3 and Vodafone services. Given most of the market has now moved to a $29 entry plan for mobile broadband, one wonders how long before the other players follow.

Wednesday was also a big day for Unwired. It started with the launch of their “Freebruary” special offer. The special offer promises 3 months free access for customers who sign up to Unwired on a 12 month contract during February. The ‘Freebruary’ promotion is a significant change for Unwired, which until now has managed to avoid this kind of thing. It suggests to me that they have now captured all the “easy wins” (customers who couldn’t get fixed broadband but could get Unwired) and are being forced to compete for the same customers as the fixed broadband operators. This is an intensely competitive market and “Freebruary” was probably a necessity if it was going to compete for these customers.

Unwired should get a bit of a boost in the next few months (I assume) when it starts selling it’s services to customers in Melbourne. Unwired disclosed in its quarterly cash flow statement back in January that it had spent about $500k of CAPEX on network build activities outside Sydney. On Wednesday it confirmed its expansion and named Melbourne as the next city to be covered by the Unwired service. Unfortunately for Melbournite’s, it sounds like they are still rolling out the current Navini technology, rather than WiMAX. Still, it ought to hot up wireless competition in Melbourne a bit, especially for iBurst.

Written by Admin

February 3, 2006 at 6:50 am

Posted in Uncategorized

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