firstpath-commsday-speach-july-2015-(final)

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The future of wholesale
Stephen Carter, 15 July 2015

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www.FirstPath.com.au
stephen.carter@firstpath.com.au
Level 20, 31 Market Street
Sydney NSW 2000
Phone: 02 8458 2666
Quick Update
Compelling coverage (increasing our
relevance as a supplier)
Largest density submarine cable
diversely laid across Sydney Harbour
Fibre core count per cable increasing
from 144 cores to 720 cores
FirstPath Fibre500 product beats rival
Fibre400 offer
Became a supplier to more carriers.
Proving FirstPath build network efficiently
& for less than building your own
Better tools for resellers
Domestic IRU product launched, first to
include both Dark & Lit services

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Sydney NSW 2000
Phone: 02 8458 2666
Exciting Times Ahead for FirstPath
Gearing (seeking funding and investors)
National Coverage
Increase share of the circa $4 billion pa market
Become the second largest wholesale
provider in Australia
Become supplier for foreign carriers and
ISP’s
New products & innovations to be
announced

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Sydney NSW 2000
Phone: 02 8458 2666
Market Update
Large scale consolidation
Further legislative restrictions “Carrier License Conditions (CLC)”
Harder for ISP’s to differentiate (Whirlpool “Broadband Choice”
discontinued)
Netflix, Stan, streaming, OTT, IOT are eroding ISP margin and
demand will continue to grow
Is the current race for NBN subscribers possibly “fools gold”?

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Sydney NSW 2000
Phone: 02 8458 2666
Current Market Issues
CVC charges
Legislative restrictions (Part 7&8, CLC, Competition Act)
Access (availability and choices)
Mobile vs Fixed-line
- Mobile data quotas are ever increasing
- Mobile & wireless are portable, fixed line will never be portable
- Mobile may soon be faster speeds than NBN
Telstra’s advantage will continue to grow

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Sydney NSW 2000
Phone: 02 8458 2666
Charges to NBN RSP’s
CVC charge of $17.50 per Mbps per
month
Access Charge per subscriber
- 12/1 Mbps $24 pm (average retail price $53.45)
- 100/40 Mbps $38 pm (average retail price $97.27)
- Retail price is the RSP sale price matching products from leading NBN
RSP’s where materially similar.
- NBN access prices vary per RSP based on “NBN Direct” or “NBN
Wholesaler”
IP Transit (wholesale) say $10 per Mbps with 70% of content provided over
peering = real cost of $3 per Mbps

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Sydney NSW 2000
Phone: 02 8458 2666
Netflix Effect
Data Usage:
Before Netflix 0.8 Mbps
Current Netflix 3.0 Mbps
Near Future 7.0 Mbps
4K TV plus OTT plus IOT etc
Interestingly AU globally consistent on
performance although still mostly on
ADSL

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Sydney NSW 2000
Phone: 02 8458 2666
Average Margin & Utilisation based on 5 NBN RSP's
Before Netflix, $13.05
With Netflix (std def), -$56.65
Near future, -$200.15
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
-$250.00
-$200.00
-$150.00
-$100.00
-$50.00
$-
$50.00
$100.00
Before Netflix With Netflix (std def) Near future
$ Margin on 12/1 Mbps plan (without Transit) $ Margin on 12/1 Mbps plan (with Transit)
$ Margin on 100/40 Mbps plan (without Transit) $ Margin on 100/40 Mbps plan (with Transit)
Utilisation % on 12Mbps plan Utilisation % on 100Mbps plan

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Sydney NSW 2000
Phone: 02 8458 2666
Possible annual effect on ISP’s margin due to increased
usage based on 10 million subscribers
-$25,000,000,000
-$20,000,000,000
-$15,000,000,000
-$10,000,000,000
-$5,000,000,000
$-
$5,000,000,000
Before Netflix With Netflix (std def) Near future
Margin on 12/1 Mbps plan (with Transit) Margin on 100/40 Mbps plan (with Transit)

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Sydney NSW 2000
Phone: 02 8458 2666
The numbers in more detail
Data does not account for items such as:
- Averaging, individual usage may vary greatly
- Varying pricing approaches by ISP’s and not all subscribers will be on the
same plan
- ISP additional revenue from other services
- Not all users will use streaming, IOT, OTT services etc
- NBN levies (if any)
- TEBA charges (Telstra)
- Backhaul charges (third party)
- Other NBN charges (per POI)
- Operational costs and CAPEX costs of RSP’s
- Other content costs
To receive a copy of the data used please email us

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Sydney NSW 2000
Phone: 02 8458 2666
NBN Ltd vs FirstPath (Resi Product)
Public
Datacentre
“CVC free” links also
offered by FirstPath
121 POI’s increase the costs

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Sydney NSW 2000
Phone: 02 8458 2666
FirstPath Helps By:
Unlimited (no CVC) plans already available
POI’s in Public Datacentres
Backhaul between POI’s available
First 500Mbps CVC per State or Territory $nil with fewer POI’s
Full Product range (Residential, Business, Dark Fibre, VDSL & Lit
Fibre)
Fibre500 promotion with Fibre1,000 on the roadmap
Other announcements soon

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Sydney NSW 2000
Phone: 02 8458 2666
Competitor ≠ Adversary
FirstPath’s wholesale-only approach reduces threat to carriers and
allows for service delivery for other carriers where they are restricted
by Part 7&8, CLC & or Competition Act
Shared strengths provides greater mutual benefit & margin
Capital efficiencies while not needing to overbuild each other
Stronger relationships will all parties

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Sydney NSW 2000
Phone: 02 8458 2666
4 Key Debates Needed
NBN charges unchanged, lower/no CVC and or higher Access
Charges?
Completely separate Telstra and Telstra Wholesale?
Allow more competition in the market?
Will consolidation leave only 4 main Telco’s like the 4 main Bank’s
where competition is diluted?

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Sydney NSW 2000
Phone: 02 8458 2666
Our Prediction
NBN price model will be redefined
Tension increasing between NBN earnings and RSP losses
Pricing is structured in opposition to demand/usage growth.
The greater the demand the more chance of NBN becoming
profitable and RSP’s becoming unprofitable.
Stock markets will revalue the impact of margin erosion
Foreign entrants, with possible loss leading approach

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Sydney NSW 2000
Phone: 02 8458 2666
FirstPath’s sustainability and longevity
Longevity is assured by:
- Focus on complete product offerings
- Already profitably selling at NBN pricing where a Superfast -
Declared product (25/5Mbps) is charged at $27pm
- Continued focus on agility, efficiency and productivity
FirstPath continue to increased profitability and margin in the most
competitive geography in Australia demonstrates our sustainability
FirstPath current owners each have over 20 years of building and
running strong businesses
Back-office systems are world class

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Sydney NSW 2000
Phone: 02 8458 2666
Call for Interest from Investors and Lenders
FirstPath
(Australian Telecommunications Carrier)
Call for Registrations
Infrastructure Growth Funding
Round 2, 3 & 4
Enquiries to email: Stephen.Carter@FirstPath.com.au
If you are an investor or funding organisation that has an interest in
participating in an infrastructure company like FirstPath we welcome
your registration for our “Investment Pack”

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Sydney NSW 2000
Phone: 02 8458 2666
Contact Page
Address
Sydney NSW 2000
Phone
02 8458 2666
Website
E-Mail
Stephen.Carter@FirstPath.com.au
Facebook
facebook.com/firstpath.australia
Twitter
twitter.com/firstpath_au

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Thanks For Listening
Stephen Carter

firstpath-commsday-speach-july-2015-(final)

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