Woosh has just reported a loss of $21.8m for the financial year. It just goes to show that providing competition comes at a huge cost and is not something for the 'faint hearted'.
When you are spending huge $$ rolling out a network and struggling to sign up customers it doesn't really come as surprise. The big question now is whether they can reverse those losses, it's going to take a substancial increase in customer numbers just to break even.
Charging a $99 connection fee for nothing and still forcing a 12 month contract is not going to cut it, people just ARENT interested. You can hook jetstream for nothing and KEEP the modem.
Don't not lock people in for 12 months after shelling out $99, you got your churn costs be done with it.
Allow people who have hardware (modems) to connect FREE as at the moment you charge the $99 and lumber with the 12 month contract, it costs them NOTHING to setup an "account" Do you want the customers who have handed-down modems or not!
Offering to people whom have bought modems, $20 DSE gift vouchers is an insult.
And rebrand yousrselves, there's no point pushing a "wireless" product which lives life stuck to one window!! I'd sooner get jetstream if my homeline was not going to cost $2000 to get installed.
Extend the coverage footprint & push it to the people who move about.
It's sad how it's evolved for the worse, I once had high hopes for it and now see it having a service life of about 4-5 years at best with it's current direction.
To succeed and still avoid churn.
Drop either the connection fee or the 12 month contract
Allow customers with bought modems to reconnect them at no charge or contract
Drop phone price to $50 and no contract term. Really, get a slice of reality.
I agree - but the government and TUANZ keep pushing the competition wheel barrow. I now wonder if Woosh fail how that will affect future investment in alternative networks. In 5 years time Woosh may be used as a case study in University economics classes.
Interesting that all the focus is still on 'big bad Telecom' and I don't see the government stumping up to help Woosh be successful.
I would rather my tax dollars go to Woosh than to Te Wanaga o Aotearoa.
Is Woosh still working to expand their network? When the public share offer failed, I figured that would put the brakes on their network expansion unless they can significantly increase their customer base. I agree with paradoxsm that this won't happen unless they remove all of the risks and barriers faced by their potential customers.
It's really unfortunate to see Woosh struggling considering that they do largely provide a good service, and it often makes me angry that New Zealanders are so complacent when it comes to supporting competition. TV3's receivership 15 years ago and the demise of Ansett New Zealand are a couple of very good examples of New Zealanders being unwilling to support new market entrants. In my view, if people are unwilling to support companies who aim to compete with Telecom, then they have no right to complain about Telecom's alleged price gouging.
Here's an interesting question that I'd like to throw out there: Do you think that companies investing in WiMAX infrastructure will also struggle to return a profit? If not, what factors do you think will differentiate them from Woosh?
For WiMAX I think it will depend on how much is invested and how far the network goes. I think one of the failings of Woosh is trying to expand to far to soon. They should have probably focused on Auckland first in making it the best and most competitive broadband network with awesome coverage instead of the patchy far and wide approach they have taken.
A smart WiMAX operator would focus on one area with minimal investment.
Jama: For WiMAX I think it will depend on how much is invested and how far the network goes. I think one of the failings of Woosh is trying to expand to far to soon. They should have probably focused on Auckland first in making it the best and most competitive broadband network with awesome coverage instead of the patchy far and wide approach they have taken.
A smart WiMAX operator would focus on one area with minimal investment.
Yep, well said. Restricting infrastructure investment to one particular geographic area would mean that marketing, customer support and maintenance costs would be incurred only in that area. It seems like a sensible strategy to maximise cashflow while the business is in its infancy, hence ensuring that there are funds available for continued expansion.
Perhaps this is the approach that Econet are taking with their UMTS network.
mpmorrison: Is there a press release with a statement from Woosh to say what the reason for the loss is?
I assume that the hardware that they've been invested in over the last year would have been capitalised, but I wonder about the resource consents? That could be the reason for the huge loss.
Otherwise, a marketing blowout may be a possibility. I'd be interested to get my hands on a copy of their annual report.
I got an email back quite smartly from them and they seem to have taken some heed.,, Hopefully this will have some effect on how to treat customers, I think they are still in a learning curve.. rather than trying to make money from nasty stinging fee's and "policies" with disgruntled short term customers, introduce them to the network with a "go as you please policy" with a pleasant experience they will comment about. if someone reduces their plan, so be it, they are still connected to YOU, a $99 fee would see me switch instantly.
Good on them for being the only ones not to whinge about "unbundling" and release alternative phone and email services to the market. I'd like to see them succeed.
paradoxsm:
Good on them for being the only ones not to whinge about "unbundling" and release alternative phone and email services to the market. I'd like to see them succeed.
Telecom and Woosh make a lovely couple together. Telecom use them as proof unbulding isn't required and Woosh are happy to back Telecom and insist there is nothing wrong with the current regulatory environment. Remember Bob Smith is the former Mr Xtra . .
I'll put $20 on Telecom buying Woosh in the future. Their current losses are unsustainable and with nobody else out there wanting to invest money into them the current investors have no choice but to invest more of their own money or walk away from the whole business.
I'll put $20 on Telecom buying Woosh in the future. Their current losses are unsustainable and with nobody else out there wanting to invest money into them the current investors have no choice but to invest more of their own money or walk away from the whole business.
I'm not sure how the Commerce Commission would react to Telecom trying to purchase Woosh. They certainly wouldn't let it happen easily.
The article that Jama refers to notes that Woosh's owners are "experienced infrastructure investors", and I think it's fair to believe that they would have made their initial investment with the expectation that it would be a hard road. The risk is that, because there are such a small number of investors, one of them walking away could prompt the others to do likewise.
Woosh's situation reminds me a lot of Prime Television's early days. Prime was losing money hand over fist to begin with, but now seem to have some clout in the market. It's really too early to say how Woosh might fare in the long term.
Jama: NZ Herald are reporting that Woosh have secured another $29M off their already bleeding investors.
Don't see Telecom buying them. Telstra Clear? who knows given that the fire sale value is around $20M why would you sell?
The gear alone is worth more than $20M, why would Woosh sell out to Telecom at a bargain basement price?
It would be more realistic to sell on a regional basis, or direct to Telstra - rememeber the technology can easily be modified to be used as a cellular network....
Are you subscribed to our RSS feed? You can download the latest headlines and summaries from our stories directly
to your computer or smartphone by using a feed reader.
Trusted
Biddle Corp
Lifetime subscriber
