first of all I would ebable HSRP tracking on branch1, like this:
standby track ser0/0 10
This will lower the hsrp priority to 90 when s0/0 is down, so branch2 will become the active hsrp router.
However this will not prevent your dialer-watch to activate the BRI. Since the dialer-watch will only do this when the router has no route to 172.16.16.0/24, you need to check why the router does not have this route when the primary link fails.
From the partial config you posted, it is not clear how you do the routing; is it static, or do you run a routing protocol?
I don't think there is a solution using static routing, since a (floating) static route via branch2 will cause the dialer-watch to never become active.
So you'll need to run a routing protocol between the 3 routers. When the primary link then fails, branch1 will still receive its routing info via branch2. Only when branch2 (or its serial) goes down as well, branch1 will have no route and the dialer-watch will activate the isdn.
We are pleased to announce availability of Beta software for 16.6.3.
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