John Linton .......are making profits for its shareholders....as is so often stated by people who know nothing about Exetel or its owners.
I was asked to attend a meeting last Friday afternoon with a representative of a largish company that provides “employee benefits” to a range of Australian corporates who contract this company to ‘package’ a range of essential services the average person might need and provide the services at lower prices than are available by the end user going direct to the various suppliers. For some reason either he or his manager had made Exetel one of the three ISPs they would consider as a replacement to their current recommended ISP.
He was a nice and businesslike person who, strangely I thought in the circumstances, visited us rather than asking us to visit his offices to 'present our case' (perhaps he wanted to 'check out' our premises). He asked a few standard questions about our company and then invited us to give him some reasons why Exetel would be a better choice than "the large and well known ISPs" and what type of discounts and special benefits we could offer his large corporate customers. We asked him what he expected in terms of pricing advantages and he said that the current deal he had in place was, and take a deep breath:
The first three months free
20% off advertised retail monthly charges
Free activation
Free modem
Soooooo....this ISP has so much profit in its pricing that it can happily reduce its monthly charges by 32.5% (20% + 12.5 % for the 3 months free on a 24 month contract) and it can also afford to give away whatever their cost is for the activation and modem.
We quickly explained that we couldn't begin to offer such incentives because our company wasn't "a standard commercial organisation" (he used the phrase - or something very like it with the same meaning) We explained that our average GROSS profit on our broadband plans was around 15%, less than half the discount being offered by his current provider, and that our objectives of being in business was to provide our customers with the lowest possible broadband prices (for any speed or download plan) but deliver a service quality equal to or better than the highest available from any other provider.
We suggested he calcuate the cost over 24 months for his current plans and then compare them to the costings we gave him of or current 'corporate personnel plans'.
We then 'stepped him through' our MRTG reports and explained how much bandwidth was provided to each PoP and how he could see there was no contention on our parts of the network. We also showed him the support call answer statistics over the past six months and fault repair times and some of our other metrics on service performance, fault resolution and the user help functions which (his words) were "very impressive" - which they are - very, very impressive.
When he asked about our 'size' we made the point that in ADSL terms we were certainly in the top 15 (by size of customer base) and quite likely closer to the top ten. He asked about how we generated our business and he was very surprised when we told him that it was all word of mouth and we did no advertising or other promotion but, using our audited accounts BDO/BRW confirmed (we showed him the 30th October BRW Issue) that our growth averaged 50% over the past three years in an industry where organic growth (according to the most recent ABS figures) averaged less than 12% over the past year.
His last question was why we didn't make more money as a commercial enterprise. Our explanation that our objectives were set out on our web site and could be summarised as:
1) Helping all Human Australians by providing communications services at the lowest possible costs
2) Helping Australia's threatened flora and fauna survive by donating one half of the small profits we make and contributing to enough tree planting to cover our carbon emissions
3) Helping people in the 'third world' by spending our time and using our abilities to generate real additional employment at real remuneration
Our visitor didn't know how to respond.
I explained that if Exetel were a "typical commercial organisation" our prices would be 30% higher and we would spend 5% of our gross revenue on advertising not on donating to Australian fauna and flora protection and to offsetting carbon emissions and we would be in a position to give him the sort of ridiculous discounts his current provider was giving from their ripoff list pricing.
I don't expect to be selected as the recommended ISP for this organisation as our company is just too different to what people expect to see. We are very different people to those who own or operate other Australian communications companies - and are very happy to be that different.