Wednesday, November 5. 2008If I Had $A44 Million To Spare......John Linton ....I wouldn't let a marketing department throw it away on selling (giving away) Apple iphones...... which today's SMH (page 23) reports that Optus did in the last three months and have noted it as a charge to their quarterly results. It just seems unbelievable to me that Optus, or any large company - such idiocies aren't confined to Optus, can throw away such huge (to me) sums of money - more than Exetel's total revenue for a year - on providing tens of thousands of total wankers with a free toy. If the information reported is correct it seems that Optus has spent around $2,500 per HSPA customer it obtained from this promotion - an incredibly stupid amount to pay for to acquire a mobile user under any circumstances. When I think of the haggling, intransigence and moaning (on the part of Optus) when we try and get a tenth of a cent or so off the cost of HSPA minutes and then read that - I get really and seriously annoyed. What's the point of working yourself to near death to try and do the right thing by your supplier(s) and your customers when a bunch of idiots are throwing away that sort of money because they're too stupid and too bone idle to actually work out how to introduce a new service without wrecking their quarterly figures? It's enough to make you just give up. I will be very interested to be told, yet again, by Optus that their margins on HSPA are so thin they can't accommodate any of Exetel's reasonable requests to actually provide the base service at a more reasonable cost than they currently do. I continue to find it really, really strange that we can get better pricing, by 70%, in the UK from people we've never dealt with than we can from a supplier we've dealt with for almost 5 years and from whom we have had to put with so much grief. They can lose $A44 million on giving away iphones, they can retail 5 gigabytes of HSPA data for half what they wholesale it to Exetel for, they can charge double what any other mobile provider charges us for mobile minutes over HSPA but Exetel is so stupid (and unimportant) that they can't find any way of making their HSPA pricing sensible enough for us to provide a service that it should be possible to provide (except by making a loss for 12 months). Reading such lunacy first thing in the morning (lucky it was after a night's sleep rather at the end of a tiring day after a Scotch or two) makes you aware of why communications services are so expensive to wholesale customers from some Australian suppliers - they lose so much money on their retail promotions they try and recoup a bit of it by over charging small wholesale customers who in turn have to pass on those costs to their own end users. A closed circle doomed to failure sooner rather than later. Why on Earth do these carriers even bother with a wholesale operation if they aren't going to operate it as a benefit to themselves by reducing their cost of sales and support and therefore offering a true wholesale price that reflects real savings? I understand in Telstra's case the legislation requires them to at least pretend to have a wholesale operation but no other carrier is similarly constrained. It's only when you get the occasional 'jolt' from reading such things every few months or so that you are, once again, reminded that there really is no point in being a small communications company in Australia who relies on large carriers to provide base services. I can't remember now when it ever was - those scenarios are lost in the mists of time and too much alcohol over the years - but I suppose it must have been at some distant past period of my life. Maybe it wasn't ever a sensible thing to do? It certainly isn't now. As far as I remember an organisation that operates a retail and wholesale business does so because a wholesale customer delivers an identical profit to the business and reduces the costs to the business as well as providing increased sales. Apparently that isn't the case in Australian communications and it is long past time for Exetel to get out of attempting to add value to the services it buys from Telstra and Optus - it is so well past the time that I must be out of my mind to still be attempting to build a future business based on these stupid assumptions. I've never thought of myself as a person given to thinking malevolent thoughts about individuals or groups of human beings or even getting depressed for more than a few minutes at a time when confronted with some of the more bizarre inanities perpetrated by members of my species. I've always shrugged my metaphorical shoulders and moved on - with the occasional rant about the idiocy of some people/organisations - life is too short to do anything else. However there seem to be an awful lot of things happening over the past 12 to 18 months that have made me doubt my fitness to remain dealing with supplier companies and people, and it must be said even some of our own customers, as it more and more often seems to me that I have absolutely no ability to comprehend why they do and say the things they say and do which, more often than not these days, seem to be either outright lies or actions intended to cause criminal damage. Not nice thoughts to be crossing what's left of my mind so early in such a pleasant day - or, come to think of it, at any time of any day. PS: Fortunately for us, I didn't get around to selling our bank shares in time yesterday so my hopelessly incorrect picks in the cup didn't complete the annihilation of what remains of our super fund. At least one bright spot to ameliorate the day. Trackbacks
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Oh well. I guess they are much larger than Exetel so they can greater afford such significant expenditure.
In a way I'm glad they did it, because I think the introduction of the iPhone has been what's triggered the recent wars on HSPA prices with all carriers - even causing Telstra to drop NextG via mobile pricing from $30=80M to $10=150MB. If they hadn't done it, perhaps the HSPA prices would still be higher on all carriers. So far as not being able to get cheaper prices out of Optus, and the wider issue of being dependent on the wholesaling carriers, I don't see that there's any solution to this. The only true way around it I can see is to build your own network entirely; but that is surely impractical - so I guess there's nothing to do but keep competing and riding the price changes as best you can? At least, when prices change for the others they presumably change for you too. For the big carriers, I don't really understand why they'd want to have wholesale customers. I guess it's guaranteed income for them in a way without the hassles of end user support; but otherwise isn't it effectively competing against themselves? Hopefully your day improves Sounded like it wasn't a great start! Comment (1)
My day is irredeemably screwed and I don't trust myself to make any attempt to address the many problems and issues I'm already behind schedule in addressing.
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you may need to play the same game as the retailers have to play when you can't get a tenth of a cent off, you hit them up for marketing dollars instead, how they sort the figures on their side and call it what they will doesn't really matter as long as you achieve the end result so let them call it marketing support rather than a discount if need be
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That might be the way to go - it just goes against the 'black and white' way I like to do business.
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Maybe you could convince them you are their "low cost arm" - something like what Jetstar is to Qantas.
..... while still keeping your independence. Comment (1)
They've already got Virgin for their "Low cost arm".
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John,
what ever made you think you're in a game where you will one day get a fair go? your wholesalers are laughing in your face all day every day and don't give a damn because they make the $ anyway....you just happen to be a "service" provider for the big boyz!... As the say goes, "if your going to get off your doggy bed on the verandah and go run with the Big dogs in the street be prepared to get mauled!".... Where do you really expect to be in 1, 3 and 5 years time? maybe you should take a close look at the yless4u network and have a think about building you own networks.. Sincerely Bruce Stewart Comment (1)
Hi John,
I think you will find that with some telcos in Australia, the cost of hardware is a means of exporting cash to other countries, Singtel does not care about Optus producing a reportable profit, it just cares about how much money it can bring back to Singapore by whatever means, that's the impression i sometimes get from this industry anyway. Or these companies are just stupid sometimes. Or I'm getting crazy irrational nationalism thoughts. Comment (1)
Although I understand your frustration in regards to seeing your supplier wasting it's money on gimmicks, which means they are unable to offer you discounts on services provided, it still doesn't make you a big man because you can swear 4 times in 2 lines of text.
We all feel the same frustration, my suppliers put their prices up 25% and 20% respectively for the core product my business provides to customers, and then went and poured money into sporting events and gave away product (gave away the same product I sell and provide professional services for). It's dissapointing that the bigger players dont want to share the ball, but sometimes we all need to wait until it's our turn to have a kick for the goals. Comment (1)
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