John Linton ....one or two 'clouds' may even have golden linings.
We keep working on the finer details of our next 24 months and beyond financial and business plan. This has involved more than usual contact with our major current and prospective suppliers and a great deal of work on trying to come to grips with new technologies and new, to us, hardware and software. We have also been reviewing our implementations of the new technologies we have introduced over the past two years, at a great deal of financial and operational pain.
One good thing that has come out of our 'pioneering' P2P controlling and caching solutions has been the slow but now marked changes in the user profiles of our ADSL1 and ADSL2 customers and the significant cost benefits that have been achieved over the past two years in terms of the costs we incur per customer in providing the access to to the sources they require.While I always regret losing any long term customer (I look at the number of 'first thousand' customers who are still with us almost daily - and am still very grateful that so many of those 'early adopters' are still Exetel customers and am always sad when one of them shows up on the churn away list) Exetel's customer profiles have changed markedly over the last 18 months.
Average usage per customer that was inexorably rising over the first four and a half years of our existence 'peaked' in May of this year and over the past 6 months has gradually, and very slowly, been declining month on month.This is not only reflected in our usage:customer ratios but in the churn away reports which show an ongoing flow of our heaviest 'down loaders' leaving Exetel to, overwhelmingly, go to TPG. While TPG remains the second most common 'churn to' Exetel source (BigPond remains the largest) the plans selected by TPG churners to Exetel are seldom our highest download plans but are overwhelmingly the low and low/medium usage plans. In general terms this is a very positive 'sea change'.
The other major change we can see since implementing P2P controls and P2P caching is the ongoing flattening of the usage across the 12 hour "off peak" period that is generating an efficiency increase of almost 20% since we commenced those implementations as well as now generating over 700 mbps from the cache at peak usage times - bearing in mind we are still operating quite heavy restrictions on P2P traffic but now the cache is more than compensating for those restrictions by delivering more than we are restricting at and delivering it at higher speeds an increasing amount of the time. When the Pipe and Akamai contributions are added to the PeerApp it now quite common for the three caching services to deliver well over 1 gbps of customer traffic in peak usage periods.
So we are encouraged, despite the great pain we endured, that our 'pioneering' of those two technologies has in fact been more than worthwhile in both financial and operational terms and we will continue down those 'paths' over the coming 12 months. We will plan to add the third of those 'enhancements' in the immediate future to complete the processes we thought would be very useful more than two years ago.
2008 has just 'zipped by' and we have begun to look at our IP costs and needs moving forward. Although our contracts for IP don't expire until the middle of 2009 we always begin the 'discussions' early to allow our suppliers to overcome their internal 'just too late' inertia of not understanding that Exetel always has and will continue to ask for quotes and then make a decision based on the quotes received with no 'negotiation'. People often question/criticize my method of buying but, over more than three decades I've applied it in my personal life to buying and selling houses and cars and other major domestic acquisitions and in commercial life to buying everything. It works for me in that if I get a price I'm happy with I don't agonise over the fact that I could have got a better one and it does save a lot of time.
A couple of potential suppliers of IP have tried on the "well, with the decline of the dollar..." and "well, as you know Pipe won't be able to...." to which my response is always "SX recently achieved a fourfold decrease in its bandwidth costs and I expect to see those savings reflected in your next pricing quote to Exetel or don't bother wasting your time". I expect that we'll get lower pricing for IP when the current contracts are renewed or that we will change providers to one that will provide lower prices than we currently pay.
Similarly we would expect the cost of ADSL2 services to fall at least 15% over the coming year, one way or another, and we will have find ways of making that happen with the relatively restricted options we have for those services. I'm encouraged by recently resolving the problems with AAPT which will allow us to offer around 10,000 of our current ADSL1 customers a 'no brainer' move from ADSL1 to ADSL2 with no downtime and no increase in monthly cost but much faster speeds while meeting their needs of keeping their telephone line rental with their current supplier (something I personally don't understand but is obviously very real). It will allow us to reduce our spend with Telstra by 25% or so in 'one fell swoop' which meets a part of that major 2009 objective.
Similarly our mobile costs will reduce by around the same amount, 15%, either from our current provider or from a new provider in early 2009 and we will 'share' those reduction 50/50 with our mobile customers. The same quantum of reduction will also be likely on both VoIP and PSTN call charges and similar reductions are being 'volunteered' by many of our smaller suppliers.
Our main issue will be getting SPA rates that allow us to offer sensibly priced services to Australian customers - particularly to rural customers. We will continue to work with Optus to achieve those objectives but we do have at least one other real option.
It almost feels like Christmas with all of these cost reductions being 'offered'. Of course the reality is that business is getting tougher for our suppliers as well as for us with more than one supplier bemoaning the 'going out of business' impacts on both their revenue targets and the P and Ls to date. I take no pleasure in such happenings but the 'ill winds' do blow some good and the 'dark clouds' do occasionally have a silver lining.
PS: I'm on the edge of my seat, breathlessly awaiting, Krudd's report on the net result of the "Ideas Summit" he p***ed away more money on earlier this year than he just stripped from supporting fauna and flora. What a wonderful thing it will be to completely transform Australia using the insightful and brilliant thinking those total wankers who attended that "summit" and whose costs then murdered so many Australian endangered species to construct their wankerish concepts that will never be considered beyond that total waste of money.