John Linton
The telecommunications business is very tough and viciously competitive with high entry investment required and constant re-investment in infrastructure a month by month essential. Margins are low and deceit/fraud by a percentage of customers is endemic. Not the easiest scenario in which to make a sensible return on your capital at the best of times. You can never have too much money to invest in this business.
What really makes this business tough is the over billing by so many carriers and service providers which, because of the huge transaction volumes, is difficult to detect and can make a low margin business a no margin business almost indetectably. This over billing quickly runs through the capital reserves of a small company.
Exetel has many tens of thousands of users to whom we supply ten different services and we buy from up to ten different providers in supplying those services. Our Telstra Wholesale bill alone is over $1 million a month and our Optus Wholesale bill is approaching $1 million a month with several other bills above $100,000 a month.
We recognised from the very start of Exetel that control of customer payments (and defaults) and control of supplier bill accuracy was at least as essential to the viability of our business as 100% uptimes and sustained fast throughput of the services we sold.
What we didn't fully understand was that various suppliers would have such difficulties in billing their services accurately especially when they introduced new services and we certainly didn't anticipate the magnitude of the deficiencies in their billing systems. My previous experience in carrier bills was that there were many errors but the errors in the customer's favour cancelled out the errors in favour of the supplier over time.
For the first two years of our operation we took our time developing our own billing systems as we added new services and ensured that those billing systems not only were 100% accurate but were comprehensively reviewed on an ongoing basis and changed to meet the changes in the supplier bills that generated the input. As we developed each billing system we also developed the 'reverse' billing system that checked the input we were receiving from our suppliers.
Our intention was to be able to predict to the last tenth of a cent what we should be charged for the ever changing volumes of charges from our suppliers and ensure that we on billed all of the applicable charges at the planned pricing and therefore we achieved the planned profits. This is a very difficult and time consuming process and needs high skill and dedication levels and it's something that I had never been involved with in previous companies.
If we hadn't done it we would have been broke long ago.
At least two of Exetel's suppliers have billing systems that were/are so bad they couldn't actually bill within 20% of the real charges that should have been made for over six months - and strangely their billing systems never undercharged, they only overcharged. Not only were their billing systems hopelessly inaccurate the attitudes of the people within the supplier were aggressively demanding and they simply refused to recognise that their systems had such major deficiencies they were not fit for use and they, and the services they billed, should never have been deployed or offered.
In the case of one supplier Exetel overcame the issue by only paying based on our purchase orders - this suited the supplier because they received their money on a daily basis within 48 hours of providing the services - as opposed to offering 30 day terms and then having part of the payment delayed while the disputes were settled.
In the case of the other major supplier it has taken Exetel over 9 months of constant 'toing and froing' to recover over $500,000 of overpayments made by Exetel going back over an 18 month period (we had to make the over payments because our policy has always been to pay the face value of each invoice and submit a claim for credit to be subsequently settled and in our very early days we couldn't risk the services being suspended as the supplier refused to accept there was any sort of problem). It's probably cost Exetel over $150,000 in personnel and system development time (and far more than that in loss of business) but if we hadn't done it we would no longer be in business.
I like to think that Exetel is an extremely efficient company despite its very small size (which it almost certainly is) and I really have problems understanding how companies so much larger than Exetel can make such a total hash of both writing and then debugging fundamental programming code essential to the provision of their basic services.
If their wholesale billing systems are so error ridden I wonder what their retail billing systems are like?
My only comfort, and it's very cold comfort, is that they would have been billing their other wholesale customers who used the same services equally wrongly and, if those customers haven't picked up the errors, probably are making 'life' very difficult financially for those organisations.