Sunday, October 31. 2010
I was thinking about how Exetel could make the most of the current 'opportunities' late last night as Arsenal were making laborious work of breaking down a packed West Ham defence, and very nearly failing to do so. I have often referenced here over the past 24 months or so that I can see no ways to make any progress in residential ADSL markets while the current endless 'win back' campaigns by Telstra continue to run and elicit the responses from other ISPs. Personally I don't think there will ever be any end to the current ADSL scenario because if Telstra don't win back their deemed residential market share within the planning period they are aiming for then they will intensify their efforts and if the do they will be encouraged to continue them.....on the basis if they let up then they will begin to lose the gains they have made. So, again personally, it would be financially suicidal for Exetel to base any part of its future on increasing its ADSL user base with the best that could be done being to try to change the composition of the current customer base to ensure we are able to meet the needs of a much narrower demographic than than currently exists.
I wont see the recurrent billing numbers until early tomorrow morning but I don't expect too many surprises and I am confident that any drop in ADSL revenue will be more than made up by business/corporate revenue and the profit will increase because of the much higher margins from business and ancillary services. My reason for making this 'brave' assumption is that the MRTG reports show no overall usage changes - which is comforting as we add 50 - 60 new business data links each month (sometimes more) and the 6 am to 6 pm business day usage has scarcely moved in the last 9 months. This has been significantly helped by almost all of the 'ridiculously heavy' down loaders moving away from Exetel over that time (by 'ridiculously heavy' I refer to customers who download over 200 gbs per month - month after month). So a combination of those customers moving away and 700 plus business data link customers signing on has balanced the use of our overall bandwidth among customers who are profitable....so there is very definitely a silver lining in so many other ISPs offering huge downloads for not very much money......depending on your views on customer retention of course.
So I was watching the frustrating soccer while skimming through the management reports and occasionally looking at the more detailed transaction reports. The trends are evident (because they have to, by weight of money and personnel, reflect the different efforts we put in to the various initiatives over the past almost 24 months). What remains to be done, in terms of planning, between now and 1st January next year is to decide how we move our current resources and acquire new resources to make more progress in the various different business markets and how we improve the offerings to the residential markets without losing more money in those offers than we currently do. As the football got ever more frustrating the rationales became ever so slightly clearer - in fact they probably have never changed in 4,000 years.....you just have to do something better than anyone else that can't be duplicated by other people easily copying what you do by spending more money......this point being emphasised by the money team Arsenal being kept goal less by the much 'poorer' West Ham for so long...money can't buy you everything despite the recent example set by Chelsea and the 20 year example of ManU.
So Song eventually got the ball over the line and a thoroughly disappointing game ended shortly after but I had got one 'new' idea so, on balance, it wasn't such a bad night.
Copyright © Exetel Pty Ltd 2010
Saturday, October 30. 2010
....or, if I wished to carp, a not unpleasing week.
It seems that we have been bashing our heads against the proverbial brick wall for so long without getting anywhere that any sort of glimmer of hope registers with much greater effect than it would ordinarily do. So the few slight indications of progress this week have produced the first rays of hope in the Stygian darkness that is the Australian residential ADSL marketplaces. These signs manifested themselves in a 25% increase in new ADSL2 orders for the week and a 20% increase in new ADSL1 orders - the first increase in a week on week intake for over six months.....new weekly order intakes for ADSL1 and ADSL2 services have been incrementally declining for almost a year.
We have made a series of changes to ADSL plans and pricing over 2010 without influencing the gradual decline in new orders nor arresting the gradual increase of churn away rates over the same period. For whatever reason the various changes we made over October seem to have revered those long term trends with the last two weeks showing the reversal finally in quite stark terms - especially when you consider that the last week of any month usually produces the lowest order intake of each month - this month was quite the reverse with the last week of the month being the best of the four.
I was also 'heartened' to see that the orders for the new wireless broadband plans were beginning to, very slowly, rebuild towards their pre 'price hike' volumes which may mean something or other but one thing it does mean is that we no longer have to make a loss in providing wireless services to the residential marketplace nor, and to me much more importantly, do we have to give up our independence (or ethics) by relying on some of the more odious practices that seem to becoming more prevalent in providing residential communications services.
Last week was a particularly good five days for our corporate data business as was the whole of October. One of the particularly pleasing aspects of last week was the major contribution to overall sales volumes made by our newest sales people who produced over 70% of the weeks new orders - that was truly pleasing to see. After 18 months of putting this 'program' in place there are some real signs that we will go close to or probably succeed in meeting our very ambitious targets by the end of 2011 - I hope I don't regret writing those words.....but then I'm not the slightest bit superstitious.
Our SMS and FAX and VoIP order intakes also continue to pick up after the price increases we put through in September which means the profitability for those services will also achieve a record in October. Although the total contribution from those services remains relatively low the trends are very positive and are going to be an important part of our smaller business initiatives in the new calendar year.
So, overall, it has been the best week we have had for a very long time and, personally, I am really glad to experience a week like we used to have in the 'good old days'. Life looks so much nicer when you actually see some positive results from your endless hard work - albeit it is only for one week.
Copyright © Exetel Pty Ltd 2010
Friday, October 29. 2010
We will, probably, put the free ADSL2 plans on the web site today and release them to current customers via the November newsletter but I have little expectation for much success from this stage of that process...even free in today's market doesn't have the attraction it once did. I am not sure what it might take to successfully promote residential ADSL2 services in today's 'environment' but evidently it seems to be beyond my capabilities or gambling willingness. It needs a completely new way of looking at things which I clearly haven't been able to achieve; at least to date. Co-incidentally, I had a chat yesterday with someone who clearly has been very successful in this tough market which he undoubtedly played a part in creating to seek some advice on my part - as I didn't initiate the meeting I'm still not clear what his motives were. I didn't learn anything I didn't already know about residential selling - but then I really didn't expect to. I'm pretty certain I didn't tell him anything he didn't already know about corporate selling so I'm still unclear what the purpose of the meeting was other than "to catch up after such a long time".....If I had to guess, I think it was probably sounding us out about buying wholesale services from them.
Maybe that is the solution - buy from a lower cost wholesaler, though it's difficult to see how that would work. To date, that hasn't been possible as Telstra has maintained its preference since the Tex/Mex carpetbagger days of selling retail lower than wholesale and while Optus has done its best not to do that it has its own requirements to build market share and make commercial returns dictated by a foreign parent - that are more than reasonable and understandable. Perhaps it will become possible now with one or more new wholesalers trying to more rapidly build their businesses via wholesale 'strategies'. Somehow I can't see that happening - but who knows in these strange times. When I think bout it perhaps 'the other party' was just gauging how much problem he would have in making inroads in to the business markets as he has done the residential markets?
So I will do my best today to summon up the enthusiasm that is needed to begin a new phase of ADSL2 marketing and also try to finish off the month on a positive note in the other areas of the business. If that sounds like I am depressed it's probably because of an email I read just before starting writing this blog which I think sums up the futility of the current residential marketplaces. Yesterday, Exetel reduced the new activation price of an ADSL1 service from $120.00 to $60.00. The abusive email I received was from a current Exetel customer who said:
"...typical f***ing Exetel inconsistency changing prices every five minutes because you are obviously insane without a clue how to run an ISP. I demand a refund as I paid your rip off $120.00 only 5 weeks ago"
I wonder what he would say if we had increased the activation price? Sometimes you wonder why you bother.
Copyright © Exetel Pty Ltd 2010
Thursday, October 28. 2010
.....it never seems to work for me - no matter how much time and effort I put in to it and irrespective of how many years experience I have.
We moved from our rented premises in North Sydney on May 31st in 2009 to our own purchased premises a hundred or so meters away which had 50% or so more space. Within six months we had to buy more space four floors up in the same building. Now, some nine months after that we are about to run out of space again and although we could scrape by for perhaps another six months by really over using the current space and increasing the number of people who work from home it wouldn't be anything like a sensible solution. We made the same mistake in renting floor space in Sri Lanka taking more space twice on the initial floor we rented before taking a deep breath and nearly trebling the space we rented on a new floor and reserving the remaining 20% on that floor on a first refusal basis for two years.
We have yet to finalise the re-working of the plan for the second half of FY2011 but it is evident that we will not have anything like the space we need if we are to add the numbers of people we look like needing. Even if we continue to grow at the more moderate rate we are achieving over the past few months we will need more space.....and increasing your longer term overheads (as well as incurring the significant up front costs of fit outs) in the brutal market conditions we are experiencing at the moment is a very brave/foolish decision. Like all 'top management' decisions there are no easy answers.
So Annette has been investigating the possibilities with our preference to buy space rather than to rent (strangely our bank seems more than willing to lend us the money to buy - we must have done something right) but it is proving difficult to find what we need in North Sydney and we don't want to incur the price premiums for space in the CBD. We have, fortuitously, been advised that almost the whole floor below us is about to become available and we have briefly looked at that. If we can't find somewhere to buy (the owner of the floor we are considering want's too much money for us to seriously consider buying that which would have been an ideal solution). So we, yet again suffer the consequences of being too timid in accepting what our planning shows us we will achieve....in the latest case it showed quite clearly that we would need more space than we had by around this time.
One alternative is to scale back our plans for next calendar year. That poses a different set of problems in that once you scale down your growth plans you change many 'dynamics' within your business - particularly in personnel expectations and 'morale' - being part of a continuously growing company is something that you would only purposely move away from with great reluctance......for all of the obvious reasons and more less obvious reasons. So obtaining more space that will be usable by very early 2011 has become something that now has priority to 'finalise' (in terms of options, fit out prices and rental commitments/purchase funding) irrespective of whether we actually go ahead and do it or not.
One more thing to worry about.
PS: For sheer commonsense backed by reality and experience this man is hard to beat when it comes to putting the inane writing on the 'NBN2' in place:
Copyright © Exetel Pty Ltd 2010
Wednesday, October 27. 2010
I'll look a bit of of a ****head.....or so this and other statements in the public domain seem to mean:
If I'm reading this, and other statements made by the CEO of Internode, correctly his 'negotiating' and public whining has allowed Internode to "force" Telstra Wholesale to reduce the prices at which it sells ADSL2 services to Internode. This has resulted in Internode now being able to offer Telstra ADSL2 services at far higher prices that Exetel already sells the same services. Exetel hasn't had to "huff and puff" either directly to Telstra, the ACCC or make whining comments about Telstra Wholesale in the public domain - nor has any other Telstra Wholesale customer as far as I have noticed. I wonder whether Internode gets better prices from TW than Exetel does? I will never know but, based on their "just released, new, lower" prices it doesn't look like it.....but then.....
.....These are very tough times and it appears from the 'carry on' that Internode have been indulging in that their business is not going as smoothly as they believe it is their right to operate under in all phases of all markets at all times. It is one of the more obvious 'public' signs that ISPs in Australia are not finding the current market conditions to their liking. TPG's continual 'price cuts' are another of the more obvious signs and the closing of iinet's corporate mouth is another. But you would have had to have been truly stupid not to have realised that Telstra Retail's frantic give aways over the past year or so to "regain market share" would have resulted in exactly what is now happening and that Telstra's CEO's statement that they would be spending an additional billion dollars on "regaining market share" would only make Australian ISPs think of the previous twelve months as "the good old days".
We had one of our periodic meetings with Telstra yesterday (no "huffing and puffing" - just the sensible business discussion as to how/if we could do more business with each other at our low volumes) but the usual 'frank exchange of views' on our behalf. One of the things that we discussed, me bluntly - TW carefully, was there any long term future for Telstra to operate a wholesale business at all? In a future world of 'NBN2' what place was there for a 'sub-wholesaler' when Telstra had to buy residential services from a government monopoly that, by definition, was going to have to operate a true wholesale business based on true wholesale tiered pricing? Of course there was no view other than the expected conventional comments by TW on this issue - there couldn't have been otherwise - but the issue is very real in the future and not just for Telstra Wholesale. The same issues would affect Optus Wholesale in terms of residential wired/fibred services and any smaller company that aspired to wholesale residential services.
I made the blatantly obvious point that when a wholesaler (such as Telstra) announces that it is prepared to forgo a billion dollars of profit in one financial year to "win back market share" what is that expressing for its belief that wholesale customers play any part in its future? By the way I'm not, for one moment, expressing the view that wholesale should not play any part in Telstra's 'NBN2' future but the federal government has committed itself to becoming the 'new Telstra' as far as residential services are concerned; and maybe as far as SME services are concerned. I don't think it would be very sensible for Exetel to plan on any wholesale future with Telstra at a residential or SME level but then my thinking is seldom even tangentially similar to 'main stream' thinking in this industry. We wil look at TW's new proposals regarding various services positively (as we always do for any supplier) and hopefully their interests and our interests will coincide well enough for positive outcomes to be achieved on several 'fronts'.
What is very clear to me is that 'support' (in new meanings of that word) is going to be far more important in a government dominated communications industry than it ever has been in the past. It maybe fortunate for our small company that we began planning and implementing for that four years ago.....or maybe that was just happenstance rather than foresight.
Copyright © Exetel Pty Ltd 2010
Tuesday, October 26. 2010
.....to the end of this very challenging fourth month of this financial year. It is some sort of sign of the difficulties of the times when you start looking at business life a day at a time. Yesterday was a very productive day with all aspects of the business, even ADSL2, making more progress than at any time this month and business data services powering towards its best monthly result in 2010 to date. We should reach our planned October overall revenue target either late today or early tomorrow which will be an excellent achievement after the 'slow' start to the month and the current situation in many of the markets in which we operate.
We even started to put the initial parts of our planning for the second six months of this financial year in place yesterday. That was determining just how we would re-organise our sales operations in 2011 moving further from our inbound web based sales approaches to a multiple outbound sales organisation in residential, small business and corporate markets. Of course, it's one thing to make decisions on structures and quite a different proposition to then put the people in place who will make that work in the ways you want it to let alone then acquire the additional people required to meet the new, much higher, sales targets. However every new initiative begins with the plan and then the people and then the training and finally the delivery - so we have made the first of the many decisions that will be required to make the planned progress in the coming new calendar year.
One of the decisions we have yet to make is whether we continue with our, to date very successful, policy of hiring university graduates and undertaking the 'burdens' of helping them develop from their 'tabla rasa' state of understanding and knowledge of working in a profession or whether we 'leaven' that intake with some experienced sales people. We are getting an increasing number of unsolicited resumes from 'experienced' people who work in the industry who give various reasons for seeking a job with Exetel - the two most recent ones from people who work for competitors who continue to lose their clients to us. (I suppose they don't see the irony that their experience and knowledge hasn't been of much help in losing accounts to people who have been in the work force for less than a year and who had zero knowledge of the industry before they joined Exetel). It's a difficult decision to make and one that becomes totally dependent on the individual person who applies - I don't think we will go down the pro-active advertising/head hunting paths.
I think the most difficult thing we have to do is to more closely integrate our Sri Lankan sales personnel into the overall selling of services in Australia. There has been very impressive progress in inbound sales results achieved in Colombo with strong quarter by quarter growth in overall sales made by the in bound sales personnel there.....especially considering the difficulties experienced in the ADSL markets over the past year - number of sales per sales employee have increased impressively throughout 2010. However outbound sales is a very different process to inbound sales and just how we get that to work in the ways we envisage is going to be a true test of planning and training. I look forward to seeing how well we can accomplish this very important set of tasks over the coming 2 - 3 months.
So, a lot to do today including finding ways to re-build ADSL2 sales to the required levels and to straighten out just where we stand with various suppliers in those endeavours.
Copyright © Exetel Pty Ltd 2010
Monday, October 25. 2010
....one way - then find a totally different way.
It's going to be a busy week with the finalisation of the remaining ADSL2 plans for the next month and putting some real work into the 'total' small business offerings as well as adding the 'dummy' portals for the various offerings to the web site. Then there's the first major work on the business plan for the second half of FY2011 and the decisions on how 'brave' we are going to be in terms of re-vamping our management structure. There is enough work in those aspects of the business to keep the people involved in it fully occupied except for the fact that this is the last week of the month and we need to ensure we reach our overall targets for this fourth month of the new planning year.
As the rain pours down outside (so much for last night's weather forecast) and it seems to be even colder outside than it was yesterday there is a great temptation to delay the start of the day with a second cup of something and an even greater temptation to turn on the TV and watch the rest of the Man C/Arsenal replay which I fell asleep watching last night. However I will resist that sensible temptation and go to the office to do my share of the work needed to try and make sure Exetel has the best product and service line up possible in these difficult times and that we make the best possible use of our personnel and web resources to present them to possible customers.
We have spent a considerable amount of time over the years building 'back end' user facilities for our residential and business customers and now the customers of our 'Hosted VoIP' service. From the feed back we get these facilities are far better than those offered by other providers (both residential and business) and for that reason we have never made them 'publicly available' on the web site as a 'marketing tool' - I used to get annoyed when our FAQs and other help tools on our web site and forums "suddenly appeared" word for word on other ISP's web sites.....often with some of the original minor typos. However our less experienced personnel think we would benefit from having these key aspects of our services available for interested customers to see and we will make final decisions on how best to do that this morning.
The other 'can't wait' set of decisions are pricing the ADSL2 plans. With multiple terabyte or unlimited download ADSL2 plans the choice de jour of the crazier side of the market we will have to find something else - another direction to take. "Unlimited" is a powerful word in "marketing". However the MOST powerful word in marketing has always been FREE.......especially if it can be shown that the offer is actually genuine and usable. So what effect do you think selling ADSL2 with, say 10 - 15 gbytes for FREE will have on a marketplace that has over 50% of users that don't use more than 5 gbytes per month? I have no idea but I think it has more promise for Exetel than pursuing the zillion terabytes for $50.00 path all of our competitors (other than perhaps Telstra) seem to be going down.
Perhaps a free ADSL2 service with a reasonable download allowance, or set of allowances, will be a new direction in ADSL 'marketing'. I mean Telstra has pretty much made ADSL2 a 'free' service with its multiple 'multi-product discounts' so why not take that as the new base price for ADSL2? It makes a lot more sense. There would be 99.9% of the market that would prefer a free ADSL2 service with 10 or 20 gigabytes rather than a terabyte service for $50 or $60 I would have thought?
Anyway it will be an interesting set of discussions.
Copyright © Exetel Pty Ltd 2010
Sunday, October 24. 2010
A week to go until the end of the first month of the second quarter of what has all the ear marks of a really, really tough year. We will make all our targets, I think, except for our ADSL2 targets which we will miss for the first time in I can't remember when. However it has become impossible, at least for Exetel, to deal with Telstra's onslaught and the follow on reactions of other ISPs in any meaningful way so we will adjust our forecasts for the balance of this calendar year and beyond and concentrate on doing more productive things than selling services at a loss 'just because'...I say 'just because' as no other reason springs to mind for investing my time/other people's time/a great deal of money in providing products and services to people who can get them at lower prices elsewhere. There's simply no point in operating in a market that is going through the scenarios that are extant in today's residential ADSL2 market places.
On the bright side the current business markets are very 'buoyant' in terms of the areas we address (data links, VoIP, SMS, contract services and Fax) and the revenue and profit that is being 'whittled away' in residential ADSL2 is being more than replaced from business and corporate services. We will accelerate the hiring processes, if we can find good people, for corporate sales in Sydney by hiring six new sales trainees between now and Christmas as well as one or two more experienced sales support personnel. We paid for the new hardware yesterday and will 'run it up' over the next few weeks to deploy a cloud computing solution for the steadily increasing enquiries we are getting for such services over the past few months.
We have been spending more money over the past few months than at any other time in our brief 'company life time' on network hardware gradually moving the key points in the network from multiple 1 gbps 'boxes' to dual 10 gbps boxes and aim to 'complete' that part of the network upgrade program before the end of the financial year. Depending on just how things develop over the balance of this planning period we would aim to upgrade the capacity of the combined residential and business networks from the current 8 gbps to 12 gbps before June 2011....assuming that we can achieve the pricing we are looking for. If we do what we are contemplating doing we will spend almost as much money on the network over the coming 15 months as we have done over the previous almost seven years.
So the tough times continue to roll on.....but then what life be like without difficult circumstances to sharpen your mind and challenge your knowledge?
Copyright © Exetel Pty Ltd 2010
Saturday, October 23. 2010
.......so I took advantage of it being 'the weekend' and slept in for one of the few times this year.
So we dealt with ADSL1, pre-paid wireless broadband, postpaid wireless broadband, SMS, FoIP, MoIP, ADSL1 and some aspects of VoIP as well as reviewing our business EOC and Fibre offerings (without reaching a decision on those) and did most of the work on ADSL2 which will be completed next week. In doing so we looked at 8 larger competitors current and changed offerings and became ever more convinced that most of them are becoming quite panic stricken at the moment so goodness knows what will happen when all of the changes those companies will make percolate through the current minds of the current residential buyers. I don't think that any of the changes currently made, meat axish as they are, are any real indication of what is to come between now and Christmas.
Doubtless, in our larger competitors, there are much cleverer people than I am who have been involved in this industry for a couple of decades or more who would know exactly what has happened and is going to happen over the coming months and years. If there aren't then the chaos that is overtaking residential communications in Australia will not end 'prettily'. I also understand that the "worst effects of the GFC were brilliantly avoided by Krudd, Whine and Ms Faustus but Australia's general business community was, despite their lying claims, also dealt a massive blow over the past three years we have had a Labor government - at least according to the non-political ABS statistics:
Those are very ugly figures and when you consider the demise of Soul, Westnet, PeopleTelecom, Netspace and AAPT Residential as well as an unknown number of smaller ISPs over that period in our industry it puts in perspective just how hard business has been and still is - irrespective of what anybody says - for their own purposes (take out mineral exports and you have a very bleak landscape). So, apart from how good we have it in this country it seems to me, from what I observe of our competitors actions and what I observe in our own P and L that these
The one 'beacon of light' in this tough and demanding week was the ever more frequent ring of the corporate sales bell signifying another new data link corporate sale (8 yesterday). We continue to make progress in building an ever more knowledgeable and skillful corporate sales force and as well as the increasing number of data link sales made each
month the number of VoIP sales is increasing by similar amounts. What remained of the week was spent on VoIP and the new small business services which didn't get the time they needed due to everything else taking so long. Although we haven't made as much progress as we had planned (perhaps hoped would be a more appropriate word to use) I am very glad we have the current profit contribution made by corporate data services each month in these strange times. Our major focus now is to more rapidly build out the corporate market places we operate in and more finely focus the services we can provide and increase the differentiation between what we offer and what the companies we compete with offer.
I don't know whether these are interesting times. I am inclined to think that times are changing, and not for the better, across most aspects of Western societies and we may well, as a species, have seen the best we are able to create......or maybe I'm just too old.
Copyright © Exetel Pty Ltd 2010
Friday, October 22. 2010
I read this earlier this morning:
and was struck by two aspects of the standard whining from Internode and iinet and the self righteous posturing of Dodo. All these companies (and, of course including all other ISPs which of course includes Exetel) only exist because Telstra was forced to wholesale ADSL1 services and then chose to sell the same services at sky high prices for as long as possible which allowed many of those ISPs to make very easy money for over seven years. They made so much money they thought they were carriers and used some of the profits they made to 'bite the hand that fed them' and to install their own versions of the Telstra infrastructures in Telstra's exchanges and stop buying from Telstra and 'use their own infrastructures' - in other words set themselves up as a direct competitor to Telstra having used all of Telstra's investments to put themselves in that position.
This worked relatively well for a while until Telstra decided to compete more sensibly by doing exactly what these whiners had done - set their prices lower than other ISPs operating from the same exchanges and provide ADSL2 in 800 or so exchanges that all other competitors had not put their own equipment in. Does this sound unreasonable to you? I mean, is it unreasonable that one ADSL2 provider should not compete with other ADSL2 providers on whatever terms they choose to adopt? The reason that the ACCC didn't "declare" ADSL2 services was for this very reason - that any ISP could install ADSL2 DSLAMs in any exchange they wished to do so (and many already had with a bonus $2.50 pm line from local users to the exchange) and use any provider they wished to run back hauls from those exchanges. The result, from Optus on down, was that those ISPs who chose this path confined their installations to the profitable exchanges and, unlike Telstra's commitments under its USO, ignored the rest of the country.
Now they whine to the ACCC that Telstra has an unreasonable advantage and they want their sheltered workshop arrangements extended so they can simply use Telstra's investments for their own benefit - or that's how it looks to me. I don't seem to see any repeat of the previous boasts that they were responsible for 'driving down ADSL prices' because of their superior efficiencies and superior service - apparently they aren't superior in any way now but are actually inferior - at least in terms of price per month and activation cost and low cost other services. Do they want competition or not? Apparently not.
I was also amused to see Dodo's comments praising their new best friend - Telstra. Nothing wrong with the 'sentiment' but a little obsequious I would have thought. Dodo, like TPG and, to a much lesser extent Exetel have all, apparently, recently benefited from Telstra's slightly changed attitudes towards their wholesale customers. TPG, which has a larger investment in ADSL2 DSLAMs and back hauls than either iinet or Internode has simply recognised the reality of the current Telstra situation and 'done a deal' with Telstra to sell their ADSL1 and ADSL2 services in the exchanges in which they have no presence. They have been able to sell those services at lower costs than Telstra offers the same services (something that iinet and Internode are apparently unable to do) therefore putting in place the competition that Internode and iinet do not seem to be able to do. In a lesser way Dodo have done the same.
The residential ADSL marketplaces ARE a dog eat dog mess at the moment but if anyone is to blame for that it's the ISPs that thought a few years of umbrella pricing made them carriers and they 'poked the sleeping bear with a stick' one too many times....and got the predictable response. The reality has yet to play out but the next 12 months are unlikely to get any easier and almost certainly will get even tougher. I don't like what I see and while I am sure the whiners have much stronger balance sheets than Exetel does and have far larger customer bases I don't think whining to the ACCC will be of much use in addressing the ever bloodier 'bath' this industry has become - at least in terms of residential market places.
Copyright © Exetel Pty Ltd 2010
Thursday, October 21. 2010
.....that are the problem - the problems are how to deal with them.
There is never any shortage of 'issues' to deal with in taking part in running a business of Exetel's size and the diversity and novelty of what you get to deal with plus the sheer never ending demands sometimes seem too much for any realistic person to be able to sensibly deal with. It is never the 'big' issues that cause me to think that way - they are the acceptable and familiar part of business life which experience allows you to accept and deal with almost without noticing that they are very difficult and quite 'dangerous' - in a business sense. It's the endless 'small' issues that actually 'wear you down' and make you wonder why you bother.
I am not feeling particularly 'down' (I'm not sure that I know what that sort of feeling is - perhaps that means I am down all the time?) but when I listed the key things I had to do today it was a much longer list than usual and contained a very unusual number of issues that I had never had to deal with before and, really, never expected to have to deal with or even be aware of. Perhaps it is the fact that the 'big' issues have become a daily part of communications business life and the sheer amount of consideration they are demanding makes everything else seem too much of an added burden. On balance, I think it is trying to operate in a set of marketplace and supply environments that not only seem to become more difficult each day but show absolutely no indication of abating, let alone ceasing, to be that way.
I understand, and have for a very long time, that no matter how clearly and correctly any person 'sees' the future, it only partially prepares you for what that future actually entails. You can see the 'big' changes and you can even, mostly, pretty accurately determine what they will entail and what has to be done to avoid the negatives they will bring. In that respect it's pretty much like sailing - you can detect the slight changes in the wave movement, easily see the dark bar on the horizon and feel the change in wind direction and strength - but knowing that you will be enveloped in the storm within 10 or 15 minutes, and having shortened sail appropriately, never quite prepares you (maybe that's just never prepared me) for the actuality of the power that then envelopes you and the scariness of the experience - no matter how many times it has happened to you.
One thing is for certain in uncertain times is that doing nothing, or even delaying doing something, doesn't appear to be an option that it so often is in easy times. That of course poses the major problem of having to make more decisions faster that you have become accustomed to as well as knowing, fore certain, that some percentage of decisions you are making are wrong - to some degree - and hoping that not too many of your wrong decisions aren't seriously wrong and that you are making them fast enough to be able to correct the really bad ones before they do too much damage. So, assuming this scenario is actually what is required at this time it makes for very uncertain days knowing that what ever you are trying to plan for is also being planned for by many other companies all having different views on how they should change what they're doing depending on there own circumstances and how they are 'reading' the same aspects of what is happening as you are.....all with different objectives and all with different budgets to make whatever it is that they decide on happen.
One interesting thing that has happened over the past 9 months has been decline in average gbytes downloaded by Exetel's customers. This has several causes (many of which we would have no idea about) but the most obvious cause has been the 'loss' of the very heavy down loaders from around 3% of our total ADSL customers to less than 0.5% of total ADSL customers. This has made an enormous difference, a positive one, to our bandwidth usage in every State and Territory and, presumably, has made the people who left us as happy as the people who have remained with us. It is the most significant change that has occurred in our business since we connected our first customer over six and a half years ago and is going to be one of the major challenges we now have to deal with.
Another day another puzzle piece to find a home for.
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Wednesday, October 20. 2010
This caught my eye yesterday:
as we were 'completing the re-setting of the Exetel wireless broadband plans. Having previously commented on the gyrations in the US marketplaces by AT&T and Verizon in first offering 'unllimited' mobile device downloads for $US30.00 a month and then reporting the average download usage as much less than 400 mbytes per month for telephone handsets.Now Verizon comes up with $US15.00 a month for 150 mbytes.....makes you wonder who is counting the numbers and just what they are seeing....or whether successive reporting is reporting on different bases which is not being made clear in the reporting.
We agreed on and then added four new wireless broadband plans to our revised offerings yesterday:
1 gbyte for $15.00 pm
2 gbytes for $22.00 pm
3 gbytes for $30.00 pm
5 gbytes for $45.00 pm
All of the plans were based on premium provisioning with premium inclusions and we also slightly reduced the price of wireless modems though our assumption is that a very high proportion of people who buy from us will already have a wireless modem or will source one elsewhere. Together with the payu plan we had already put in place these options provide a real wireless service at very low pricing without any of the smoke and mirrors that is far too common with other companies offerings. Whether there is still a place for 'honesty' in product presentation in this part of the residential marketplace remains pretty doubtful.
We discussed 'matching' the just reduced Telstra higher download 7/12 gbyte plans (or their Optus equivalents) but we can't do that without losing money. This is because of our 'foolish' decision to continue to provision the wireless broadband service at full capacity to meet the peak demands of all customers at all times rather than to only aim to provision at 60% of that required capacity. Perhaps we are being foolish in actually trying to provide the performance level a residential customer assumes they are going to get but it just seems plain dishonest to me to do anything else....and I have never considered myself to be more morally 'upright' than my 'neighbour'.
What we have been able to come up with now, in terms of pricing, doesn't begin to address the path started down by Optus of course - and what is already available in the USA from AT&T and Verizon - unlimited data downloads at very low prices in the US ($US30.00) and unaffordable prices from Optus ($A90.00) at the moment but prices that are certain to fall now that the concept has been established. It is an interesting idea - to have daily allowances that can be changed on a day by day basis....and when the price per day equates to a realistic price per month for more and more potential users then it could be a 'seismic' change in service pricing. It has some very obvious problems though - not least the number of billing disputes it could generate if Optus' residential billing systems are as woeful as their wholesale billing 'systems'.
So we will have one more look at offering higher than 5 gbyte wireless broadband plans later this morning and then move on to something else (like dealing with TPG's new desperation in selling Telstra's ADSL1 and ADSL2 services at new low prices) until the next iteration in the Telstra vs Optus wireless wars. Hopefully we will see some differences over the coming few weeks in terms of 'take up' of the new plans but I will not be holding my breath.
Copyright © Exetel Pty Ltd 2010
Tuesday, October 19. 2010
As predicted (by me and everybody else who spends time looking at what's happening in the Australian communications markets) Telstra again cut the prices of its wireless broadband services and raised the included download allowances:
When you see things like this:
"The new plans saw Telstra offer 7GB for $59.95 a month (previously 6GB for $79.95) and 12GB for $89.95 (previously 10 GB for $119.95)."
you do have to wonder at how far large companies go to rip off their customers for as long as possible (same with the Optus pre-paid mobile plans I commented on last Sunday). I mean, what has changed over the course of the 6 or so weeks between the last price decrease and this one to make it possible to offer the same service for 30% or so less? Nothing - is the answer to that question. Also bear in mind that this will not be the last price reduction between now and Christmas from Telstra or Optus in terms of their 'retail' offerings. I am not, in any way, complaining about these reductions - they simply confirm that wireless broadband will continue reduce in price and increase in speed as time passes (a self evident scenario for any communications technology for the past 150 years). But then the 'average' residential buyer continues to sign up for 24 month contracts even when they actually do understand that prices keep falling at shorter and shorter intervals....there obviously IS "one born every minute".
So its always been a given that wireless broadband would become more and more 'competitive' with lower end ADSL as a sensible option for some 50% of the current marketplace to use for residential purposes and while these current prices don't quite reach that point they are very, very close now. In fact if you drop the cost of the wire line monthly rental they pretty much are at the ADSL Replacement Point. If the assumption is right, that Telstra and Optus' prices will drop further between now and Christmas, it will be interesting to see whether the take up of wireless broadband does produce a more significant decline in the ADSL numbers in the next ABS survey results. You would also think by now that the "advisers" to the gubmant would be having to re-look at their idiotic dismissal of the development of wireless broadband and invent some new figures to support their statements that "wireless will never be a significant.......".
All very well in macro terms - the US carriers and their customers have made this situation blatantly obvious for two years. It doesn't help companies like Exetel make sensible decisions on what, if anything, we can do in making 'better' wireless broadband plans available to our own customers. There is no point in producing a set of plans now which will have to compete with Telstra and Optus 'Christmas specials'. We will have to come up with something shortly or forget about the residential wireless broadband marketplaces and spend the time and money somewhere that has some chance of producing a meaningful result. I was trying to pick a sensible 'experimental' plan pricing last night in preparation for a meeting later this morning. I came up with $30.00 for 3 gbytes as being the 'golden' value price point (based on what the 'market' wants - not what we could afford to provide) and I will be interested with what the other people in the company who are involved in this exercise come up with.
Numbers like $30/3gbytes make you realise there is no real point in getting out of bed any morning. However it does remind you that such a service now far exceeds the 'value' (and the utility) of all the ADSL1 plans for people who use less than 2 gigabytes of monthly down loads - which is a very, very large percentage of total users. Although there are attempts to portray the majority of current internet users as being obsessed with speed and huge downloads the reality for ALL ISPs is that somewhere around 50% of all users download less than 2 gigabytes a month and a serious percentage of those users have speeds of 1500/256 or less but pay more than $30.00 a month for their service and have to pay another $30.00 for a land line to be able to obtain their ADSL service.
.....and of course....these current wireless broadband prices will only get lower and the speeds will only get faster.....that are already better than 50% of ADSL users pay and obtain.
PS: Although I commented that it was looming - it has finally happened:
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Monday, October 18. 2010
......too expensive for connecting a single house to the 'NBN2'
While it doesn't concern me or Exetel in any way (at least I don't think it does unless they rip up my telephone line too soon) I do wonder why 'press releases' that fostered this article:
continue to clutter up my morning newspaper scanning. Just how desperate do you have to be about the progress and 'acceptance' of a project based on giving away tens of billions of tax payer's money and foreign loans to actually try to convince the readers of the SMH that there is something positive in people accepting your offer of giving them something for nothing in the undetermined future? I can only think that it is because your first attempt at giving something away in three small villages in an economically depressed area of Tasmania got you some bad publicity for your ineptitude in 'selling' your story to a few thousand householders many of whom were tenants and were unqualified to reply to your 'flyers'. OK, so no big deal - a new government department lacks commercial 'marketing skills' - hardly surprising.
It wasn't the fact that someone who is very unsure of themselves goes to the trouble and expense of putting out a press release (of unsubstantiated figures of no meaning) about some future event that should 'trouble' anyone who reads it. It is the 'fact' that these same people haven't put out a similarly glowing press release about how many of the 50% of the 4,000 households in Tasmania who have the luxury of having the choice of an ADSL service on their old fashioned telephone line have actually signed up for the new fibre service - a choice that Ms Faustus is not proposing to give the rest of us in the future. Personally, I can only think of one likely reason for that - the take up has been of a level that doesn't make for any form of press release other than a very negative one.
Not that either scenario has any significance at this time (whether a good number of people actually have signed up in Tasmania or whether a good number of people who have accepted something free will eventually pay for something else). But what struck me as significant was that the people trying to force the 'NBN2' down Australian's throats (so to speak) are sufficiently scared of their likelihood of success in doing that that they are indulging in these sorts of dishonest tactics so early in the roll out. I can only assume that Ms Faustus and co are receiving information that is negative and are beginning to panic about the concept of spending tens of billions on an Ord River Scheme rather than the assumption that it was being spent on A Snowy River project.
I would have thought that a Federal Government that had given $500 million (or whatever it really was) to a State Government to build a specific piece of infrastructure would have been required by Treasury to publish an accounting of the usefulness of that donation. Apparently not. Perhaps someone should ask for an accounting in Parliament in the not too distant future. My, absolutely not auditable/back of the bus ticket arithmetic says it has cost $5,000,000 per customer connected so far. Doubtless that number will fall over time but just how far will it fall and just how much will you and I and other taxpayers have to kick in to ensure that the non-taxpayers in this country (over 2,000,000 people on 'pensions') get to play their internet games at higher speeds? Is the current government and the two country traitors ever going to spell out just what this stupidity is going to cost us?
I will lay a bet at any odds that, if the 'NBN2' proceeds, only the wealthy and the stupid will be able to afford to pay a commercial price for it.....everyone else will have to get a 'pension' to be able to afford Krudd's/Ms Faustus' lunatic self obsession.
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Sunday, October 17. 2010
I read the various reports of the Optus press release of unlimited wireless broadband downloads over the last three days with some puzzlement. As usual the various reports seemed to give different views of what was actually being offered but it seems to be accurately, as far as I can make out, here:
So, if this is in fact correct then for $65.00 per month a customer can get unlimited internet usage (and unlimited Australian telephone calling) for $65.00 a month. The 'non tethering' (if in fact it is the case) is a negative but everything else seems to be fine except for the price which is not going to be within everyone's range. However an unlimited use mobile telephone usage plus an unlimited data usage for $65.00 per month has to cover all the 'high usage' markets you would have thought.....a pretty significant number. It may be slightly too high to have the maximum effect but Optus obviously have a lot of scope to 'fine tune' the offer between now and Christmas.
The reason I, personally, find it 'peculiar' is that I have listened to Optus 'blandishments' in person and in writing for several months now regarding the absolutely lowest possible cost of per mb data on their mobile network and during the parallel discussions on mobile voice minutes I listened to the extensive arguments made for why costs just HAD to be as high as they were for Optus to 'break even' on providing the mobile services. Now I do fully understand that volumes play the major part in determining buying prices but I have always failed to work out how to make the arithmetic used by Telstra (on ADSL) and Optus on all other services begin to make sense. I really like wireless broadband and have been trying to find a way of making it available to residential users in difficult parts of Australia for the best part of three years - but I think this latest offer by Optus, and what it will lead to in the near future has ended our interest in Exetel continuing to invest in trying to find a way of doing that - at least for the time being.
The other peculiar aspect of this particular offer is it seems to reflect the pointless desperation of the 'terabyte' ADSL plans that are similarly pitched at prices too high to attract very many users and no-one who will actually use the amount of data. They are purely 'marketing' pitches that have 'headline' value but are beyond the budget of all but the heaviest and wealthier users - who, based on everything that is said by Optus themselves, will lose mega money if they use the services as they are being pitched. It seems that the buyers/sellers in today's residential communications marketplaces are locked in to pitches that emphasise gigantic usages that the suppliers are banking on not being used but attracting buyers who also know they won't use them but are 'compelled' to believe they represent value to them.
It hasn't worked in the ADSL market places; perhaps Optus will get it priced correctly for it to eventually work in the wireless broadband markets.
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