John Linton As you may know, Exetel started it's ADSL business in January 2004 and for the first 15 months only offered ADSL1 services in NSW via the single POP Exetel had in the Sydney CBD.
From April/May 2005, Exetel offered ADSL1 services in all other States and Territories using a service offered by Optus (who in turn had some, still unclear to us, collaboration with a third party called iSeek).
This was an advantage to Exetel in that it allowed us to offer ADSL1 services Australia wide without the expense of activating and maintaining PoPs in each state and territory capital city.
It had some disadvantages in that we paid more than we would have paid Telstra direct for ADSL1 services and we had no control over the provisioning of back hauls. There were other operational disadvantages but they were to be expected.
In mid 2007 our number of customers in QLD and VIC had grown to a point where it was financially justifiable for us to establish Exetel PoPs in Melbourne and Brisbane and begin the process of transferring all Queensland and Victorian customers from the Optus/iSeek service to a direct Telstra service with Exetel.
That has now been accomplished (at a very significant cost to Exetel). It is good for the Queensland and Melbourne customers in that we can now ensure that the backhaul/bandwidth provisioning is not going to be an issue in the future as it appeared to be in the past.
We don't currently have the same economy of scale in the other States and Territories and we may never reach that economy of scale on current indications given the increasing availability of ADSL2 and the rapidly growing take up of HSDPA type services.
However, we get the 'feeling' that Optus may not continue to offer re-sold Telstra services via wholesale for much longer (6 - 12 months or so) in line with their decision last year to stop selling Telstra ADSL1 via their retail operations.
So we are faced with a 'no win' decision (if in fact Optus does decide to discontinue offering ADSL1 services at some future time).
We can lose all our customers in those three States and two territories where the service is currently provided by Optus to us or we can spend a considerable amount of capital as well as losing money each month to continue offering ADSL1 services to our customers in those locations.
Not attractive choices at the best of times and especially unattractive in difficult times such as these.
A more ‘conventional’ company than Exetel (and certainly one run on the sole basis of making money for its shareholders) wouldn’t hesitate over a choice such as this for more than a few micro seconds.
However, Exetel isn’t a ‘conventional’ company so it is something that we need to find a sensible but ethical solution to and that means finding a way to continue to offer services to those customers who have been good enough to support us in the past by choosing Exetel over the bigger and better known ISPs who operate in their locations.
We have already made a decision to activate a PoP in Perth based on our need to provide services to the Perth operations of businesses who buy VPN and other solutions from Exetel whose head offices are in Sydney, Melbourne and Brisbane. The same needs don’t really hold true for the other States and Territories though.
In the end I have little doubt we will in fact open PoPs in all Australian State and Territory capital cities – I just don’t know, at the moment, how to justify this to the other more sensible people who play major parts on deciding on Exetel’s policies and, more importantly, expenditures.