Friday, May 28. 2010
We continue to work on the Australian business plan for next financial year - frighteningly only barely a month away now. We are pursuing an even more conservative path than we did at this time twelve months ago with more uncertainty now than there was then. One major change to the planning is that for the first time since we began the Exetel business is that, overall, we are planning for less ADSL customers month by month going forward whereas in every month for the past six and a half years of Exetel's existence we have always planned, and succeeded in achieving, month on month growth for that service which has been by far the largest revenue contributor to our company.
The other major change is that we will cease/have already ceased to cater for the high end down loaders in the ADSL marketplaces and reduce our 'ambitions' from offering more for less to every ADSL user to offering more for less to the marketplaces that download less than 150 gb per month. When we look at our ADSL customer base we actually have less than 2,000 customers who download more than 150 gb per month with over 90% of our user base downloading less than 30 gb. It has become ever clearer that in attempting to satisfy that higher end user we have wasted a huge (for us) amount of money. If we can deal with that waste then we would be able to solve our current issues and have a much easier 'life'.
So we continue to refine the various assumptions and predictions and attempt to correct the more obvious of our mistakes. In simple terms our plan is to not provide services to end users who cost us money and use that money to provide better/lower cost services to our other ADSL customers without the need to make lower downloading users pay for the downloads of money losing users. The continuing, and escalating, growth of our corporate business (a sector where we can continue to offer services at the lowest pricing in Australia but make a solid 30% plus net margin) will more than replace the 'lost' revenue from a decrease in ADSL revenues and make a very big difference to monthly 'profit' results - at least according to the draft plan.
We are also closer to finalising our revised wireless offerings for FY2011. We will 'bundle' a wireless service withe the Optus ADSL2 naked and included wire line telephone services at no monthly cost except usage from either June or July 1st. This service will be aimed at people who want a 'mobile' data service that is not used every month or for very heavy downloading. No monthly use - no charge and at 2 cents per megabyte gives a user who averages 500 mb of casual mobile use a sound wireless service for $A10.00 a month in usage charges - and an immediate back up should their ADSL service ever become unavailable at an awkward time. It still needs some work but we don't expect to make any more changes to the structure.
We have made no provision for any fibre services in the next year plan. Although we have been surprised at the 'take up' of fibre services in the Point Cook trial there is no certainty that Telstra will provide a wholesale fibre service moving forward and the fibred areas provided by Opticomm are limited and with 'established' competition so we have no basis on which to make any sort of forecast at this time. There is even less certainty as to what the 'NBN2' fibred areas may provide and with the current difficulties of dealing with NBNCo on even the most mundane of issues it isn't possible to forecast any sort of contribution from that possible area of operation.You have to speculate on what would happen if fibre services were widely available in the capital cities. It would instantly 'wipe out' the outrageously over priced SHDSL services in use by over 50 - 100,000 small/medium businesses in those areas.
The main area of the plan that we are uncertain about is VoIP. We have a constantly increasing number of VoIP users both residential and small business and continue to receive a lot of interest from much bigger businesses. We are in the process of deciding whether to limit our business VoIP offerings to 'hosted VoIP' rather than installing hardware at customer premises and if we do go that way just what we will implement. It's a very big decision and one that needs more knowledge than I possess to be made correctly. We have to solve that dilemma 'real soon now'.
It's my youngest son's graduation ceremony this afternoon which will be a very happy occasion and, being the last of five, a more meaningful event in some ways than the four previous graduations. A sobering thought.
Copyright © Exetel Pty Ltd 2010
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I applaud you on your decision to the abandon the high downloaders, although I would have thought that setting the bar at 50-100GB rather than 150GB would have been more in the interests of the majority of Exetel customers but I can appreciate the balancing act of discouraging some customers from being Exetel customers whilst not discouraging to many customers from being Exetel customers.
As for VOIP I would like to see a continued expansion of your VOIP offerings and fro Exetel to offer a full range of Business VOIP services.
Our business initially used Exetel for our VOIP services but unfortuantely had move to another provider because of Extels inability to offer the expanding business VOIP services we required.
Whilst our VOIP spend is modest at around $300-450 per month I would have prferred to give Exetel this Business rather than another provider.
Thank you for the feedback.
Would you let me have a list of features you are looking for?
I too congratulate you on not catering to the leeches. I've never understood why the market hasn't adjusted to this before. It is like the high downloaders are some kind of exclusive group ISPs have wanted to court. What it in effect means though is that other users were subsidising them and so there must be scope for an ISP to provide a cheaper service to those people if they ignore the large downloaders. Looks like that is what Exetel will be doing!
By the way, is there any reason the wireless offer is only to Optus based ADSL2? Why not the BYO / AAPT ADSL2 based plans?
It's Optus that makes such an offer possible - so - not unnaturally - it's restricted to Optus network services.
We will also produce a new wireless broadband plan along similar lines for non-Optus Exetel users.
It's a shame so many of us live in areas not serviced by Optus.
For us it's Telstra or Telstra.
Do you think that competition in the ADSL market get so tough that your residential client base will erode to zero? If so then would it then make sense to sell Exetel's residential operation to one of the big spenders in the ISP sector (IIN / TPM) sooner rather than later to realise some value?
I have no doubt that ADSL1 customers will reduce to zero in the undetermined future.
While a sensible company should consider selling off such an "asset" I'm not sure Exetel could ever do that.
...for several reasons other than stupidity.
I also applaud your decision not to service the uber downloaders. After all, what they're downloading is probably stolen movies! and then they whinge about you wanting them to be reasonable?
There's a customer segment, I suppose the same as in society, that just doesn't get the impact of what they're doing. There's another segment that enjoys good service at good pricing, and is often prepared to pay a little more for that extra quality where needed, as we do at my office where obviously internet service is critical to our business.
You'll get some annoyed people (leechers), but frankly, you can't build a business on those guys, and I for one am thrilled that you're making good plans for the rest of us.
Great to hear about your smallest one graduating, congratulations!
'You'll get some annoyed people (leechers), but frankly, you can't build a business on those guys, and I for one am thrilled that you're making good plans for the rest of us.'
LOL He has done exactly that, Exetel grew due to all the large downloaders being those with the most knowledge in the industry and referring Exetel to those also with contacts.
Growth through word of mouth.
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