Tuesday, June 1. 2010First Day Of The Last Month Of The Year....John Linton .......'dawns', despite the weather forecast, without a breath of wind and with, almost, cloudless skies. Pity that I awoke to it because of the sounds of a currawong (actually what turned out to be two currawongs) trapped in our bedroom chimney. Eventually they both 'fell down' in to our bedroom hearth and with no encouragement flew away through the opened windows. Just as well because when we called WIRES for advice/assistance it turns out that their 'support centre' doesn't open until 9 am. The monthly recurrent figures also brightened the day, a new record amount for a month where we actively reduced our number of ADSL customers. The reduction in ADSL residential revenue was more than made up by a strong increase in corporate revenues from several different corporate services and the profit on corporate services is many, many times greater than that of residential services - especially when the vast majority of residential users that left us for greener fields actually lost us the most money. While it is always sad to lose any customer (with a few exceptions) it has become necessary in these much tougher times than any I have ever been involved in while participating in the Australian communications business. As I have said before we now lose money providing ADSL residential services and we simply can't afford to do that. If the 1,000 or so residential ADSL customers who lose us money find another provider that better caters to their needs than Exetel does then they will be happier and we, and the other Exetel ADSL customers, will be happier. If we can accomplish that 'reduction' by replacing residential revenue that loses us money with corporate revenue that makes us money then both 'parties' will mutually benefit. Our young corporate sales team set another monthly sales revenue record yesterday which was very pleasing and our corporate wireless sales were also a record which was an interesting result. I met with two of our major suppliers yesterday to have preliminary discussions on what we, jointly can do to increase the sales rate of corporate services. I did point out to both suppliers that to actually achieve what had been accomplished to date had been far from easy and, for both of them, to talk in terms of "we have planned for you to double your sales" sounded quite odd to my ears....I had to make the point that we weren't planning to double our level of corporate sales pe month until very late in the financial year. It was a reminder of how suppliers think about their wholesale customers. One of the new services we are introducing for corporate customers is 'pure IP'. We have never considered selling such a service before because we have never had a a particularly good buy price and, obviously, the companies who sold to us could sell to other buyers at the prices we bought at - or below in many cases. However there are a number of changes in the Australian marketplace that have allowed us to contemplate providing IP to commercial customers using the process I alluded to in a past musing that had allowed an unknown company to enter a market dominated by US multinationals and make a major impact. The set up costs are pretty scary in these difficult times but the analysis we are able to do shows there is a pretty large opportunity. We have been getting a steady stream of enquiries for this 'pure IP' product just by running a very small 'ad' on our web site and we have successfully installed the first customer for this service (in Tasmania of all places) and now have two more orders we expect to receive very soon. From what we can see the current suppliers of IP services to corporate users offer services at per mbps prices around treble what we can sell at and make a sensible return. It's far too early to make that a firm statement but it's based on the few serious enquiries/sales made to date. How it will turn out over the coming year is hard to predict but we would see the same problems for the current suppliers as we did for current SHDSL providers - they have a customer base they have been ripping off for a long time and are very reluctant to provide the cost savings to those customers which recent price reductions have made possible. So a new 'product' for us and one that has interesting potential....a long way to go though. I hope to finish the planning for FY2011 before the end of this week - running a few days late as I am teaching other people how the Exetel financial planning process works - and I am encouraged by the execution of the first year results in the long term changes we are making to Exetel's business - still a very long way to go. Copyright © Exetel Pty Ltd 2010
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Hi John,
It looks like the sleeping giant has decided to enter the market place. Telstra are releasing new plans to co-incide with the launch of the T-Box, massive thread on WP (http://forums.whirlpool.net.au/forum-replies.cfm?t=1449774 & http://img257.imageshack.us/img257/5389/tboxinfo.png) High end plan is 200GB, homeline ultimate (unlimited local, std, mobiles) + tbox on 24 month contract for $149. You can also obtain the same for $139 however only $100GB is included. No official announcements yet. Comment (1)
Thank you - it will be an interesting few months as the companies desperate to hold on to their subscriber numbers war with each other.
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Hi John,
In reading about your 1,000 ADSL customers that are causing a loss, I was reminded of some experiences I've had in brick & mortar shopping. I was looking for some origami paper and went into a shop which was a possible source. They had paper that might be suitable but not true origami paper. However rather than sell me the paper, they pointed me to Japanese import shop that would probably have some that was at the other end of the shopping centre. They didn't have to do that, but they did and it left a good impression. Have you thought about doing the equivalent for the loss making customers you currently have who are out of contract? You might warn them your prices will need to go up soon. Find competitors' plans that might be suitable to their needs and recommend they consider them. Offer to help them relocate. You might also offer them 12 months free access to their Exetel based email etc. As you say, it is sad to loose customers but you can try and make sure they leave feeling good about you. Comment (1)
That's a good idea and it would be nice to do - but the cost would be prohibitively expensive.
Comments (6)
Hi John,
Can I ask how much you'd have to download to cost Exetel $600 dollars in a month, or would that reveal too much information? Your strategy for the future regarding residential customers seems sound to me, though I'd be curious (merely from a psychological perspective) to know what impact it would have had if those high use residential customers were able to be told the breakeven point for providing them service. Comment (1)
I know you are probably sick of this type of question, but...
In the recent newsletter you state that the 6 hour uncounted period is not 'unlimited', which I actually fully support. Will customers get any warning as to what the limit actually is during that period then, or is it left ambiguous so that 96% of customers never have to care about it.. to the detriment of the other 4% of customers (or whatever the percentages are). Comment (1)
99.5% plus of Exetel's customers never begin to approach over using the facilities we provide.
A few do. We are happy to get rid of the ones who do at the end of their contract. Those few are much better off going to a more appropriate ISP than Exetel and end up much happier - everybody wins. Comments (6)
I was speaking to a TPG customer on the weekend who said he has been averaging 1TB of download over the last few months.
He claims that a TPG network engineer said it was no issue they have heaps of spare bandwidth. So whilst I was stunned someone was actually downloading that much, I guess you're correct to say the very high end users are happy at TPG (and strangely, TPG is allegedly happy to have them). 1.5T!!! Sounds like I don't need to be too guilty about bumping into my 60/70 gig allowance and paying an extra 50c a gig some months. Comment (1)
As I said - such users should go to TPG - we don't have the ability to provide 1 terabyte of download for $75.00....I'm pretty sure no-one else does either.
Comments (6)
TPG probably do have plenty of spare bandwidth.
That is, for their on-net customers. Assuming dark fibre backhaul, increasing customer connectivity bandwidth is a capex cost. When you're paying someone else recurring fees for ports and customer connectivity bandwidth, it is an extremely different story. TPG also fail to cater for lower-usage users in the same way Exetel does. Although they have some very heavy downloaders as customers, they'd have a large number of low-usage users just by virtue of their customer count. These customers would heavily subsidise the higher end users. Comment (1)
Doubtless you're right.
However - the restriction would be the terminating hardware. 10 gbps boxes are not inexpensive. 300+ exchanges? An awful lot of money. Comments (6)
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