John Linton Life in the Australian communications industry continues to get harder with so much changing that it is sometimes difficult to get to grips with just what needs to be done to make enough progress to justify continuing to put the efforts in to continue to have a reason to exist in the various marketplaces in which Exetel operates. I don't say this with any sense of despair or even any sense of some form of self pity but out of a frustration with the what seems to me increasing amount of time each day it takes to achieve anything. Then again perhaps that's just yet another sign of increasing ravages of time on an aging body and the remnants of a once sharp mind. Then again it may just be the result of increasing laziness.
I suppose the AAPT sale of its residential business shook me up more than I had expected now i have had time to absorb what it actually means and what it may mean. While I, along with the rest of the people in the industry in Australia and New Zealand, had read the various reports over the last few years of NZ Telecom's progressive write downs of the value of its purchase (for $A1.9 billion if my memory is correct) to the offer price of around $A400 million recently I suppose it didn't really register that running a business of that sort of size in today's Australian communications marketplaces could result in such a huge loss of value and money. It had also never occurred to me that any communications business of that sort of size could be so badly managed that it could actually lose money so consistently without the NZ Telecom owners doing something about it.
With the sell off over the past couple of years of a raft of medium sized ISPs/communications companies it has been obvious that the 'old days' of picking a position under Telstra's 'umbrella' pricing had ended some time ago it wasn't until the actual sell off of AAPT that it became quite so starkly obvious that FY2011 was going to be an even rougher 'ride' than my more pessimistic views suggested it might be. So, 'overnight', I have come to the view that VoIP, the 'NBN2' and the effect those two issues have had on Telstra will create a greater degree of chaos in the Australian communications market that even Exetel's current ultra-conservative business plan has allowed for and that, even after an on target July and an almost certain on target August we will need to make some very serious changes to our business to ride out the 'storm' that is looming ever closer.
Despite the claims by Gillard and even the RBA that the Australian economy is in good shape we see increasing signs that it isn't. Principal among these is the increasing level of default on credit card and direct debit payments which were bad in the recent bill run and what was most worrying was the significant increase in defaults by small business customers. There are now more business customer defaults/late payments than at any time in our existence and the major issue is that default has gone from zero over many years to a figure that is noticeable. Those are not good signs for the general financial situation in Australia no matter what anyone says.
By serious changes I am not referring to fiddling round the edges but doing far more comprehensive things....however I don't know what they would be. The AAPT sale itself pretty much means that there is only an unknown time left for us to buy services from the remaining part of that company which was our first 'supplier' back in January 2004 when we rented our first rack in their data centre for our first PoP and began selling their busines data services. Since that time, although never ever being more than our third largest supplier we do get close to a million dollars a month of business with them and their data centre houses more than 60% of our Sydney based termination equipment and band width. Just the logistical issues of moving that equipment to new premises is not something that can be done quickly or easily but it will have to be done as there is nothing more certain than Telecom NZ will sell off the wholesale business as soon as they can get the right price for it and a company like Exetel can't rely on that future buyer being someone we would be happy to have as a supplier.
Similarly it is becoming more difficult to see what future, if any, there is in continuing to deal with Telstra who, it appears to me, is 'losing the plot' itself as it frantically tries to deal with the massive changes wished on it by its own inertia for so many years, rapidly changing technologies that cannot be contained by its own actions on the markets and a government forcing it to destroy its income base and split itself into whatever that fiasco is up to. The results on Telstra are serious enough but the subsequent effects on every other supplier as Telstra lashes out to try and fix the problems confronting it are far worse - at least for the time being. So chaos may well reign and the devil take the hindmost etc, etc.
There has to be a more enjoyable way to start your day.
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