John Linton We have a board meeting later today and we will make some attempt to decide on the overall direction of Exetel from early 2012 onwards. It will be eight years, almost to the day, since we decided to 'enter' the communications services supply business and if we had to make that decision today we almost certainly would not make it. So much has changed over that time the business is unrecognisable and the methods of providing services have changed beyond all recognition. The ongoing rate of change is, if anything, increasing and the 'unknowns' caused by the 'NBN2'/Telstra shenanigans are reaching inestimable proportions. I made some comments recently on how I believed the wholesale practices of the larger carriers were 'broken' and how difficult that made doing business with them to the point it was becoming impossible. All of these issues and several more minor things need to be sorted out over the next three board meetings. Whether we will end up in the same, or similar, set of relationships that exist today looks very doubtful.
To put in to perspective how much things have changed you only need to consider how Telstra (the monopoly infrastructure owner) itself conducts its business. In October 2003 Telstra sold communications services to the residential (and business) marketplaces at sky high prices and sold those same services to wholesale customers at much lower prices. Today, Telstra sells communication services to residential users at lower prices than it sells to wholesale customers - a crazy situation unknown in the commercial world for the whole of its 4,000 year 'history'. Obviously, if that had been the case in October 2003 then there would have been no Exetel. The fact that it has become the case in October 2011 (and has been the case for over three years) demands a major change in what Exetel needs to do. These changes range from divesting ourselves from residential services and concentrating on business services through to accepting an offer to buy Exetel by another entity. At the moment we have no intention of doing anything other than reviewing what we think will happen over the coming two years and then make up our minds as to what will be best for everyone concerned.
When we first signed up with AAPT to buy business, and then residential, communications services they were a relatively aggressive and growing carrier. Today they have a questionable future in terms of long term existence and have divested themselves of their residential base and now are in the process of re-defining whether or not they will remain in business. Optus has moved so far from their original wholesale practices that it is becoming almost impossible to find a way of buying services from them that makes any commercial sense (to either Exetel or, at least from what I can see, to Optus). Verizon, has got rid of so many of its wholesale personnel it's getting difficult to find someone to actually talk to and NTT, the most recent of our wholesale suppliers, seems to have misjudged what it wants to do in Australia quite badly.
You may think that I am exaggerating the instability in these relationships or, more cogently, you may more directly wonder why Exetel, if it has seen these changes happening, hasn't done something about them a long time ago. You would be right. There are reasons for that - they could all be summed up by the word "incompetence" if you were very black and white. A kinder person might suggest that Exetel is a quite complex business that has many inter-linked scenarios that prevent drastic change even when drastic change is quite possibly the only real solution. However - spilled milk etc - whatever past scenarios may have demanded it doesn't change the facts that current changes are now demanded. So over the next three months, an awful long time in communications land these days, we will have to change many aspects of our current business....beginning at today's board meeting.
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