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Saturday, January 28. 2012The End Of The Last 'Full Week' Of January.......John Linton .....all monthly targets exceeded or far exceeded and still much to come over the last two 'working days' next week......if the current forecasts are to be believed. So a very successful month in terms of new sales and a really satisfying start to the new calendar year and the last sx months of the financial year. We also moved in to our new floor space in Sri Lanka over the Australia Day holiday with all SL based sales personnel moving to the dizzying heights on Level 35 of the East Tower of the WTC (our 'old' floor space is on Level 25 of the West Tower). It is 'just in time' planning as we have five new engineers starting next week and when I was in Sri Lanka earlier this month we were down to one or two spare desks on Level 25 and that may have been because people were on leave. Despite starting five new sales trainees and three new engineers in Australia over the past few weeks we now have twice as many people in Colombo as we do in North Sydney. Exetel in Sri Lanka has come a long way since we hired two work from home support email ticket answerers almost five years ago to the day. We have some quite frightening targets to achieve over the coming months of 2012 and it will be the biggest challenge of Exetel's 'short life' to complete the transition of the company from a supplier of telecommunications services to residential users to one with the majority of its revenue coming from business and corporate users. We have made significant progress in deploying ever more redundant and greater capacity infrastructure to deliver ever larger, and far more, business and corporate customer connections. We have an ever growing list of customers who now use Exetel for 100, 200 and now 300 mbps pure IP services and are getting closer to signing our first 1 gbps pure IP service. It wasn't that long ago when 1 gbps was more bandwidth than Exetel used to provide its then tens of thousands of residential customers with ADSL connections. Our major challenge (among so many) is to get Exetel better known around Australia. We have never done any real advertising apart from 'playing' with the concepts every year or so and will probably never do any advertising in the future. We do need to get more people to know about Exetel than we have accomplished over the first eight years of our existence. As with every major 'challenge' in business life there are seldom, maybe never, "new ways of doing things". Perhaps all 'the new things' are done by people who have never done anything before so they actually think they are doing something new? So, either from having no 'new' ideas or because one idea (far from new) that I have used in the past on four occasions to rapidly build companies from the ground up to something relatively substantial (once with Exetel, once in the UK and twice in previous 'lives' in Australia) has worked very effectively we will use that as the basis for developing Exetel as a much better known presence around Australia. Perhaps there is nothing new in selling products or services to widely spread market places? Copyright © Exetel Pty Ltd 2012
Sunday, January 22. 2012The Cost Of IP Transit......John Linton ....was once the major cost of providing an internet service to a residential, or a business, user. Back in the day (1995) when internet was delivered to residential and 'business' users over 28.8 kbps modems the cost of a 2 mbps link to the USA was around $US900,000 per mbps and comapanies like OzeMail charged up to $A10.00 per megabyte for downloads. Today current offers vary between $A15.00 and $A20.00 per mbps - one of the greatest improvements in industrial history - even if you remove the incredible price gouging applied to international telecommunications services throughout the past 40 years. Add to that the fact that even a company of Exetel's size delivers over one third of total end user IP though caching (Google, Akamai, Various peering points) the cost of delivering data to an end user is now lower than it has ever been. It would be much lower than it is today if it weren't for the cost of 'back haul' - the cost paid by wholesale customers of the large carriers to deliver traffic from the end user to the ISP's carrier interconnect point....that cost varies between twice the cost of the IP traffic to four times the cost depending on which carrier is providing the 'back haul'. By far the highest cost of delivering traffic to a residential end user is the carrier's back haul charges followed by their 'port' charges. Many ISPs have addressed this problem by building their own DSLAM network which, courtesy of the ACCC, have allowed back haul and port costs to be reduced which, allied to the dramatic fall in IP costs should have allowed much lower prices for residential ADSL services to be offered than has proven to be the case....it isn't the case because of all the obvious reasons (Telstra less 10% remains the pricing mantra for the ISP industry in Australia). Exetel will shortly make a decision on IP suppliers for the coming 12 month period starting April 1st 2012. We expect our 'pure' IP costs will fall around 50% from what they are today....we are already receiving the benefits of a continually growing percentage of IP delivery via caching which is saving us what would have been the previous costs of over 4 gbps of 'pure' IP bought from IP wholesalers. We will replace the current 'pure' IP bandwidth with 8 gbps of 'new' band width which will generate considerable monthly savings for us. However the port costs and back haul costs, particularly for our Telstra services will remain unchanged and will need to be subject to a review of whether we can continue to offer those services at their current costs going forward. We have delayed, and then delayed again, more than once, making any decision on continuing to do business with Telstra while we tried to get some grip on when an 'NBN2' service might offer a viable replacement. Apart from the fact that 'NBN2' port costs and backhaul prices are even more expensive than Telstra's prices we were taking the optimistic view that they would at least be the same to every wholesale buyer (from Telstra's to Exetel's 'size'). That was always pretty naive, I admit, but it was the premise on which the 'NBN2' was promised. What is a Juliar promise worth? Nothing - but then I am as naive as the average person and did want to believe that particualar promise while always conceding it would not eventuate. So, with some sort of real coverage delivery by NBNCo way in the undefined far future the decision on whether to continue a relationship with Telstra remains 'on the table'. We started a trial program yesterday to see if we could accelerate the change in 'balance' between our Optus and AAPT residential customers and our Telstra customers - we have never differentiated before - and over the next 2 - 3 months we will see if it is in fact possible to rapidly increase our Optus and AAPT residential ADSL customers as a percentage of our total residential ADSL customers. If this can be done then we could continue to 'hang on' to the Telstra relationship until the 'NBN2' becomes a viable alternative - or at least for another year while some definition is available on the future of the 'NBN2'. In the mean time the cost of back haul and port costs from Telstra make it very, very hard for a company lilke Exetel to continue to offer Telstra wholesale services and current negotiations simply, yet again, underline how difficult it is (for a company of Exetel's size) to deal with such a company. Copyright © Exetel Pty Ltd 2012
Sunday, November 6. 2011Christmas Is Almost Here......John Linton .....which means that calendar 2011 is almost over - gone, like so many recent years in the blink of an eye. I know this is the case because I sent out the details of Exetel's Christmas party late last week and regretfully declined my fifth "catch up" invitation from Exetel's suppliers earlier today. Why suppliers think that such events are of any benefit to anyone or reach even a minimum level of 'enjoyment' is beyond my comprehension. In my experience the only enjoyable such event I have attended in the whole of my business life was an Hitachi customer 'cocktail' party in Las Vegas at one of the function rooms at the Mirage some thirty years ago. The food was exceptionally good, the liquor was off the top shelf and the myriad entertainments were straight out of the Las Vegas showrooms. It was the format that we have tried to emulate for our Exetel Christmas parties (with a much less flamboyant budget) but I have never seen any supplier come close to - quite possibly because the people they invite would feel more at home in some outer suburban Leagues Club. It is a reminder that the current year is rapidly drawing to a close and that the doldrums of 'the Christmas season and the whole of January are nearly upon us once more which means we look back at the last six months of the year and try to make sense out of what has happened so that we can adjust our 'forecasts' as to what might happen over the remaining six months of this financial year. One issue,of course, remains just what will happen in terms of the NBNCo roll out which, like the year just ending, produced millions of 'column inches' but ended up with less than 1,000 customers connected.....never in the history of Australian communications "journalism" (perhaps any "journalism") has so much been written about so little. Unless something occurs that is not currently predicted, it seems as though the NBNCo 'roll out' will have as little affect on CY2012 as it did on CY2011. What may have more affect in residential communications land is the proposed "separation" of Telstra into retail and wholesale....if in fact that happens in any real way.....and that is still, at least to me, highly doubtful. Why do I take such a strange view? Because the only real way of having a national fibre network is for there to be a change of government at the next Federal election and for the current NBNCo infrastructure to be sold to Telstra for 'nothing' and for Telstra to 'turn on' its current fibre in the capital cities and continue to build out the fibre in regional and country areas where it is vaguely practical and to use its 4G/LTE wireless everywhere else.....but then I said that when Krudd was lying to the gullible electorate to get himself elected more than 4 years ago.....so I am still probably wrong. One less important, but quite pleasant, change to Australian internet usage will happen in 2012 and that is the massive increase in trans-Pacific IP bandwidth as a result of the next Southern Cross upgrade. This is already being seen in the steady reduction in SX IP costs that is hitting new lows from at least some of the major providers. What it already means is that IP is becoming a smaller and smaller component of the cost of providing internet services to both residential and corporate users and it that will become even less over 2012 as the various SX providers work out just how to handle what each of their competitors will do with each others customers. A nice problem not to have. As someone who was around in the days when IP bandwidth cost something like $A800,000 a year for 2 mbps (I really can't remember the exact figures 15 or 16 years ago) it still comes as a shock to understand that it now costs less than 10 cents to provide 1 gigabyte of data to your egress router....of course while back haul costs have fallen they now represent the majority of the cost of providing a residential internet service to a 'heavy' user. So, as usual, many things are changing with many more things likely to change as 2012 gets going. Copyright © Exetel Pty Ltd 2011
Saturday, November 5. 2011ADSL Download Cost ChangesJohn Linton
Some two years ago we offered unlimited download plans to see just what such plans would produce in terms of longer term monthly usage. When we had acquired a statistically meaningful number of customers we stopped offering unlimited plans to new users and allowed sufficient time to pass to get a better idea of what such users actually downloaded after the 'novelty' wore off. After two years and some time to time check pointing across a fairly wide demographic of user types we have a much better idea of what unlimited download plans mean in terms of monthly bandwidth usage and changes over time. Over that same two year period the cost of IP has dropped dramatically - partly because the actual cost of IP has continued to fall dramatically but also because the Google and Akamai caches (as well as the peering caches) have significantly increased their provision of data to the point where it is approaching 50% of all IP traffic delivered to residential users. For Exetel, this means that the only significant cost of delivering unlimited download plans is the back haul charged for by the three carriers we use and the profile of some of the people we provide unlimited services to. The port cost also plays some part but not a significant one....except for Telstra of course. What these various cost changes mean is that, if the average downloads by unlimited plan users were to stay the same in the future as they have been for the past 12 months, then there is very little cost difference between an unlimited user and a user who downloads a few gigabytes a month in percentage terms on an AAPT service, more, but not that much more, on an Optus service and only on a Telstra service does the cost difference become substantial - to the point that it couldn't be considered. As we slowly cut over our curnet IP contracts to new contracts this scenario becomes more financially sensible and it must be the same for our much larger competitors. So it poses some difficult questions in terms of what will be offered to residential ADSL2 users in 2012? It poses some even more difficult questions for the NBNCo where back haul costs, at least currently, make it impossible to offer major download allowances at anything like the prices that can now be provided on residential ADSL services. This isn't such a big issue today - where it could be argued that only pirates need large down loads - but as home internet connections are used to deliver FoxTel, and FoxTel like, services at ever denser resolutions 100 gb begins to look like an 'entry level' user and 500 gb is no longer automatically equated to illegal usage....just someone who watches a lot of TV/Movies at very high resolution. The trouble remains that when amateurs (such as federal Governments) meddle in complex professional businesses (like Australia wide communications services) they never understand how swiftly commercial enterprises have to change to meet the rapid changes that occur in commercial life....and therefore they don't ever succeed....it's why all sensible western governments have sold off their commercial assets over the past fifty years...they knew they couldn't continue to run them.....there's no fool like a doctrinaire fool. Copyright © Exetel Pty Ltd 2011 Tuesday, October 4. 2011Internet Usage In 2011......John Linton ....seems to be different to previous years. One thing that seemed anomalous in the latest ABS figures was the huge jump reported in average usage per customer over the past 12 months. While I very much doubt that the figures provided by any of the ISPs (except Exetel) are particularly accurate I did wonder what the reported huge, getting on for 100%, increase over the past 12 months actually meant - assuming it was in any way accurate. Did it simply mean that the average internet user was just ramping up their daily usage? That is a possibility but what changed over the past twelve months to make such a huge difference? Is it just that the majority of ISPs (including Telstra Retail) have inflated their download allowance so much over the last twelve months that a relatively small proportion of end users are encouraged to download so much more that it distorts the 'average' figure? It would be very useful to be able to understand the download bases of any customer base and track it more forensically than at least we do. We have always used relatively crude analyses of usage by customer and don't understand any of the 'whys and wherefores' of usage at all beyond percentage bands of usage across the whole customer base. What we do know, but unlike what the ABS statistics seem to show, is that all of the download growth is within the top 10 - 15% of the customer base with the bottom 85% still downloading at the rates they did three years ago. It is quite hard to understand why this would be the case and it should be changing in line with the facilities that are available. Why this isn't yet the case can be surmised but not proven. In stark contrast to residential services, business services downloads do not seem to grow at all. Most business services provided by Exetel have unlimited or very high included download allowances and the trend in our business sales is to sell higher and higher speed connections - 100mbps is becoming quite 'common' as a business service - but the 'average usage' per customer per month remains where it was more than two years ago. Perhaps this will begin to change over the coming year or so but, right now, there is absolutely no indication that will happen. Although the cost of pure IP has fallen significantly over the past two years and, as far as I can see from early indications in the 'negotiating season, is likely to continue to fall, the major 'saviour' for the increased residential usage is the caching provided by Google, Akamai, Pipe and other peering points which is now approaching almost 50% of total IP bandwidth presented to customers. The cost of this bandwidth is sub $10.00 per mbps compared to 2 to 3 times that for pure IP. As the pure IP price continues to fall so do the peering costs which has lead to an overall drop of almost stair step proportions over the past 18 - 24 months. Interestingly enough (despite MS and other major software caching) business users don't seem to use the cache as much as residential users). The question that we are attempting to deal with is what happens if the 'average' residential user (at least as described in the ABS statistics) doubles their usage over the coming year. An indication of why that might be an issue was Internode's statement that they were having to raise some plan prices because their customers had begun to use "all of their allocated allowances" It sounded wrong but you understand what was meant. Is that happening to 'more aggressive' offerings from other providers? The next two ABS reports might be quite interesting. Copyright © Exetel Pty Ltd 2011 Wednesday, August 31. 2011A Very Good Month......John Linton ....far better than July and, with the minor exception of residential ADSL (where total new customers were slightly lower than August last year but revenue from those fewer customers was well up on August 2010) we had record months for new mobile customers, by a very,very long way with a day still to go, and will almost certainly exceed 150 new corporate customers in a single month smashing the old record of 131). So a good all round effort in terms of sales and revenue - a great relief after the struggles of the last few years. I can almost feel the give as the wheel finally becomes free of the mud. I also realise that one month does not a financial year make........but, as Forrest would say - "one less thing to worry about". Not that having one less thing to worry about reduces the 'worry list' noticeably and there are more than enough quite obvious signs of things that need serious attention if not completely re-thinking in our current business to more than adequately fill any time that may become available for their consideration. One of the more immediate considerations is the annual IP bandwidth 'negotiations'. We received an invitation for Steve and I to attend NTT's global conference on IP and other issues. One of the sessions was headed "How To Deal With The Plunging Price Of IP". We have already advised one of our current IP providers that we will not renew their contract for IP services beyond the current end date and will shortly make it very clear to the other providers what we expect this years contract renewal prices to be. Unfortunately I can' find the time to attend (much as I love Tokyo) but it will be interesting to see what Steve learns from the speakers ad the attendees. I have always disliked these 'negotiations' and am pleased that I will not be involved in them this year. I am always embarrassed at the lies told by suppliers about the state of IP pricing which is overtly and blatantly contradicted by easily referenceable facts published in many industry reports. So these 'negotiations' start, from the supplier's side, with our account manager and usually his product manager for IP spinning a pack of lies about current market pricing which, when I was acting on behalf of Exetel, would be refuted by me giving them various references to what is on offer from every other supplier but them. There would be some huffing and puffing followed by an ignominous retreat 'to consider what we may be able to do about meeting your price' - on their part. Very occasionally over the past almost eight years a very foolish supplier representative will (presumably at the urging of his management) tell us that we should go and get the pricing we cite from someone else because "that pricing is impossible to provide". On those occasions we have done exactly that and, no, we never 'bluff' about something so serious. From the limited information that I can find, the largest buyer of IP in today's market in iinet who buys their IP from Telstra - something I found strange but assume it's because of some sort of overall discount from the pricing they pay for other Telstra services. Looking at what we 'know' about the price iinet pays Telstra (and we can't possibly 'know' what their contracted price is) we are looking for a per gbps price of around 50% less for IP in this year's negotiations. My view is that all IP from SX or NTT is the same and with the exception of the TPG/IP1 service which I accept is of lesser calibre there is no justification for paying any more than the SX wholesale cost for the size IP we are contemplating. Perhaps buying direct from SX would save a lot of embarrassment all round....but then NTT do have better Asian routes and are able to provide SX at very close to our target price. So, I am pleased not to be directly involved in such discussions any more and even more pleased that I can relax today and see what the final sales results for the month are and complete the final internal discussions slightly revising September's targets. One sleep to go. Copyright © Exetel Pty Ltd 2011 PS: Who said the nanny state syndrome wasn't all pervasive in Australia. Frequent Flyer points on emergency charters?
Thursday, August 4. 2011Perhaps It's The Thought Of An Imminent Holiday?John Linton I was trying to establish a basis for determining how to properly compare what is going on in the marketplaces in which we operate today with those of one year ago and two years ago - beyond the bleeding obvious of order intakes divided by payroll expenses. Even removing the distortions of increased base revenue and changed product line ups I didn't get anything meaningful with the simplistic approaches I was taking. I don't want to kid myself out of sheer exhaustion that the first few weeks of this new financial year are 'easier' than any of the weeks for the past two plus years but that is the way it is looking to me. Perhaps I am just too tired to register the burdens? For whatever reason things do look brighter than they have done for as long as I can remember and, real or not, that can only be a good thing. I briefly discussed the progress we have made in processing the NBN applications we have received so far (now closing on 40% of those eligible) with our operations manager yesterday and got the predictable update. Removing the comments on the capabilities of the NBNCo people concerned and the completely broken nature of the cobbled together "B2B" software leaves nothing positive. Exetel, a very small company in terms of the overall communications markets in Australia is very used to the quirkiness and vagaries of the different suppliers B2B software - we have, after all, had to write interfaces to over a dozen different B2B interfaces over the years - all very different - all with functional problems and just plain 'doesn't works'. As I said to Paul - "why expect NBNCo to be any different?" However it does serve to illustrate how completely unprepared NBNCo is to actually accept and deliver services on a purely administrative basis. One can only conjecture on how the systems/processes to report and resolve line faults are. Our major 'project' for FY2012 is to make a great deal of progress in providing 'pure IP' services to the corporate and government market places around Australia.It takes time (in our case a little over seven years) to build a network that will meet the criteria of large buyers when it comes to key infrastructure services. The Exetel network meets even the most stringent criteria from even the most demanding large buyer and, apart from the fact it provides services to far more end users for many years than any corporate/government user will ever need, the diagrams demonstrate the multiple redundancies and sophisticated back end controls the most sophisticated IT manager could demand. Part of our reason for, after considering it for the past three years, buying some of our IP bandwidth direct from Southern Cross rather than via a Southern Cross reseller is to more directly address the corporate/government IP market. I don't know just how possible it will be for us to sell 20 or 30 or even 50 gbps of 'pure IP' over the coming 12 to 18 months but, based on our test efforts to date (we have now sold over approaching 20 'pure IP' links with the largest one being 250 mbps and one being 500 mbps if the 'trial' 100 mbps service delivers as expected) it seems more than possible. We have spent a lot of money over a long time frame to build a network capable of doing that and then we have spent an even greater amount of money building a corporate sales force and support group capable of selling at the required levels. We have spent even more money (and are 'lucky' to have incredibly skilled programmers) developing the back end 'control panels' that provide a highly sophisticated view and control over the network connections and interfaces. All that remains is to put in place the pricing that will 'blow away' the horrendously high charges made by current IP providers and on which they have based their forward revenue assumptions. Piece of cake really - well, as long as you are farseeing and patient enough to put in a lot of money over a lot of years developing the required capabilities. Copyright © Exetel Pty Ltd 2011 PS: What I've been saying for over a year: Wednesday, August 3. 2011It's That Time Of Year Again.......John Linton ......when we start looking at our IP and national interconnects again. How time continues to speed by. Like many other buyers of bandwidth, Exetel has two or three year contracts with its suppliers that have annual review clauses in them. Like everyone else who has been around the communications industry for more than 'five minutes' we know the patterns of price changes and the mechanisms that trigger those changes. Having been around since the days when 2 mbps of IP connectivity to the USA cost the best part of $US1 million a year we have seen some amazing falls in IP costs over that time. Similarly the cost of national interconnect between the different Australian capital and other large cities has also fallen dramatically since we first installed 128kbps between Sydney and Melbourne in the early 1990s using ISDN. Ahh, those were simpler and slower days with little or no pressure. Today, Exetel's IP and national network is rapidly closing on 10 gbps and will go past 12 gbps early in 2012 heading towards 18 gbps by the end of that year - if we meet our planned targets. We have three main suppliers of IP and three main suppliers on national interconnect. Another major factor is that increasing amount of our 'IP' bandwidth is delivered via Google and Akamai cache as well as local peering points, particularly in Sydney. Cached IP now accounts for closing on 3 gbps of our total 9 gbps on an average day. That trend is likely to continue in to the future though it's difficult to measure. So we go into the 'negotiating season' this year with a different set of needs than in any previous year.....and with the knowledge that we have always paid too much for both types of bandwidth in the past. The obvious complication in changing bandwidth suppliers is that no sane person wants to go through the potential disruption of moving providers because of all the installation and change over hassles involved....so incumbent providers always have a starting advantage in contemplating changes. Having said that - Exetel has changed suppliers on several occasions because 'incumbents' over play their 'hand' and end up losing the business. Incumbents always have management who measure their sales people on an NSRI basis (they take the level of current revenue as a given and only look at increasing that revenue - pretty difficult to do in a falling market) which usually negates their advantage of no hassle upgrades. In this instance say we are paying $30.00 per gbps for IP and are now looking for $15.00 per gbps we would have to buy twice as much from supplier x just to maintain their revenue at the same level. As we are not contemplating doubling our IP at this time our current suppliers are at a disadvantage to 'new' suppliers who have no current revenue from Exetel to protect. I am not yet sure what price we will establish for either IP or national interconnect but it will be much lower than we signed up for last year. The quantity is likely to be 20% to 30% more than we have now but we are, as always, looking for a net reduction in our IP and interconnect monthly bills. Without understanding any of the situations with our current suppliers I think it's likely that we will buy directly from Southern Cross this year instead of buying through one of their re-sellers. As we progressively upgrade our interfaces with our suppliers from n x 1 gbps links to single 10 gbps links the move between suppliers has become much simpler - at least for us - and for the suppliers willing to provide 10 gbps bearers. So there will be some interesting discussions between Exetel and various suppliers between now and the middle of February next year. Copyright © Exetel Pty Ltd 2011 Tuesday, July 26. 2011NBNCo Myths Already Running RiotJohn Linton On Friday we sent out emailed 'invitations' to those of our current ADSL customers in Willunga, Armidale and Kiama who are covered by the NBNCo trial areas. By Monday morning we had received requests to take part in the trial from around 15% of the total 'eligible' and we commenced submitting those 'orders' to the NBNCo yesterday via the cumbersome, '19th Century' facility they have made available at this early stage of development. It will be interesting to see just how the installation time frames and process actually work out and just how 'seamless' a disparate array of end users actually 'fare' with these new processes. By this morning we had received positive replies from 24% of the customers we emailed which, in other circumstances, would be an excellent response but I am surprised that a free trial of a new technology didn't generate a much higher percentage of acceptances. It will be interesting to see what experience these trial users actually enjoy as I already see various 'claims' being made about 'how much better' one ISP's NBNCo service will be than another. I am assuming people who make such statements are lunatics whose comprehension of both reality and communications networks is far removed from the actuality of the NBNCo network. My knowledge of network engineering is far from comprehensive but it doesn't have to be to understand that NO ISP can influence, in any way at all, the 'performance' of an NBNCo service from the customer's home location to the hand off point between the NBNCo network and the ISP network which is in, currenty, a capital city data centre. Every end user customer connected to the NBNCo network will have the identical experience (whatever that may be) between those two points. This is the same experience that has always existed on the Telstra, Optus or AAPT ADSL network for ISP's who use those services. If Telstra, Optus, AAPT and now NBNCo have enough bandwidth on their back hauls from pick up points to delivery points then there will be no congestion on that part of the network for anyone. If they don't then the subsequent congestion will affect all customers, irrespective of ISP, equally. Presumably even the lunatics and dummies can understand that simple piece of networking 'lore'. All an ISP can do to negatively affect the performance of an NBNCo service is to under provision the CVC (the cross connect between NBNCo and the ISP) or the IP bandwidth made available to the NBNCo services which only the truly paranoid would consider possible. Why paranoid? Because it would be so obvious that it is being done that no-one would use such an ISP's service. Then again, even the lunatics, dummies and paranoids could not hype their conspiracy theories about an ISP's fibre performance if, like Exetel, ISPs published the performance graphs of all of the bandwidth links used in customer data transit.You have to wonder why that isn't done? I assume this particular line in lunacy has commenced because Internode published very high NBNCo prices (which will never be used in 'real life') as part of their political campaign against CVC charges and requirements rather than do what the more sensible NBNCo customers have done - point out a better price structure to NBNCo. The subsequent hysteria in the media shocked even me who never expects any knowledge or even commonsense from the overwhelming majority of 'journalists' covering the communications industry. The only issues that will determine NBNCo end user pricing are real commercial ones and those are not yet in place and won't be until Telstra and Optus work out how they will approach wholesaling NBNCo fibre and then selling those services to their own customers. In the mean time it would be nice if Australia's communications media took a far less hysterical line in what they choose to write. Copyright © Exetel Pty Ltd 2011 1 - the number of people considered by the overwhelming majority of the human species as most important in any decision or action. Thursday, May 19. 2011Qui Provisiones Provisionet?John Linton This article points out the bleeding obvious but does illustrate a situation which is not going to be easily dealt with: With several similar services (FetchTV as the current obvious example) likely to be offered to Australian users over the remainder of this calendar year the trend of average bandwidth usage per customer is set to accelerate. As an example of trends over time the average customer download usage for Exetel customers has increased from a little over one gigabyte per customer per month in April 2004 to around 5 gigabytes per customer per month in April 2008 accelerating to 13 gigabytes in April 2010 and is now North of of 20 gigabytes in April 2011. This is at a time when over 50% of Exetel customers download less than 5 gigabytes per month. Those of you that look at our web site on occasions would have noticed the progressive changes in download inclusions over the past few weeks as we consider the implications of the tsunami of video offerings that some percentage of end users will require over the coming months. The most obvious example is FetchTV which while being able to be delivered via multicast from approximately 400 exchanges will not be able to be delivered that way to the other 2,000 plus exchanges used by Exetel (or any one else's) customers....only Telstra will be able to do that. Of course, 400 exchanges cover around 80% of Australia's broad band users so it isn't going to be any sort of real problem in the short term but, even so, the usage patterns of customers will inevitably rise significantly and very quickly. Depending on just what transpires over the near future it seems inevitable that Exetel will no longer be able to use Telstra as a supplier of ADSL services - unless there really is a true split of Telstra in the relatively near future. While it's true that Telstra Wholesale prices have declined from their stratospheric levels of 12 - 18 months ago they still charge Exetel well above their own retail prices and, possibly much worse, far higher prices than they charge our competitors. We need to see what actually transpires over the next twelve months or so but if 'movies on demand' does become the same devourer of bandwidth here as it is becoming in the USA then Telstra's port and back haul costs will make it impossible to deal with. I suppose this would not be as large a problem if you believe that the 'NBN2' will actually be delivered in enough places to provide a new alternative to Telstra at realistic prices but I am of the opinion that won't happen either at all or in any realistic time frame to obviate the problem. The costs of re-dimensioning any network to deal with the demands of movies on demand will pose a significant challenge to any network owner. I, of course, have only a vague idea of the actual capabilities of the different networks deployed by the various suppliers but the growth statistics in the cited article are harbingers of significant change and investment requirements. With the 'NBN2' complicating almost every aspect of providing services today the complications of providing services tomorrow that require significant investment today are even more complicated. As Malcolm Fraser once said........ "where did I put my trousers?" Copyright © Exetel Pty Ltd 2011 Saturday, April 16. 2011"Premium" ADSL And Other ServicesJohn Linton I re-read the minutes of the Sri Lankan operational review earlier this morning to double check that I had advised the various people on the required follow up actions. When we first started transferring services from North Sydney to Colombo almost three years ago we set an objective of answering all residential support, provisioning and sales telephone enquiries within an average of less than 60 seconds. (our goal to answer corporate support queries has remained at "within five rings") For the majority of the last year we achieved those, fairly tough, objectives though the support service answering times have risen to almost 2 minutes due to some ill considered transfer of residential engineers to corporate services. We will correct that by hiring additional engineers for residential services as soon as possible. We track the performance of the larger companies with which we compete by calling their support and sales number on a regular basis and seldom find that any of them answer their support numbers in less than 20 minutes and many not answering within 30+ minutes with one hour wait times not being uncommon. Exetel publishes 'live' feeds of its residential provisioning, support and sales telephone 'queues' and has done for almost the whole of its existence. Those details are available on the pricing pages of our web site as well as the 'contact Exetel' page. Almost invariably they show either no waiting time or very short wait times. The only other ISP 'brave' enough to publish such statistics (that I know of) is Internode. I was sent this view of Internode's answering statistics a day or so ago: https://forum.exetel.com.au/viewtopic.php?f=288&t=37917 which isn't much of an advertisement for a company claiming to offer a 'premium' service' (maybe this was just an aberration) but it is consistent with the sort of wait times that many large providers actually deliver to their users. Of course support or provisioning 'answer times' are only one measure of a 'premium' service with the quality of the advice received once a customer's call is answered of critical importance. That can't be measured by a simple automatically generated statistic as can be done with call answer times. It certainly isn't possible to 'measure' other companies support quality and quite difficult to measure your own let alone demostrate that quality to your own customers or prospective customers. For almost two years now Exetel has published complete personnel lists for every person we employ that, in the case of residential services, show their photograph, tertiary qualifications and time employed by Exetel. This can show the quality of the individuals if not the quality of their ability to handle the specific requirement of their jobs. I know of no other company that is 'brave' enough to do this. Similarly Exetel, almost from 'day one' of our existence, has published an MRTG report of total IP bandwidth usage over our network to demonstrate to prospective users that the Exetel network is uncontended and therefore runs as fast as anything under our control can make it. An Exetel customer has complete access to every link within our network which will show him/her the exact status of link capacity/usage at any second of any day. I know of no other provider 'brave' enough to provide such information to their users. Looking at the various ADSL complaint forums it seems quite obvious that more than a few larger ISPs under provision their networks - some under provision quite extensively. It will be interesting to see as the competitive actions of the various providers bite ever more deeply in to profits how the providers who claim to offer 'quality/premium' services re-act. http://www.theaustralian.com.au/business/optus-looks-on-the-bright-side/story-e6frg8zx-1226039924001 Apart from simply going out of business as Eftel recently did perhaps that recent 'aberration' in support answer times by Internode is an indication of where cost 'savings' are being made by some self claimed "premium" service providers? How can any company that doesn't provision its support centres adequately claim to offer a 'premium' service? As margins on mobile and ADSL continue to fall what is a "premium" service? Copyright © Exetel Pty Ltd 2011 PS: A colleague sent me this article which, from the ex-CEO of a major Australian Telco, has some cogency: Wednesday, March 9. 2011Some Tangible Progress IndicatorsJohn Linton We, finally, 'turned on' the new supplier's (NTT) IP transit late yesterday at the new PoP located at Equinix which adds a further 1.25 gbps to our total IP bringing it to over 9gbps. When the 'live testing' is completed the new bandwidth will provide the third set of transit paths to the US and Asia and complete the redundancy plans for our IP offerings (and just as importantly will provide a fourth Sydney PoP) for both business and residential users. The delays caused by one supplier having to divert "all" available engineering resources to repairing infrastructure damage caused by the Queensland floods are finally over. We will update the network diagram to reflect these additions 'shortly'. The current Exetel network is light years away from our initial single PoP with a few 'boxes' and one tiny IP link in January 2004. The Exetel network now has four PoPs in Sydney, is soon to get second PoPs in Melbourne and Brisbane, PoPs in all other Australian State capitals plus the ACT and will shortly have a new PoP in Auckland followed by PoPs in Wellington, Chicago and the outskirts of London before the end of the year - as well as a 'PoP' in Colombo. These PoPs are linked by back hauls (in Australia) provided by NextGen which will shortly be duplicated by much larger back hauls from AAPT. With IP transit now provided by Optus (all Australian PoPs), Verizon and NTT (four different Sydney PoPs) the Exetel network is a highly functional and multiply redundant transit service. A large, continuous and continuing, investment for a company that only commenced in business seven years ago....and its almost flawless performance from day one is a great tribute to its designer and overall manager throughout that time. We also moved a step closer to signing new leases for floor space in both North Sydney and Colombo. Subject to final approvals by Exetel's directors we will double the people housing capacity in North Sydney by renting a whole new floor and will add more than 30% to our SL people capacity in Columbo by renting the remaining space on the very large floor we already occupy. The North Sydney space will be needed as we will expand the Data Centre capacity on the floor we purchased almost three years ago and we already are at close to people capacity - doubling the current data centre space will make it impossible to house our current North Sydney based personnel - let alone the planned growth in people in North Sydney over the balance of 2011 and beyond. We continue to quite significantly increase the rate of hiring additional people - mainly in Colombo, but also in North Sydney. Having only quite recently passed the 100 personnel 'mark' it will not be that long, assuming we continue to grow at the anticipated rates, that we will have more than 200 people employed in our 'start up' communications business - still insignificant in comparison to our competitors but a long, long way from where we started. However there are so many dependencies, not all within our direct control, for that to happen that it only serves as an indication that we are still on track to planned aspirations rather than having to contemplate a "strategic change of direction".....let's hope I'm not getting ahead of myself. So much to do....... so little brain power left. Copyright © Exetel Pty Ltd 2011
Wednesday, February 2. 2011Business Services Going The Way Of Residential ADSL?John Linton I read the report that M2 had bought Clear yesterday for around $A25 million. The rationale was that Clear had around $A70 million a year of revenue from business customers and is said to increase M2's annual revenues to around $A500 million annually. It's not a name that many retail buyers are aware of being mainly an agglomeration of failing or failed businesses that have been bought up over the years and put together as a more powerful whole - a rising (until very recently share price) and an interesting balance sheet. Like many other companies M2's principal income and profits are made from mobile sales and the generous carrier payments associated with them with ADSL being a relatively small part of their operations and wire line telephone (via their acquisition of the failed Commander group) comprising the bulk of the rest. I was interested in the update on M2's operations because they seem to out "iinet" "iinet" in their approach to growing their overall business via acquisition of other companies and it clearly has worked out very well for them assuming the reported figures are accurate and the share price continues to hold up. Of the companies that provide services to the residential marketplaces it seems only Dodo continues to rapidly grow from its own efforts and that always seems, at least to me, to be nothing short of miraculous when taken in the context of its apparent business practices. But I really have no idea of how they really operate only seeing what is reported in the media. In terms of 'industry consolidation' it may mean something but two companies that few outside the industry have ever heard of 'merging' their quite different businesses is not going to mean much. What it seems to mean, in terms of Exetel's interests, is that more emphasis is being given by various comms companies to business customers as the revenues, and more importantly profits, from residential ADSL and telephone services continues to shrink. While I think I know a reasonable amount about business customers, their motivations and imperatives, and how to sell to them I remain more than a little confused about what will really happen over the coming months and for the rest of this calendar year. As I commented about that TPG email to one of their customers a week or so ago; it is a very dangerous situation to find yourself in - a supplier that has a customer base that they have been ripping off for years suddenly being confronted with one or more competitors offering better services and much higher speeds for less than half what they are currently charging their customers. This is exemplified by a sale we made yesterday to a private school where we could provide 4 times more bandwidth at less than half the price the school was paying to Telstra and had been paying for years. That pretty much sums up the scenario for almost all business customers of Telstra and it doesn't really change a great deal as you go 'down' the supplier status list. It appears to me that all of the 'business' suppliers have been content to simply use Telstra's umbrella to charge "Telstra less 10 - 15%" as their pricing strategy. Practically every, if not every, business in Australia is paying more than twice as much as they could be for business data services because of this scenario. All of those suppliers will begin to face increasing customer loss and/or continually decreasing revenues from their current business customer bases as more and more business customers become aware of how they have been over charged for decades. It's a pretty 'frightening' scenario that doesn't happen very often in business. A whole industry that has spent the last ten years (at least) being over charged for simple services while the providers of those services simply increase their profits each year by 'pocketing' the lowering of supply costs delivered by new technology. Maybe that will simply continue but as Telstra eventually was forced to radically change its approach to the residential markets as competitors whittled away its 100% market shares to less than 40% the same thing will eventually (perhaps sooner rather than later) happen in the business marketplaces. It's really only a question of timing and how passive the current business decision makers on data services really are. Exetel has had a really good result from its decision two years ago to build a corporate sales team and we are currently rapidly expanding that out bound sales capability in both Australia and now in Sri Lanka. I have noticed the reaction of several current business data link suppliers reactions to Exetel's activities - which are typically "we will meet whatever price Exetel offers". It is a silly thing to do (simply confirming in the customer's mind that they have been paying way over the odds for a very long time) and will have to be replaced with something more sensible in the immediate future as more data companies make similar offers as they too move more 'heavily' in to the business marketplaces and/or take some sort of actions to protect their over paying customer bases. I will have to give more thought to how they might try and do that. Copyright © Exetel Pty Ltd 2011 Friday, December 31. 2010That Was The Year I'd Like To Forget.....John Linton .....even go so far as to pretend it never happened at all. I never thought a business year could be so particularly horrible in so many different ways.....but there were some achievements that were notable. There is never anything useful about looking backwards in business, or probably in any other aspect of life - irrespective of what anyone might say to the contrary you are not really going to learn anything from the past (you certainly aren't doomed to repeat any mistakes you may have made). As the new calendar year is now less than 24 hours away all the bad things about 2010 are finished but the good things remain and are the basis for believing that 2011 will be a much better year than any we have previously enjoyed as a business. Firstly despite the incredible number of problems we encountered and, largely, overcame we completed our seventh full year in business from our start up in January 2004. Over the year our business grew by a double digit percentage in terms of revenue (around 15% subject to final figures) which was remarkable in itself given the conditions we, and every other company, encountered and endured throughout the year in terms of residential ADSL. Profit was a completely different, and much sadder, story that we have already taken steps to address for 2011. Secondly our company again became much stronger operationally with very few people leaving us and our recruiting of new people adding immensely to our capabilities in every aspect of our business. Our ability to retain our people year after year has been a key factor in any success we may have enjoyed and is something we need to continue to do if we are to continue to grow. We now have just over 100 people between Sri Lanka and Australia with 30% of those people now in some form of direct sales role. Thirdly we completed the three year program to transfer all of our back end processes to Colombo and began the process of building outbound sales capabilities in Sri Lanka. Not only did we complete the processes but we established and met the benchmarks that were set to ensure that the SL facilities operate not only at world best practices but that they deliver services to our customers that are superior to those of every other Australian communications company - bar none - a very significant achievement. The ability to provide much better service than our competitors at a fraction of their costs is a very significant sales advantage that will begin to 'deliver' in 2011. Fourthly we completed all of the work planned to make our Australian network even more robust by adding bandwidth and installing multiple paths in each State and Territory as well as upgrading the hardware capabilities of each piece of equipment deployed across the network. We spent more money on new hardware in 2010 than we did in the previous three years added together which is some measure of the scope of that program - which is ongoing. Those four achievements were the keystones on which all future growth of Exetel was and is dependent and to achieve them in an incredibly tough year was a great success in itself. We also enjoyed continuing success in building our corporate business to more than double what it was at the start of the year and also finishing the year unbelievably strongly with, currently, 82 new sales in a single, usually extremely 'quiet', month. Our corporate VoIP, SMS and Fax businesses also more than doubled over 2010. We will complete the last of the planning for 2011 some time later today with the revised pricing for all of our services, residential and business on the web site and almost all of the remuneration increase letters completed and sent to all personnel (a very important activity) as well as the last t's crossed and the last i's dotted in the overall business plan - not many organisations would be able to say that - but then not many organisations have the discipline and abilities that Exetel is lucky enough to possess. So 2010 was not a total write off but as I look across the meeting room table at the tired faces of our key personnel it's obvious that whatever it has taken for us to achieve whatever we may have achieved over the past twelve months it has been done at significant personal costs to too many really good people. Both for them and me - COB today cannot come too soon. I wish you a very happy new year....and thank you for reading and commenting on these thoughts - it has been a big help to Exetel. Copyright © Exetel Pty Ltd 2010
Thursday, December 2. 2010Seen Through A Glass Darkly.....John Linton ....may have a 2,000 year old meanings much less trivial than I'm hijacking the phrase for but it seems to perfectly describe my limitations in understanding the current residential communications markets. No matter how hard I try I simply can't seem to understand what is going on - beyond the obvious consequences of a saturated market (at least for ADSL) and the dominant supplier (Telstra Retail) desperate to "win back" market share and with a frighteningly large 'marketing' budget to do that. So the head line phrase I used exactly describes my situation at the moment - I can dimly see various things but I can't make them out in enough detail to really understand what is truly going on. I appreciate that I am not the only person having difficulty grasping the details of the current situation - every time I talk with one of Exetel's suppliers I struggle to work out whether they have wonderful acting abilities or they cannot understand the current situations any better than I can. I base that view on the, seemingly, startlingly naive statements they make about their understanding of the current marketplaces and the actions of the various competitors within those marketplaces. Two press reports about Internode in the last few days exemplify what I mean: http://www.theaustralian.com.au/news/nation/governments-broadband-not-up-to-speed-at-tasmanian-school/story-e6frg6nf-1225961150410
Now, you may well read the statements by 'Internode spokespeople' differently to the way I do. However when a company says it is increasing connectivity by 400% it only means one thing to me - the bandwidth up to the time of upgrade was woefully inadequate. Similarly when a provider ascribes slow user speeds to "problems with Bass Strait back haul" it only means they don't have enough ( as the forced subsequent retraction of those statements clearly indicated). No problem - these things can happen for all sorts of reasons but, in both these cases, they can't blame this situation on 'up stream' providers as both suppliers (and we know this as we use both suppliers referenced) can upgrade these circuits in 48 hours. Again, these things can happen to any provider at any time (including Telstra) but Internode has always made a song and dance about its past provisioning policies that it appears very odd to have moved away from their stated "massively over provisioned, golden network" to a point where under provisioning appears apparent in at least two key services. The issue isn't that it happened and was addressed but that it happened at all. Only one reason springs to mind - less money is available these days at Internode to provision links as they did in the past.....most likely reason for that is.....form your own views....but it appears to have caused a significant change in company policy. That is just one example of my inability to understand what is happening around us and I only use it because of the third party references rather than quoting statements made by people I talk with. It's a strange time in my, longer than most, time in the communications industry I have never been so 'lost' as to what is likely to happen 'next'. This is not a good way to be when your principal activities over the coming days are to revise a business plan. PS: Not wishing to say "I told you so" but those of you that read these musings regularly might remember that I have been saying since June that for all Labor's tub thumping about how good the economy is - I said that I, and the business people I talk with, saw it very differently: http://www.smh.com.au/business/economy-moves-into-the-slow-lane-20101201-18gn7.html Copyright © Exetel Pty Ltd 2010
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