Sunday, October 4. 2009No Place For Small Companies In Today's Give Away MarketsJohn Linton
I sent a 'fuller' explanation that effectively said that the marketplaces in which we had planned to operate had changed over the time we had been trying to source the device and that the current 'climate' in the residential data market was going to become increasingly difficult over the coming twelve months with more and more people attempting to use HSPA revenues to attempt to keep their sagging wire line revenues from becoming too much of a problem to their growth objectives. We believed that this, together with the uncertainties of the Labor Governments actual actions was not a time to be gambling with large expenditures on untried hardware. We exchanged emails on the HSPA market generally and his company's plans for various new hardware devices and I explained my thoughts on how HSPA offerings had changed and my views on how they would change over the coming months especially in late November of this year. My view is that I no longer believed that Exetel could sell the volumes of HSPA servces we had planned and therefore we couldn't risk any further significant investments in 'novel' HSPA hardware as we had done with the very low cost long distance aerial. My other view is simply that a tiny company like Exetel cannot compete in any discount residential market like HSPA and has therefore had to change its previous plans to accept the realities of the current situation. I suppose our poor planning was based on an assumption that HSPA would follow the ADSL 'model' in terms of customer appeal but its clear that the same scummy tactics used to sell mobile telephones are predominantly the way that HSPA is being offered by the less ethical of the HSPA providers. If you have any doubts about the new lows in ethical marketing (though that is probably an oxymoron) that are being reached a glance at page 17 of today's Sydney Sun-Herald will dispel such a view. Some samples: "Consumers are making up to 350 complaints a day to the TIO about the high cost of owning new generation phones for what is known as "bill shock" "Sam had a $49.00 capped plan and his first two bills were for $7,102 and $3766 respectively" "Mrs C used global roaming while in India for 3 months, she checked her internet usage regularly as advised by her provider but the charges weren't updated - after 3 months she had run up a bill of $4,500." "My daughter said she just used her phone to update her entry on Facebook on the way home but here I have a bill for $700." It seems we have returned to the bad old days of 2002 when people on Telstra's then brand new ADSL service with its super low included download allowances and its gigantic excess charges were in the headlines for getting multi-thousand dollar monthly ADSL bills. (Annette reminded me when she pointed out that article that we had got a thousand dollar plus bill in those days when we used Telstra's ADSL because of our children's downloads). But it's not going to go away and the reality is it's going to get worse as the fight to retain revenues becomes harder. My view is that the truly scummy operatives in the market, fully supported by the carrirs wholeslae account managers will destroy any semblance of 'ethical' marketing of HSPA services. There appears to be no place for a tiny company like Exxetel in this scenario. Although the first three months of this financial year (subject to seeing the final profit calculations for September) have been on target for Exetel, and in several areas well above each of the monthly targets we set back in June, I feel some very 'chill winds' blowing that make me think that our business plans need to be reviewed very carefully and revised downwards in terms of growth targets in several areas - not just in HSPA projections. In making that statement I'm not being pointlessly pessimistic I am merely looking at the facts as I can find them and then try to make intelligent decisions based on what seems to be the case. It seems to me that there is no/little place for a tiny/small company in residential data markets any more - the advantages of in depth knowledge and therefore the skills to make things happen better than the larger companies have reached the end of the road and are being overwhelmed by the sheer weight of marketing give aways and other money based methodologies. No big deal - that has always been the way of commerce in 'mass markets'. Our issue is to 'protect' what we have worked so hard to develop over the past few years and find a way past the problems that change always creates. Again, nothing new in having to do that - just sometimes you would like a less complex scenario to deal with. The person I was corresponding with this morning also advised me to stop writing this blog.....he said it gave too much information to people who shouldn't have the benefit of it. Trackbacks
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I got a HSPA account with Exetel when they first came out last year.
I expected to use it when I was "on the road" and also as a backup to my other ADSL accounts. Recently I cancelled my ADSL2 plus phone account in my Brisbane "unit/office" - I was using it for email, web and voip - but only for 4 or 5 months of the year.. ... so now I rely upon the HSPA service when in Brisbane. I have great reception and can even use a softphone with reasonable success. ... I love to find a device which could accept the Exetel HSPA sim (or Hauwei modem) and provide ethernet and voip connections.... at a price less than $150 (my other half prefers to use a standard phone vs a mobile phone). Comment (1)
Interesting content as usual,reminded me of when we first had adsl on one of those $29.00 #200mb plans.
Ofcoarse we didn't read the fine print regarding the $150 gig excess charge as we were very excited about getting "fast"internet.We payed dearly for that mistake as did lots of others i suspect. I don't think there were plain english contracts in those days but still it was our fault in our rush to sign up. I hope you keep this blog going [i'm sure you will] as i like your 'to the point' style. cheers Comment (1)
I'm curious if you advised him of the benefits this blog has brought to Exetel and yourself.
sigh at deceptive marketing of cap plans. The few decent mobile providers with "cap" plans automatically increase you to the next cap, and perhaps have an upper limit (an actual "cap") for your service. (Even Dodo ADSL at $9.90/mth has an upper cap of $99.) Was this discussion regarding the (current, possible) "magic box" or another device? Any further information on what's happening in HSPA/3G market in November? Comment (1)
Please John, don't stop writing your blog, we read it daily and enjoy your insights just like Krudd & 'Con'roy do !
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'The person I was corresponding with this morning also advised me to stop writing this blog.....he said it gave too much information to people who shouldn't have the benefit of it.'
That raises the question , how successful has the blog been ? From a personal perspective I can only imagine its been a great challenge to continually produce the blog each day. But how does one gauge its impact from a business perspective ? I am not sure you have ever released the figures on unique hits for the blog. Would make very interesting reading by ISP who frequents your blog each day. Knowing you, albeit I don't know you at all I would imagine you have some pretty good data who visits your blog each day ? Ever thought of publishing that data ? Stanley D would have a field day Comment (1)
we have spent a lot of time/effort to find such a device over th3 past 18 months.
We have got close over the past few weeks but have now abandoned the project. Comments (10)
It's hard to interpret the statistics.
As I use, by definition, many 'key words' in what I write there is a very large hit rate but that doesn't represent "real" visitors. Comments (10)
John, I always read your musings each day, and I do find your thoughts interesting, if not fascinating.
But, I tend to agree that you, to your own potential disadvantage, make too much public for your own business's good. Whilst it's quaint to regard Exetel as a "tiny" business, I think you over-play the struggling little Aussie!! Comment (1)
That would be really good but we were trying to get the price to below $100.00.
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I refer to Exetel as tiny for a number of reasons:
1) Telstra has a 25 billion dollar 2) Optus has an 8 billion dollar revenue 3) Every other competitor with whom we compete in any product/market area is at least three times bigger than Exetel (and thats the smallest competitor) 4) Our suppliers regard us as insignificant Hence - 'tiny'. Comments (10)
"It seems to me that there is no/little place for a tiny/small company in residential data markets any more."
How many larger competitors/suppliers, who may - or may not - have read correctly between the lines, contacted you with more offers to swallow up your residential data user base? Are you flagging that Exetel may head in the direction of a business/corporate only data provisioner in the near future? Comment (1)
John,
Since joining Exetel a few months ago and 'seeing the light' I have enjoyed reading your blog each morning. Hopefully the bastards haven't scared you off! Chris Comment (1)
"The person I was corresponding with this morning also advised me to stop writing this blog.....he said it gave too much information to people who shouldn't have the benefit of it."
Take no notice of that person you were corresponding with. I could easily now (not as easy 2-3 years ago) find an ISP that costs me around the same as Exetel with similar data limits that I require. Somewhat less than 54GB off peak. But I choose to stay with Exetel because of your honesty in you interesting daily blog, and the "ethics" that Exetel seem to abide by, along with the support Exetel gives towards environmental causes. Without these reasons, I would be shopping around every year as I usually do with car insurance. Comment (1)
Hi John
In regards to ethical marketing, surely the power of massive marketing budgets will never win over a good product/service that does what it says (ie Exetel' products). Massive marketing campaigns work over the short-term, but this will all come to nought if the product is crap (such as ripping out massive excess usage charges from unaware users). Once a customer has learned this lesson (whenever this may be) I would expect they would identify significant value in a good product/service, such as exetel. This is the reason I joined exetel, because I was fed up at being forced to use the crap products supplied by the bigger providers. It is also the same reason I recommend Exetel to my friends. In regards to your blog, i hope you didn't pay too much mind to the views of someone who works for one of the large suppliers that have marginalised exetel over the years. This blog communicates your passion and understanding of the industry in a way which hundreds of millions of marketing dollars can never do. The only thing your competitors' CEOs (no matter what size) are passionate about are their pay packets. You may give away some detailed about your company, but i'm sure this honesty has motivated people - like me - to become exetel customers. Anyway, i'm just hoping this post convinces you to keep doing what you're doing. Keep up the good work. Mahesh Comment (1)
I'm surprised by you sudden change on HSPA. What's got you so spooked? I haven't seen any noticeable change in your suppliers consumer offing over the past 2 months.
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Thank you for taking the time to write your kind words.
Personally I will continue to try to ensure that Exetel continues to survive by providing the best services it can given the difficulties of sourcing base 'components' at realistic prices. Comments (10)
Exetel would never sell "its user base" - it is an abhorrent concept to regard customers as some sort of 'livestock'.
We get the occasional enquiry about buying Exetel and our response has always been that we are not interested in selling any part of or the whole company. Comments (10)
I suppose I woke up to the realities of wholesale supplier/wholesale buyer relationships and didn't like what I realised was true.
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Its good to hear that you share our view of business and the environment - one day more companies may do that.
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hi John,
I believe that Exetel only had one ace in your hand regarding HSPA -- you had to play it immediately and offer HSPA before the big players geared up. John , your usually very decisive but you dilly dallied - and choose to procrastinate with this for a very long time, when as far as I could see, you possibly should attempted a pre-emptive roll out and advertising 10 months earlier. As one of the original beta testers I thought as soon as those test results were in, that would have been the time to strike. Anyway I wouldn’t get too discouraged -- you choose the path of safety -- I’m sure there are many before you that wished they had chosen that path. The best strategy I can see at present, is if you can’t establish your own new customers quickly enough -- I would not throw out the idea of growth by acquisition of ailing small suppliers. Think about it... cheers bill Comment (1)
Perhaps you're right but we never had such an opportunity for several reasons.
Our original 'strategy' has been overcome by events and we will need to think of something else - assuming we can. We will never 'buy up' other smaller companies 'in financial distress' - we aren't that sort of scum. Comments (10)
Out of curiosity, why do you consider a company that "buys up smaller companies in financial distress" scum? If someone's drowning financially and you offer to throw them some money at least they have another option than just going under immediately. They can always say no if they don't like the terms.
Regards, Michael. Comments (2)
Sorry to hear you've cancelled the HSPA plan, it sounded really interesting.
I would have thought that $10 / month equipment fee for 12 months would have been an acceptable pricing structure in the market. Seems to work okay for the big players with their partial handset subsidies. Any chance that the HSPA plan may start again or is it completely dead and buried? Regards, Michael. Comments (2)
The people I have met that do that sort of thing are scum.
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