Saturday, January 1. 2011Happy New Year.....John Linton .....and 2010 is finally over and already being forgotten....at least by me...and it's a perfect Sydney summer's day. The January recurrent billing run has been completed on time - well up on January 2010 (around 12%) and almost 380% up on January 2006 (our running 5 year growth base point). So in terms of 'figures' we continue to make progress in all areas of our business objectives except residential ADSL where we continue to lose customers to Telstra Retail's offers on a month by month basis. Not exactly a surprise. We also sent out the January Exetel customer news letter advising all customers that we would be increasing the plan costs for all residential customers who are out of contract by $10.00 or, alternatively they could move plans before midnight on 31st January 2011....or move to another provider if that provided them with a better solution for their needs. It appears to be a very 'brave' decision (as Sir Humphrey may well have said if his opinion had ever been sought) but it is in fact the only decision that we could have made at this stage of Exetel's life. The simple fact is that we make no money at all from providing residential ADSL services and have lost money for most of the past 18 months, every month, on providing these services. Only the profits made from business data services and other services have allowed Exetel to continue to provide residential ADSL to our customers and that is not a sensible basis for operating any business. By increasing each of our out of contract ADSL plans by $10.00 they are still, with a very few exceptions, lower cost than those of almost all other providers who sensibly provision their networks to provide full services at all times of the day/week/month....they are just not by far the lowest cost that they have been for the past seven years. However they will actually produce a, very small, profit now and they will ensure that the customers who remain with Exetel will contribute to the company remaining in business rather than ensuring it didn't. We expect to lose some, unknown, percentage of our current customers particularly the newer ones. The bald fact is that every customer on an out of contract plan loses us money so, while it's always very sad to ever lose any customer, the basic financial fact is that Exetel is financially better off and the customer who has found a better option is better off so everybody wins....not often you can say that in a competitive market place. You can never be certain of any forecasts or predictions in life generally and competitive business in particular but we dd plan for the inevitable eventualities of a stagnant residential ADSL market with ever fiercer pricing competition some two years ago when we looked at the simple arithmetic available to us at the time and which has remained pretty much the case, month by month, since March 2009. This is that if we could average obtaining 80 new corporate business accounts at a rate of $50,000 per month (at 30% gross margin) we could lose up to 9,000 residential customers each month (at the then gross margin of 3% - now 0%). Financially, assuming we could generate that level of new corporate business which looked very, very difficult two years ago but not at all difficult today then we would survive whatever the combination of a saturated residential ADSL marketplace and Labor's 'NBN2' ventures would produce. The chaos that was 2009 and 2010 residential ADSL came about exactly as predicted....however that was pretty obvious to anyone in the industry with an IQ greater than their waist measurement. The depredations of Labor's meddling with the communications industry is also becoming apparent - but I will let my views on that remain unpublished as they seem to cause consternation at my stupidity by too many people and I have no interest in appearing to be more stupid than I already know myself to be. After seven years I think it can be demonstrated that Exetel actually now provides better residential services than any of the companies with which we compete for a broad section of residential end users. Hopefully some 1.5% or so of Australian users of such services will see that is the case and will continue to use Exetel. If they don't then we have wasted seven years of our, and 100 other people's precious time on Earth and a great deal of our share holder's money. Copyright © Exetel Pty Ltd 2011
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I doubt anyone who looked at the newsletter would like the fact that a $10 price rise is looming, I suspect for a lot of people on old plans they could possibly spend less anyway as the new plans are a lot more generous than prior offerings but are possibly unaware how much the value has changed since
Regardless of what will possibly seen by many as the bad news I was quite impressed with the amount of network upgrades that are just about to happen, quite a lot going on behind the scenes there which looks like it will bring an enhanced end user experience, good stuff Comment (1)
It seems a bit strange that you are actively encouraging customers to change plans, yet there is a $40 plan change fee. Is that expected to remain all month?
In my case I am on a $45/month plan which will be increased to $55/month and for $55/month I can get more download which isn't really worth the $40 change-over fee (I think). So: is there any chance that the $40 plan change fee will be waived for this month? Thanks. Comment (1)
2 things:
Imposing a $40 plan fee on I'm guessing about 50% (not-on-current-plan-users) of your customer base is a very tidy windfall for Exetel and not very nice after slugging everyone with the $3 per month charge a while back. Can I suggest this be decreased/waived for this month? (Pretty sure I remember you discrediting other ISP's for this practice 6 or 7 years back in forums etc (i.e. Charging exorbitant fee's for a plan change which is essentially an automated process)) Also... why are there no longer any low-use ADSL1 plans avail.? I signed up my wife's grandma to Exetel about a year ago on the 256/64 $27/month plan. This increased to $30 with the $3 surcharge. Now it's moving to $40 a month! This is the same fee as the cheapest plan you now have in your ADSL1 plans. I'm probably going to suggest she just leave it as is to save her incurring the $40 plan change fee until I can move her to wireless, but I'd really like one of those all-in-one magic boxes that never eventuated first! (More $$$$). She must use a whole 100 or so MB a month if that! My issue is that she's an hour away and 95% computer illiterate and 100% modem/router illiterate. She just likes turning the PC on and clicking on outlook express/ IE. If she has any problems logging in/onto the net I'd have to drive out there... Comment (1)
The $40 plan change fee does seem excessive especially for a forced change, apart from that I have no problems with your policy.
Comments (2)
I'm with Thomas on both points.
My mother is on the same $27 ($30 with the admin fee) plan which is starting to get expensive at $40 a month. Her average monthly use is around 500MB. Oh how I long for a 256/64 PAYU plan for her. Comment (1)
Don't know if there is enough margin in the new plan pricing to allow for this, but thought I'd mention it.
To help retain customers in the long term, there could be a sort of "frequent flyer" program. After 2 years they get x% discount, after 3 years y%, 4 years z% etc. Might help keep customers onboard as they can look forward to a higher discount each year and when they reach the plateau discount level, hopefully it would be sufficient disincentive for them to go elsewhere. I don't know what the cost of winning a new customer to replace those lost might be but maybe this "frequent flyer" cost would be similar. Comments (2)
I take it back, there appears to be no plan change fee from next week according to a post on the Exetel forum.
May I suggest that Exetel take more care in wording their customer wide emails? There is a huge discussion on WP about the plan change fee and customers in contract being forced to change. This could have been all avoided with a properly worded email. Maybe release a draft to the Exetel forum beforehand, I am sure they would be happy to give suggestions. Comments (2)
The plan change charge will be reduced to zero in a day or so.
Unfortunately it was missed in the pressure to get many changes made over the past few days...and the only people who can make that sort of change are now asleep as they were up till 9.00 am today completing the January bill run. I am making too many errors. Comments (7)
It will be made zero when the appropriate people are available to do the work.
Comments (7)
As has been discussed in one of the forum threads (6 year club from memory) this will come in to effect for 5 year plus customers on February 11th.
There will be a loyalty discount of $10.00 per month for 5 year+ customers. No decision has yet been made on discounts for other customer longevities....we ran out of time. Comments (7)
Just looked up the topic - https://forum.exetel.com.au/viewtopic.php?f=288&t=35442&start=30#p285563
That looks promising to me and I think it will slow the flow of customers away from Exetel and contribute to long term goodwill towards the company. Comments (2)
I hope you're right.
We have always been very grateful to the 'pioneers' who have supported Exetel from the start of our 'existence' and, as you can see from the length of that thread, discussed how we could significantly extend that program. Over the last two years it has been very difficult to even consider such a process but now it can be done - I think. There are still a great deal of the details to be worked out. Nothing is easy at the moment. Comments (7)
Iam about to come off contract D/20BYOLine which i think is great for low GB users. Is there plans for something similar.A $10 increase on my plan is a huge increase, especially if the $3 admin fee stays.
Kindest regards Richard Morris Comments (2)
There is no $3.00 admin fee on the new plans.
Are you eligible for the new, yet to be formally announced, 'long term user' discounts that will be applied to the new plans? Discussed here: https://forum.exetel.com.au/viewtopic.php?f=288&t=35442&start=30 Comments (7)
No ,Just coming up to the end of year one with Exetel [AAPT Maitland] and have no wish to leave. The way I read it I will be charged $30 + usage = about $35. Still cheaper than$45 with more usage than needed.Mobile discount
out too not good reception in Morpeth. Enjoy the rest of your day Richard Comments (2)
Congratulations on your continued upgrades and enhancements to your network - Exetel will be one of only a few carriers with multiple PoPs outside of Sydney with this upgrade.
Two questions I do have after reading your latest newsletter come to mind: 1. With your relationship with Primus, would you consider approaching them for DSLAM/MSAN services on their hardware and/or EoC services on their hardware (I've been told by Primus that they do wholesale each of these). 2. Would Exetel consider building out their VoIP presence to PoPs other than Sydney? My reason for asking in each case is simply that more coverage and redundancy can never be a bad thing, especially for business services if the costs add up and the product meets certain quality requirements. Comment (1)
We will definitely put VoIP switches in to Melbourne later this year - assuming the ongoing growth in business VoIP services make that practical.
We have never been approached by iPrimus concerning any sort of wholesale services but we will look into that. Comments (7)
2010 has certainly been an interesting year for the communications industry, that's for sure.
As a satisfied Exetel customer since August 2004 (according to the date on my first invoice), I appreciate the effort that has gone into making Exetel the success it is, even though sometimes that reward gets lost in the day to day issues around running the business as efficiently and effectively as you can. Keep up the great work, and best regards to you and your team, and I hope and trust that 2011 will be an easier time for you all. Thanks Klaas Comment (1)
Thank you, Klaas - and may your 2011 be an exceptional year in your life.
Comments (7)
Sorry for the late comment. On holidays!
The new offers seem to price Exetel out of the low usage market. At a lowest cost of $45 for the A30 plan, there are alternatives in the sub 5Gb market that are more competitive - being around the $30 mark. (The new price of my current plan isn't competitive either.) If previous comments on the number of users who are sub 5Gb are correct, and this pattern is true across all your plans, you may have priced out a large number of your users. Comment (1)
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