John Linton's Personal Musings

I was looking at the preliminary monthly revenue results for October this morning over breakfast, always a cheerful way to start the day, and while they presented a pleasing symmetry in terms of their increase over the revenues achieved in September other contributing trends were not as pleasing - and one was quite concerning.

The report that caused me concern was the report that tracks where Exetel customers go when they leave Exetel to move to another provider and that tracks where customers who transfer from another ISP come from. Over the almost four years these details have been tracked the results have always been relatively easy to understand and, on more than one occasion, provided interesting insights in to what was happening within other ISPs.

From February 2004 until quite recently these twin reports pretty much showed what anyone familiar with broadband provision by different companies would expect to see. Over that time they accurately predicted the demise of the smaller/badly managed ISPs with sharp spikes in the churn to Exetel report in the 2 - 3 months prior to their demise. Similarly they accurately tracked some 'groundbreaking' new offer by an ISP: like the 1500/256 for $29.00 from TPG in October 2004 and the introduction of TPG's subsequent 'unlimited 1500' plan - the spikes were always marked but short lived.

The concern to me this morning when I read the report, was the trend in customers leaving Exetel and moving to BigPond starting 3 months ago and becoming the largest single 'move to' ISP in October.

From the very beginning of Exetel until July 2007 the one constant in this report was that the majority of customers who transferred from another ISP to Exetel were from BigPond and virtually no Exetel customer ever transferred from Exetel to BigPond.

For the last three months that 'constant' has disappeared and BigPond is now the ISP that the largest number of Exetel customers transfer to and has dropped (from the largest by a factor of double that of all others combined) to only the third largest of the ISPs from which customers transfer to Exetel.

In the past the most favoured ISP to which customers who left Exetel churned to varied from time to time - there was never one preferred ISP. That has changed over the last three months and the change is so marked it must mean something; I just don't have any idea as to what it does mean.

Given the huge size of the BigPond customer base (around 60%) it was always logical that BigPond would be the largest source of transfers in.

The fact that Telstra was always so expensive meant that someone was unlikely to transfer back to Telstra if they were unhappy with some aspect of Exetel - and for over three years this self evident scenario continued exactly as expected.

Now it doesn't.

The number of customers transferring away as a percentage of total customers hasn't changed in three years by more than a few hundredths of a percent from month to month (an average of less than 0.3% per month) so the actual financial loss hasn't changed and is, and never has been, of any financial concern (of course it's a concern in terms of customer dissatisfaction but that's not what struck me).

While the numbers are small, they are evenly distributed across all States.

I'm sure it means something.....I must find out what that is.

I've never even remotely considered before this Fedreal election that the result of such a thing could have any bearing on how a small business like Exetel operates. I was not running a business when the "Whitlam Landslide" ended up ruining the whole Australian economy in less than three years with over 400,000 small businesses going broke between the time of his 'landslide win' and his 'reverse landslide' loss some three years later.

Those old enough to remember will recall that Whitlam's Labour party ran on the election slogan "It's Time!" referring to the need to make a change from the coalition parties after they had been in Federal government for so long.

Australia went from prosperous to penurious in less than three years and the negative effects of the "sweeping Whitlam reforms" took over a decade to recover from. Of course the 400,000 small business owners and their families, their suppliers and their customers never did recover from what 'sweeping change' did to them.

People never learn it seems so after the country got back on its feet, albeit saddled with such an increase in employment cost it's taken 30 years to get back to full employment, the Australian people decided that "Labour has learned its lesson" and voted in the populist Robert ("call me Bob") Hawke and his doctrinaire running dog, er...mate, Paul ("despite what it may look like I can assure you those pig farms aren't under my beneficial control) Keating.

The Bob and Paul dog and pony show kept getting elected because those dreadful coalition people"were going to introduce a GST which would increase the cost of living by over 25% if they got elected". So "call me Bob" Hawke and Paul ("this is the recession you have to have when you're a banana republic like Australia"), who were so expert in bankrupting countries that they ran up the Australian government's national debt to around $100 billion and were so convinced that recession was just fine for working Australians that home loan interest rates exceeded 18% ensuring that home repossessions and lost jobs both hit post World War II records - oh, and another 500,000 small businesses closed (and more than a few large businesses if you remember Australia's then second largest airline and even Westpac was almost sold off as it's share price plunged as a consequence of its disastrous home loan exposures).

Labour had really learned - not.

However all that's in the distant past - Australia and Australians have never been better off and the country now has zero debt, the highest level of home ownership and the lowest tax rates, with more tax cuts to come, than it has ever had. Maybe thats all the result of the "resources boom" and has nothing to do with fiscally responsible government? Could be - the contrast remains so black and white it's not likely though.

All of that isn't enough though for small businesses in the communications industry and, of course, the customers of small businesses like Exetel. We now have the terrifying concept of the three amigo's who run Telstra (and will be gone from this country in a year or two and who have no interest whatsoever other than enriching themselves during their brief Australian stay to the maximum) playing extreme politics and attempting to use Telstra's huge free cashflow resources to influence a change of government for the sole purpose of benefitting themselves personally and to the detriment of all Australians everywhere, irrespective of what their political views are.

Telstra are using tens of millions of dollars in attempts to get rid of the coalition government (take a look at their 'advice to shareholders packages' sent to their 1.2 million shareholders and then think about if thats what they are doing so brazenly/overtly what else are they doing that isn't so obvious?) on the understanding that a Labour federal government would be their lap dog in terms of reversing recent decisions made by the ACCC and restoring the old monopoly (which was justified because it was 100% owned by the Federal government who operated it in the interests of all Australians) to what is now a purely commercial organisation whose only interest is to get rid of whatever competition has so painfully been built up since 1991 so they can raise prices.

A bit too simplistically overstated and alarmist?

I don't get alarmed easily - and I understand that there are a great many unknowns.

I'm one step down from becoming alarmed.

I also understand that I have zero ability to influence any end result (like so many Australians I will vote in an electorate that has, since Federation, never elected any candidate from a different party).

Hopefully there will be enough people who remember the results of doctrinaire Labour policy implementations by Whitlam and Hawke and also remember the horrendous pain that was caused to so many Australians while they fiddled with their "social engineering".

They might also remember that NO-ONE benefitted at all from their crazy attempts to engineer Australia into what the remaining union apparatchiks believe should be the new workers paradise.

Earlier this morning I wrote an email that effectively ended the 'old' Exetel and started a new version of it. Perhaps thats an overly dramatic way of describing a process that's been happening for some time but it was the way I felt as I 'hit send'. What's so dramatic? Not all that easy to describe in a few sentences but the email was putting in place a more formal structure and a schedule of meetings to support that structure between the directors and the people who have the responsibility within Exetel of either managing other employees or of managing key development and operational projects and targets.

Since Exetel began offering communications services in early January 2004 the company has been run and operated with no formal reporting structure with all decisions and discussions being done on an as needed basis with constant conversations between the working directors and everyone else in the company either face to face, by telephone or by email being the only ways we passed on decisions, corrected what might be becoming problems and all other information interchanges required to run the company.

There were no formal meetings nor many informal meetings with everyone knowing what they needed to do or asking advice if they were unclear or unsure about anything (or sometimes being given advice before they thought of asking for it). Similarly new ideas or suggestions were communicated the same way with an occasional meeting, sometimes schedules of meetings, put in place to get something more complicated operational. This was possible because the directors of the company worked, literally, within eyesight (and often earshot) of the few people working within Exetel over most of the past three and a half years.

For the past two years that structure was varied a little by, for the first year, setting up 5 operating committees chaired by me to address the five key aspects of the day by day operation of the company and to ensure the constant stream of ideas for innovation were brought to fruition as quickly as possible. After the first year these 'committees' continued but without me as the 'chairman' and, without a doubt, they have continued to be highly effective.

The only formal meeting within Exetel since the start has been the monthly director's meeting which has been held each month (with the exception of July 2007) and has been the only 'checkpoint/legal obligations' meeting held over almost four years.

It was obvious, as it's always obvious within companies that grow to the sort of size that Exetel is now (around 30 employees and $A3 million revenue per month) that the 'old ways' of running Exetel couldn't continue, despite the relatively high levels of achievement and success that had been accomplished, for much longer and, although I'd hoped to continue until the end of this calendar year (I've always been very driven by 'neatness' in planning dates), it was proving to be impractical.

So starting this week we will introduce a more formal management structure into the operation of Exetel with a view to fully putting a more formally organised company in place starting in January 2008. I haven't done this for a while, believing that the days of formal structures that I 'grew up' with in my commercial career were past and email and other forms of instant communication had rendered both the expense and waste inevitably resulting from 'company organisation charts' was a thing of the past. Perhaps its one more indication of encroaching age but it now seems to me that this has to be done if Exetel is to continue to reach its planned objectives.

Personally, I'm saddened by having to take this step. I've never believed in doing things in the same ways they have been done in the past and, probably, have always gone out of my way to eschew either copying anything done by others or repeating anything I've previously been associated with. I fully understand that such a modus operandi is quite possibly needlessly elitist - but ......it seems to have worked relatively well over a long period of time..........

It will be interesting to see how well we are able to manage this change over the coming months.

Exetel has been a wholesale customer of Unwired for a little over three years now - I think we were either the first or second ISP to use Unwired for access via wireless to Sydney customers and, as far as I know, have been the only ISP to do any reasonable volume of business with them.

As with all the companies we do business with, I take an interest in whatever information is published about them and therefore read their first quarter report for the new financial year with interest when it was published late last week. I had, probably like many other people who take some sort of interest in the Australian communications industry, formed a view some two years ago that Unwired would need to be bought out by some entity with a lot of money if it was to survive as a wireless competitor to fixed line and mobile competitors and therefore the recent offer by Kerry Stokes to buy the company for some $A120 million was no surprise.

The financial report for the first quarter of FY2008 released last week doesn't appear to have changed anything though. Unwired chewed through another $A4 million in cash losing money on its operations for the 17 successive quarter and incurring increased financing costs and, still after that time, has less than 75,000 subscribers.

More worryingly, despite, spending a massive $3.7 million in the last quarter on advertising it resulted in a net gain of only 4,428 customers - a cost of acquisition of over $900.00 a customer (surely the highest coa of any comms company in Australia by around 300%?). As an example - Exetel increased is user base in the last quarter by almost the same number without spending one cent on advertising or marketing and in a previous musing I did a rough calculation of iiNet's advertising where the coa appeared to be around $250.00.

I don't take any comfort in looking at numbers like these especially as Exetel provides services to customers via the Unwired network. My interest is simply in what direction WiMax inAustralia is heading in terms of competing with the mobile 3G solutions now available from every Australian mobile carrier. With the Federal Government awarding the regional broadband contract to OPEL (which will pump at least a billion dollars into WiMax) plus Kerry Stokes ambitions for Unwired there appears to be real money being made available to which must be added the heavy influence, and financial muscle, of Intel and Navini's more recent rise to acceptance in terms of the concepts it's promoting to boost wireless data capabilities and the subsequent buy out by Cisco.

Today, only the Unwired Navini (and possibly iBurst) network can deliver a reasonable amount of data for a reasonable price wirelessly-but both those networks are relatively small in terms of total Australian coverage. However 'tomorrow' the 3G networks will begin to offer more affordable data services and have four already established Australia wide networks that give them a technolgy edge and require no new nvestement in overall structure- there only drawback is the cost to themselves and therefore to the end user of carrying data via those networks.

Exetel is edging closer to providing a data service via a 3G solution but that, assuming it happens, is nowhere near where we would believe it needs to be and is only going to be a small step along the way. We haven't found a way of working with Unwired to make our wireless offering via Navini more competitive in the Sydney data market and we have spent a lot of time and money attempting to do that.

In the not too distant future we are going to have to make a decision on which way to go but we need to be a lot clearer on the future of WiMAx (in Australia) before that decision will get any easier than it is today. The recent moves forward on WiMax becoming an ISO standard and the Navine buyout by Cisco plus Intel's increasing involvement all point in a positive direction - as does the buyiut of Unwired by an entity with a lot of money.

I'm just not sure that the new owners of Unwired will be any more interested in a wholesale relationship than the old owners were.

I doubt that anyone who bothered to think about it (and I would think it highly unlikely that there is a single person outside Exetel who would ever consider Exetel in this way) would think that Exetel is a company that expends much of its resources on developing 'technology'; even in the broadest meanings/interpretations of that word.

To be honest - neither would I have ever done that. However, towards the end of last year I was approached to see if Exetel was interested in a submission to DeLoittes for possible inclusion in the "Deloitte's Technology Fast 50" for 2006 based on our significant growth in the 2004 to 2006 period. As I regarded Deloitte's very highly it seemed like a good opportunity to obtain some sort of reputable third party recognition but, as so often happens, the time passed before we made up our mind about making a submission.

At the time I was unsure whether Exetel complied with the Deloitte requirements which were:

"A company making a submission must be a technology company defined as:

1) develops proprietary technology which contributes to a significant portion of the company's operating revenues (NB using other company's technology in a unique way does not qualify); or manufactures a technology-related product; or
devotes a high percentage of effort to research and development of technology

2) Be in business for a minimum of three years

3) Revenues for the first year of calculation must be at least $A100,000 and the current year must be at least $A1million.

4) The company must be Australian owned and headquartered in Australia."

At September 30th 2006, Exetel hadn't been in existence for 3 years so it didn't meet 2). At first sight, I didn't think that Exetel met 1) either so I wasn't concerned that we didn't put in a submission.

Time passes quickly and two months ago I was reminded that submissions to be included in this 'program' were again due and would we like to submit for inclusion.

As we had then been in business for over 3 years meeting 2) was no longer a barrier. Surprisingly, after we looked at 1) in more detail we worked out that almost 30% of Exetel's personnel and 40% of our financial resources were dedicated to the development of uniquely constructed services, processes and products that resulted in Exetel earning the majority of it's revenue. What was equally surprising was, when I looked at the future business plan, that these percentages were scheduled to increase in each of the three successive years.

So we put in a submission and were advised late last week that we had been included in the Top 50 Australian Companies listing together with an invitation to attend the presentation lunch in November. Subsequently we were also advised that we had been included in the 'Asia Top 500 Fastest Growing Technology Companies".

I'm pleased with that inclusion as I think it will add some emphasis to what we will be doing over the coming year - and in fact have already started doing in changing the emphasis and direction of Exetel quite considerably. Whether it has any effect on our current directions or current customers and prospective customers is unlikely. I think it will please our current employees which is very useful.

The amount of money we are currently spending on development and the amount we have budgeted for in the coming three years is just one more indication/reminder that to survive in this very tough industry doing what you are doing today a little better in the future is nowhere near enough to maintain financial viability in this end of the first decade of the 21st century (though it was more than enough to ensure survival and growth until quite recently).

Oh, for the old days when things were so much....................

We activated the 'equipmentless' VoIP service yesterday to Sydney and Melbourne Exetel customers as a final trial before making the service available Australia wide. I've used it for the last week and am more than satisfied that the service delivers toll quality calls to Australian and international land lines and mobiles. I still have trouble comprehending how I can call the UK at no call connection cost/flag fall for 1 cent a minute and still make a 40% margin for Exetel. Of course I have to pay for the local call to connect me to the Exetel VoIP calling service but that (from my home provider of call services) is only 18 cents a call.

18 cents for a call from Sydney's lower North Shore to Exetel in Pyrmont and then 1 cent a minute from Pyrmont to the South of the UK - seems odd every time you look at Australian telephone charges - even from low cost providers.

I also tested using the Exetel equipmentless VoIP service using ANI (Automatic Number Identification) that, as a process, has been around for at least 20 years as I first used it in the early 1990s to make calls back to Australia in the days when hotel phone services would charge you mega money to make an overseas call. ANI has got even smarter over the past 20 years and it now allows Exetel to offer its equipmentless VoIP service to users anywhere in Australia at a lower cost than a local call in Sydney or Melbourne.

Using ANI the end user simply dials an access number (in Exetel's case this is in Sydney) but the number doesn't 'answer' so the caller just hangs up and there is no charge from the customer's call provider because the call isn't connected. However the access number is serviced by an ANI server that doesn't have to connect the call to be able to recognise the number being used to call in to the ANI number. The ANI server simply registers the caller's number and immediately calls back and allows the user to use that open circuit to then call any number in the world of their choice.

In the case of the Exetel 'equipmentless' VoIP service the charge for opening the line is 10 cents - 40% less than my provider charges me for a local call in Sydney and much less than most providers charge most users for a local call.

So why does Telstra, or any other infrastructure provider for that matter either in Australia or anywhere else inthe world, still allow this loophole to exist after more than 20 years? I don't know the answer but assume it has something to do with the difficulties of 'policing' the access numbers and the fact that Telstra still gets revenue from the ANI call backs.

But it does raise a 'niggle' in my mind.

Apart from the slight inconvenience of having to dial an access number, ANI servers mean that the end customer gets to use the Telstra network for a cost that Telstra has never made available even to their biggest customers (the Federal Government and the major banks).

It also allows a small commercial company like Exetel to offer telephone services Australia wide without paying Telstra for expensive 1800 numbers and I also see that many calling cards I've purchased to test list 1800 number access with the 18 cents a minute charges for using those services.

Where's the catch?

Telstra's own calling cards are astronomically expensive as far as I can see:

Local call (per call) 49¢
National long distance call (per minute) (flat rate 24 hours, 7 days) 21¢
Fixed to mobile call (per minute) 44¢

*A call connection fee of 49¢ applies

Obviously many other calling card offerings are based on being lower cost than Telstra and so Telstra is well aware of ANI and how it can be used by many other companies.

Meanwhile - ANI seems to make the investments made by companies such as Engin to deliver VoIP over the Telstra network (who would have been fully aware of ANI) equally incomprehensible - why pay for a VoIP box and entering to a long contract to make calls when there are dozens of lower cost/better quality options already available?

One more strange and incomprehensible, to me, apparent anomaly in the ever more incomprehensible Australian telephone communications services business.

I read in the SMH yesterday that the owner, founder and CEO, of Crazy Johns - John Ilhan - had died of a heart attack at the age of 42 while walking on the beach near his home. I met with him once and talked to him briefly on the telephone some 3 months ago but have no knowledge of how he ran his business other than what anyone can read in the business press; that basically his business was continually growing and was a major 'player' and an equally major influence in the mobile marketplace. I read the brief profile on his background and activities when he reached the top of the BRW's young rich list (wealthiest people in Australia under 40) and his 'drive' was evident not only from the quoted business results he had achieved but from his quoted statements in the write up.

Of course, I'm sure the vast majority of people who operate in highly stressful positions in IT and all other industries and professions live to enjoy a long and enjoyable life completely unaffected by the demands of their day to day activities. However, when I read that report, I took a few minutes to try and remember the people who I've known who made some sort of difference to the IT/Communications Industries and was saddened in being able to recall more than a dozen people who I'd known who didn't live very long at all.

Over the years I've been in the technology business I've noticed a worrying number of people who died well before the quoted averages for Australian males or males from other countries. The person I admired most (of all the people I have ever been managed by or observed managing) in terms of the very best manager of people in the IT industry committed suicide in his early 50s and one of the true genii of the development of mainframe computer chip architecture whom I had the privilege of meeting on several occasions also died of a heart attack in his late 40s - he just dropped dead while waiting for a flight at the airport.

I'm reminded by these sad events that the environment in which many people work in IT is inherently unhealthy - long hours, sedentary working (made worse over the past ten years by the spread of laptop use), constant change/development, low margins in many aspects, unrelentingly fierce competition and a constant need, in senior management positions, to take decisions very quickly based on too little information.

The financial rewards, for all but the very few, are nothing like what has been the norm in merchant banking and stock broking for the past 30 years yet the level of intellect and speed of thought and crucial nature of the decision making are equal or greater in most, if not all, aspects of the day to day activities.

Perhaps I'm getting to that age where the increasing number of minor ailments, aches and pains which are the inevitable result of an aging body and too many decades of drinking too much alcohol and eating too much gourmet food coupled with no exercise and 12 hour plus working days is making me too aware of the fleeting qualities of human existence.

Perhaps the habits of a working lifetime are what protects most of us from thinking about the consequences of the lack of care we take of our body and mind while we expend so much effort on doing the ever increasing things required of a career in this amazing industry which, just as you think you've understood something begins to change before you can take a 'breather' from the unrelenting demand to deal with new circumstances.

Time waits for no man, it's almost 9 am, and I'm already behind schedule.

We installed the IPTV servers and switches of a third party we are working with in our Sydney PoP earlier this week and that service is now getting closer to commercial release. It's taken a lot longer than originally envisioned, but then it always does, and it's only a very small step along the path. I was reminded of how fast all things in this business change when I received an email yesterday.

A long time ago, I can't remember when, I got tired of lumping around a lap top so I could work at home and interstate/overseas as well as the office with the same files and bought my first 'SanDisk' - one of the early manufacturers of flash memory based 'stick drives'. I also can't remember how small the actual capacity was - around 100 mb I think, but it allowed me to take something weighing a few grams (instead of 2 plus kilograms) to have access to my files wherever there was a computer with a USB port and it was smaller than a packet of cigarettes instead of needing its own carry case with its battery, charger mess of cables etc.

It still surprises me to see so many people using lap tops instead of flash drives but each to his/her own.

When I bought my first SanDisk I also 'ticked the box' to receive product/news updates and have never got around to cancelling that 'subscription'. I have bought replacement flash drives several times since with my latest drive holding 2 gigabytes and while I don't need anything like that capacity it was around the same price as the bottom end 1 gb unit so I spent the additional $20.00.

That's a long winded way of explaining how I was advised of their latest offering which is detailed on their web site here:

http://www.take.tv/

It's not much use to Australians at the moment because it's only avaialble in the USA but presumably it will become available in the not too distant future and, in any case, it's just one more example of how the major 'studios' are finally getting around to distributing their 'titles' legally via the internet.

What I liked about this SanDisk offering was the fact that it contained the 'set top box' control capabilities needed to display downloaded content on a standard large screen TV without all the hassle of setting up yet another wireless point etc. I realise that this sort of convenience isn't required by truly technically adept people but I'm not one of those and like to watch entertainment by using a remote with very few buttons.

I'm sure those people that download TV shows and movies illegally would be horrified at the thought of paying for their viewing pleasure but for those people who are averse to copyright theft the 'Take TV' concept has a great deal of appeal - and as it is just one more step along the road - it's an interesting move towards a more likely low cost/free entertainment via the net concept.

I think if this was available in Australia and the title list was suitable I'd start to think very seriously about getting rid of my now very expensive FoxTel connection (I think the last time I checked that service was costing me over $80.00 a month for two outlets in my home - perhaps more). I don't think I'd actually do it because of the live sports channels which I wouldn't want to be without but I'd certainly ditch some of the other add ons and, from the brief costings available, I think I'd save money even at this early iteration of the service.

The attraction to me is the ease of making the content available on a large TV screen with a simple remote control as well as the low title costs.

I'm sure Apple etc will produce even better versions of their entertainment products and SanDisk, or other companies, will also quickly develop both the scope and the financial attraction of their products.

I've been heavily involved in the set up and operation of several ISPs before setting up and operating Exetel and one thing that was/is, very strangely, common for each of those ISPs, across a timespan of 12 years, was/is that Victorian users average twice the bandwidth usage of all other State and Teritory users.

It hasn't made any difference in terms of 1995 (obviously basic dial up) to 2007 or in terms of total number of users or in terms of the 'service offering' of different ISPs at similar times; the same result happened with 5 different ISPs across 12 years - Victorian users use double the average amount of bandwidth as users in all other States/Territories. Users in all other States/Territories vary by less than 6% with NSW being the lowest on average of all other Australian areas. This result was also independent of the 'home State' of the ISP - with the five I have detailed knowledge about one was based in WA, one was based in QLD and one was based in VIC.

Apart from my own experience I've heard the same overall comment made by, what I would consider to be knowledgeable people, from two extremely large ISPs - so size doesn't seem to be a factor in terms of number of users nor of the actual 'target' end user demograhics.

As Exetel has only recently activated a Victorian PoP, this issue has only recently, again, become apparent as we have added users to the new facility. The rapid upgrades of connectivity bandwidth have continued disproportionately in Victoria to the rate at which we add bandwidth per 1,000 users in NSW and in the recently activated Queensland PoP - mirroring the 2:1 ratio that has existed for 12 years to my knowledge and remaining constant in moving from dial up to ADSL1 to ADSL2.

Interestingly the average is actually much closer to the 'average' user than in other States. In Victoria there are a lesser percentage of 'mega' downloaders to total customers with both Queensland and NSW having a higher percentage of that type of user. There are also a lesser percentage of very light downloaders in Victoria than every other State/Territory. So it appears to be that an ADSL user in Victoria in 2007 still downloads twice as much as the same types of users in all other locations. The ratio is consistent over all months of the year so the 'terrible Victorian winter weather' can't explain the issue and I have never heard any theory about why this is the case.

We will be adding a Melbourne PIPE connection in the next few weeks and I'll be interested to see if Victorian users share the same files to a greater extent once that facility's in place - though I'm not sure what that would actually explain. The Brisbane PoP will have the direct connection to PIPE installed by early next week so we'll have a 'benchmark' to assess the Victorian results against.

One of the Australian internet's ongoing anomalies.

While it probably belongs in the "No sh** Sherlock" category of comments I got some amusement from this article today:

http://www.theage.com.au/news/national/telstra-bigpond-too-slow-and-too-expensive/2007/10/21/1192940903791.html

One comment from the article was:

"Customers of Telstra's BigPond, Australia's largest internet service provider, have given it a resounding thumbs down, saying it costs too much, has poor levels of service and is not as quick as advertised."

Another, more serious part of the survey was:

"But in a concerning trend, overall levels of satisfaction have slumped from 41 per cent two years ago to 29 per cent now."

Almost at the end of the article a "Telstra Spokesperson" responded to this survey result by saying:

"BigPond corporate affairs manager Craig Middleton said Telstra was offering a premium service. "While we'd be concerned at this survey's findings we are outselling our nearest competitor (Optus) four to one,"

What sort of parallel universe does Mr Middleton inhabit to be able to correlate the survey findings with "offering a premium service" and the fact that as the overwhelming majority of broadband users are Telstra customers, the drop in overall user satisfaction with their supplier has dropped from 42% to 29% (30%) in two years?

Like all 'marketing/PR personnel he chooses to use a pointless statistic in some vain attempt to be positive. I would have little doubt that BigPond does sign up 4 times the number of broadband connections than Optus does today. I'm not sure why that statistic would provide any comfort as I'm pretty sure that Telstra would have been signing up something like 20 times more broadband connections than Optus 2 years ago.

OK......cheap shots at easy target over.

The truly shattering statistic is the drop in overall customer satisfaction with broadband service/speed/support (I haven't read the full Choice article yet) from a dreadful 42% to an absolutely abysmal 29%; it's a terrible condemnation of all broadband providers - even allowing for the fact that Telstra provides around 85%+ of all ADSL services either directly via BigPond or via tail circuits supplied to wholesale buyers (thus contributing to the cost problems and, increasingly, some speed and reliability issues).

I wonder whether there is any other product/service offered in Australia that 70% of the users are dissatisfied with?

I actually wonder whether there is such a product/service anywhere in the 'Western World'?

Before either I, or anyone else responsible for delivering broadband services, goes outside and cuts their throats, you have to wonder at another little gem from this article:

"Despite the negative perceptions, 90 per cent of those surveyed had not changed their provider in the past year"

Huh???

Only 14% of the 71% (presumably the 29% who were satisfied didn't change suppliers) that were dissatisfied with their broadbad service actually changed to another provider????

Perhaps the survey questions were skewed to elicit negative responses? ........mmmmmm.....probably not.

Perhaps broadband users are totally unreasonable people who expect far too much?.....mmmmmmm....could be part of the reason.

Maybe it means there are so many lock ins on long contracts and so many of the dissatisfied are new users of the complexities of broadband (the article also says: "In two years, dial-up use has dropped from 47 per cent to 8 per cent) that their dissatisfaction is of their own causing as they grapple with the greter complexity of broadband and they aren't moving because their contract termination conditions don't make that financially viable......yup.....a little more likely....probably much more likely.

What is very certain, in simple commercial terms, is that if any commercial enterprise was supplying a product/service with which 71% of its customers were dissatisfied it would be out of business within a few months.

Maybe all this latest survey shows is that given the opportunity of complaining the human race will do that.

Now where's that patch of really soft sand.......?

PS: Alternatively - if Telstra and Optus stopped wasting millions of dollars every month on advertising and giving away modems and activation fees they could use that money to provide better networks that didn't generate so much dissatisfaction? ....but where's the fun in giving money to engineers to waste on additional circuits when you can be wined and dined by pretty girls with curvaceous figures and come hither smiles?

I went in to the office yesterday to interview some applicants to fill positions required by the new technologies we are beginning to deploy and the changes we are making to the directions of the company over the coming year. The interviews were, as always, interesting in all sorts of different ways including the glimpses the interviewer obtains about the ways other technology companies operate. In some ways it's difficult to objectively view what you think you learn but an overall impression I have got from interviews over the past few weeks is that many technology companies are struggling to keep up with the one constant of this industry - constant and unrelenting change at a rapid pace.

This was re-inforced, if indeed it did need re-inforcing, when I had a walk round the office before locking up. The ten large boxes holding the caching servers still 'litter' the little available spare space we have and the final equipment is due to arrive on Monday having cleared customs last Friday. As this is a major investment for Exetel and it continues to concern me greatly, both on the technical and financial aspects of such a change, I didn't lock up and leave but went back to my PC and, yet again, reviewed all of the assumptions and projections we have made in deciding to make this large investment.

The projections, assuming they are correct, are truly astonishing in financial terms - which, of course, they had to be for us to risk so much money starting 15 months ago when we took the first step of investing $100,000 in the NetEnforcer 2040. That first investment has paid for itself every month of its operation - a truly great financial decision, operationally (albeit a blindingly obvious one). While the implementation on the NE delivered an $80,000 reduction/saving in the monthly expenditure on ingress/egress bandwidth by 'pushing' 400 mbps of peak time P2P downloads in to off peak time it came at a cost of severely annoying a portion of our customers who believed that their file downloads should happen in the shortest possible time at all times of day - something we decided was not going to happen if the cost of doing that was $80,000 a month and a 25% slow down in peak periods for file downloading was not any real inconvenience. Those that didn't see it that way went somewhere else and so we lost some customers which has to be a bad thing and it would have been better if that hadn't happened.

However......I doubt that those disgruntled user's subsequent ISP didn't either already use, or implemented shortly after they moved to them, the same or similar P2P control processes that we used

We had always planned two more steps in changing the 'model' of delivering large file downloads.

Step One - The NE allowed us to 'push 25% of our peak time downloads (400 mbps out of 2 gbps) from the 8pm to 12 midnight period to 12 midnight to 12 noon period and was successful in allowing Exetel to only pay for 1.6 gbps of activated IP to handle 2 gbps of peak time demand.

Step Two - The new P2P caching is projected to allow the 400 mbps of 'delayed P2P downloads to, via the cache, be 'instantly supplied' rather than slowed down once it's operational.

So, if these 15 month old projections turn out to be true (and the first 400 mbps did turn out to be true) then we will be able to deliver 2.4 mbps of downloads at the price we currently pay for 1.6 mbps of downloads, a saving to the business of approximately $160,000 per month with, if it all goes to plan, NO customer impact on file downloads once/if the caching works effectively. The effective cost of the 800 mbps of additional downloads will cost Exetel around $A50.00 per mbps compared to a current cost for the other 1.6 mbps of $A250.00 per mbps.

An amazing advance in technology if you're prepared to do a lot of research, take some risk, understand your customer base, have very competent and dedicated network engineers and be prepared to lose more money and more customers in the development phases than you are comfortable about.

...and believe me when I say it isn't as simple as the confines of my time allowance in writing this and your attention span allowed for extraneous musings demands.

As with all neatly presented Excel spread sheet figures you've looked at and agreed with dozens of times before it all looks very likely to me.

I hope I maintain that view once the physical installation process commences some time later this month.

My 'working day week' finished on a high yesterday afternoon when I tested the new VoIP without VoIp equipment service that will be offered by Exetel. It's less than a month since we decided to develop this service and to have everything in place so quickly is one of the few advantages that a small company has.

The basis of developing this service was to encourage more Exetel ADSL customers to use VoIP as their preferred method of making land line telephone calls. many Exetel customers do already use VoIP, either choosing Exetel's VoIP service or a service from one of dozens of VoIP service providers in Australia and in other countries, but the vast majority of ADSL users don't use VoIP - which is a great pity because they are wasting so much money on 'standard' telephone services.

Exetel's VoIP service (which is used by Exetel to run its business and by me personally) is simple to set up and the call costs are very low and at a quality level indistinguishable from that of a 'standard' PSTN or ISDN service. The drawback for the people who don't use VoIP is that they have to buy and set up VoIP equiplment or buy a new modem/router with VoIP capabilities built in. For a very large percentage of ADSL users this is clearly a major barrier. What other explanation can there be for an individual to knowlingly spend more money, often two to ten times more, to make a telephone call?

The Exetel 'equipmentless' VoIP service is designed to encourage Exetel ADSL users to try VoIP using their current telephone handset to prove to themselves that the VoIP quality is as good as their current service and the call costs are a fraction of what they currently spend. Sounds really good to me.

There are two 'drawbacks' of this service:

1) The user has to dial an access number (and incur a local call connectioncost) each time they want to make a call. However, almost certainly, their current telephone call provider charges them a flag fall/call connection charge for Mobile, STD and International calls that is likely to be double what their local cal cost is so even that 'financial disadvantage' is almost certainly an 'advantage'

2) They have to dial an 'access number' and enter a hash before dialling the destination number.

So there is a slight time disadvantage in making a call (which is overcome if there's a speed dial function on the user's handset) but the user gets to see the quality of VoIP without having to install any equipment or make any changes to their phone set up.

They also get an 'instant' record of the phone calls and charges they've made on their User Facilities and don't have to pay for their calls until the first of the following month.

If they see that they will save money and they do experience that there is no quality difference they may like to then decide to buy the necessary equipment to eliminate the call connection charge.

I signed up for the service on line in my User Facilities which was immediate and painless and I then made three test calls which were all of excellent quality.

Our intention is to use this as the basis of a 'calling card' product to be sold in retail outlets around Sydney, Melbourne and Brisbane and we will attempt to put that in place before the end of November.

Perhaps its an example of "little things pleasing little minds" (as my gran so often commented to me) but I really think this is an excellent add on service that will provide significant financial benefits to many Exetel ADSL users which was why I was so delighted yesterday afternoon - and my 'euphoria' has carried through to this morning.

Nice for the weekend to start so pleasantly.

Yesterday was some sort of 'red letter day' in my dismal attempts (failures) to find a way of delivering data over a reputable GSM network - I actually detected a glimmer of light at the end of the tunnel which, if you squint your eyes really hard, could be daylight rather than another freight train headlight.

What we need, and as a small company we haven't got enough to offer in terms of current mobile minutes, is a direct connection to one of the four 3G carrier networks. We won't be able to get really reasonable pricing going via some established MVNO (Mobile Virtual Network Operator) but it would be better than where we stand at the moment. My principal interest in making SMS available from the desktop was, apart from providing the lowest possible SMS cost for Exetel ADSL users, was to increase the volume of our mobile netwoork traffic. (the SMS initiative has been very successful to date but most of the volume users are non-Exetel customers - which is an added bonus in one way I suppose).

I was disappointed in the outcome of our long drawn out discussions with "3" - but in retrospect their current limited coverage may make that failure a good result (pity about all the wasted time and opportunity loss though). Optus, being Optus the corporation now rather than Optus the more agile new entrant to the telecommunications market, is a possibility but I can't look forward to the long drawn out process with anything but misgiving (the least pejorative word applicable).

My discussions with mobile minute aggregators in the USA are making slow progress but dealing with the sales and operational people, having got fast introductions from senior levels, is going to take a while - but at least there is some likelhood of a successful result sometime mid 2008.

So yesterday - two separate organisations approached us with, what on first sight, appears to be reasonable compromises in terms of a reasonably fast outcome (either positive or negative without the protracted discussions I've experienced so far would be a pleasant change). Having explained what we want (access to/from a 3g network for data and SMS transfers at realistic costs to us) both organisations have said they can meet our connectivity needs and will provide pricing that they both believe is better than we can get from any other source.

"Yes, Virginia, there IS a Santa Clause." "Be still my beating heart - can this really be true." .....and other half remembered quotes from my long forgotten past appropriate to the statement that obvious impossibilites are in fact really possible.

My previous disappointments with people from 3G organisations making very positive and enthusiastic statements at the outset which gradually deteriorate over time precludes me from being very hopeful but I figure that there must be a way of making this happen and if enough time and research is put in to it then a positive result will occur sooner rather than later. It would be helpful if more carriers and related organisations employed sales personnel (sorry; customer care specialists) who actually had a firm understanding of what the organisations they represent are actually prepared to do, at what cost and in what timeframe.

Hope springs eternal in.... (as this is a G rated blog I can't complete the quote due to references to female anatomy that may be deemed inappropriate without adding the government mandated disclaimers to this entry and to the blog and site generally).

So we could offer a wireless service on either the Vodafone or Optus network but it would probably only be suitable for 'business' users as the price of the data is still very high on today's 3G networks. At least its a step in the right direction but there's a long way to go before Exetel is going to be able to offer a realistic wireless broadband service for residential users.

It would be good to think we could actually have a wireless solution in place in the not too distant future.

When I started writing this on line 'diary' of some daily events/thoughts in/about operating a small business my only objective was to record some of the 'thinking' that goes in to setting up and then running a small business in the Australian communications market place and to, perhaps, generate a higher visitor rate to the Exetel web site (an interesting fact I'd been made aware of while on holiday in the UK in June/July of this year). I wanted the record of my thoughts for my own use at some future time and when I was told about how using a 'public' blog could have a beneficial 'side effect' it seemed a great idea and one that would encourage a level of discipline that otherwise wouldn't be there.

I wish I'd been made aware of this sort of facility earlier in Exetel's 'life' as I would have been better able to look back on the issues and problems that have occurred and the planning (guesses) and other decision making processes that have gone in to setting up and then growing the Exetel business to date. Back in January 2004 all I was aware of was the 'news release'/history of concept that was, and is, commonly used on company web sites and which I have had the self discipline (and Exetel has had enough challenges and growth to make possible) noting two events each month that may have had some interest to a current or prospective user of Exetel's services. It has also been very useful lately in dealing with new suppliers, banks and other large entities.

Something that has come as a total surprise to me (despite starting this 'BLOG' because of the information that blogs generate a higher visitor rate for the web site they are based on) is the number of 'hits' the blog itself has generated and the increase in the number of 'discrete visitors' to the Exetel web site.

The Exetel web site visitor rates have increased month on month since the site was first put up in January 2004 reaching in excess of 550,000 discrete visitors/IP addresses in September 2007 an increase of over 250,000 visitors compared to August 2007 - an amazing 'leap' upwards compared to the 10,000 to 15,000 extra visitors per month that has been the monthly increase pattern for the previous 12 months (December and January excepted).

When I looked at the daily statistics (as I do on most days) the reason for the increase was the dramatic growth of visitors to the blog pages which peaked yesterday at a little under 30,000 having rapidly increased from 2 on the first day to 55 a day at the end of the first week to over 1,000 a day at the end of the second week and just under 10,000 a day at the end of the third week.

I turned off the monitoring today as it was costing a lot of, pointlessly incurred, expenditure (being based on a being billed on number of hits). However two things interested me:

1) Over 80% of the 'visitors' were from outside Australia

2) Of the Australian 'visitors' over 1,000 visited the blog more than 20 times in the last 30 days.

In terms of 1) - a significant amount of those would be web crawlers/robots indexing the common comms talk text (as I was advised would be the case) which in turn raises the profile of the web site in 'the eyes' of the search engines which in turn generates more hits from people who too loosely define their search words. Hard to see why people in some of the 100 plus countries (mostly non English speaking) who registered a visit would have wanted to read my random musings - but theres a lot to understand about this new process.

2) In terms of 2) - I'm not sure what to make of that figure. I assume that some Exetel people and some of Exetel's more interested customers would look at my musings on a regular basis but I can't begin to understand who else would bother - and as the number apears to be around 5,000+ yesterday it takes a lot of explaining.

.......yet one more surprise in this constantly surprising of industries.

Exetel has, since early 2005, invested an increasing amount of time to get a better understanding of the future of P2P in terms of both the impact on bandwidth deployment and the various 'legal' and 'quasi-legal' implications involved in being a 'link in the chain' that delivers data to and from points outside Exetel's control.

While we have gained, in my opinion, a considerable amount of knowledge over the past 18 months in how to both control and speed up the delivery of P2P 'packets' we haven't found any 'expert' source of legal advice on what the actuality of transmitting bits of data requires of us; or any other commercial entity that participates in providing some part of 'the internet'.

What we have found is a huge amount of unhelpful and totally uninformed (not based on case or statute law or anything like it) speculation of what might be the case in different scenarios. I have just completed the latest in a series of totally unhelpful, and very frustrating, discussions with a highly recommended and very reputable "Australian expert in copyright law and technology". The net of that conversation is that neither he, nor anyone of his acquaintance either in Australia or in the UK or the USA has any advice to offer on what MIGHT be involved in facilitating/participating as part of a much wider network in the carriage of data bits which when assembled might be construed as infringing somone's copyright.

We have only invested the time and money in investigating the legal aspects of switching data packets because we are innately cautious people and need to satisfy ourselves about this sort of issue.

(There must be better ways of spending thousands of dollars).

I have long term friends at both Sony and Warner Bros who are both implementing (in some cases have implemented) the distribution of video via P2P (BitTorrent). The article I referenced yesterday quoted the Canadian Broadcasting Corporation as planning to distribute their programs via P2P as well as the comments by a Microsoft spokesman saying that Microsoft was looking at also using P2P to distribute some of its 'titles'.

There are already many hundreds of software companies using P2P to distribute their software and an increasing number of video titles are also being distributed by P2P.

With the current estimates of P2P usage of worldwide internet bandwidth being 60% of peak time and 90% of off peak time (and growing year on year) the 'legalities' of any individual commercial entity in participating in providing the switching of data packets is already beyond any national legislation and there certainly is no international 'body' in existence recognised by any nation.

According to the table on page 29 of the 13th October 2007 NewScientist article, over 75% of the bandwidth around the world is used to carry P2P data (no reference is given to the source of the research that generated that table).

I think my current view of Exetel's responsibilities in switching data packets through the tiny/minute part of the world wide internet that we provide is that we have no responsibility to determine, packet by packet, whether they comprise 8 bits of a terrorist message to kill innocent people, snuff movies or other horrendous criminal activities or some entity's intellectual property.

If anyone who may read this blog entry has a recommendation on a competent legal expert on this topic - I'd be grateful for their contact details.