Sunday, December 16. 2007Don't You Just Love The Frantic Pace Of Technology Development?John Linton ...or perhaps after all these years of counting it as a major blessing I'm getting to begin to hate it for never allowing enough time to actualy get any benefit from providing services based on it..... Exetel installed its own VoIP switch almost 12 months ago and since that time has gradually built up the amount of VoIP minutes we switch for our customers. Our introduction of the 'equipmentless VoIP' concepts some two months ago has been moderately successful so far with new users signing up for that service every day. Earlier last week we commenced the distribution of an Exetel 'calling card' service via $10.00 pre-paid cards sold through convenience stores and other retail outlets in the mainland State capitals. Overall we have put in place these new services because we saw the need to reach around 10,000,000 minutes a month by sometime toward the end of 2008 to allow us to be able to continue to buy at competitive rates and therefore continue to provide services to our customers that made a profit to Exetel. Recently we announced the first ADSL plans that included a sizable amount of frree VoIP calls within the plan prices and have realistic plans to include such a component in all future plans from the second quarter of calendar 2008. We've always been aware of the abilities and costs of Skype and more recently Vonage in the USA (Vonage's plans for Australia seem to have stalled/gone away after their initial advertising here but they seem to do very well in the USA). However, late last week one of our customers posted a link on the Exetel User Forum to this new service in the USA: http://windowssecrets.com/comp/071213#story1 Not alarming in itself perhaps. However it does raise a few significant issues about the future of VoIP and, most importantly, VoIP pricing. Basically such a simple P and P device catapults VoIP from a service only for the technically competent to a consumer purchase in any retail store - absolutely no technical knowledge required. Like Skype and Vonage it will also only be a matter of months before every new laptop and GSM phone has the same capability using one or other of the major telephone carriers to provide the VoIP minutes. Voip minutes 'free' for the first twelve months overcomes a need to purchase some hardware in a very big way and our two major carriers (Telstra and Optus) appear to be showing no loss of appetite in competing with each other in just how much they can each give away in their desperation not to lose market share to each other. With this new generation of device the future of wire line telephone revenues is likely to plummet even faster than they are at the moment. ..and there I was feeling really happy that we had managed to complete our 'triple play' of establishing Exetel's VoIP services in the 2007 calendar year! Since I was first involved in selling and instaling IP voip over data lines in 1993 or so (I can't remember the exact time of the first installation) I've listened to industry commentators continually saying that "this year Voip will really take off. Well it has but its boom, at least in terms of offering opportunities to non-dominant carriers, may never eventuate. Oh well - back to the drawing board - one more time. Saturday, December 15. 2007..and so this is ChristmasJohn Linton We had the Exetel Christmas party last night which was a lot of fun and everyone seemed to have a good time. Each year we hire a bus to pick most people up at the office and to ensure they don't drive to the venue. Having 'suffered' through most of my corporate life having to attend company Christmas parties that seemed to go on for ever in boring surroundings with low budget food and even lower budget drinks we have tried to make our functions short but enjoyable. For the second year we have hired a room at the casino and paid for an open bar and their top food package and started early and closed the bar after two hours. Our 'entertainment' was a sleight of hand 'magician' and a short 'speech' briefly touching on the main highlights of the year and providing sme information about the most important aspects of the coming year. It is always nice to catch up with our volunteer forum admins who we only get to see once a year at this event and who have made such an important contribution to Exetel's progress over the past four years. The only other people we invited this year were our 'outside' accountants one of whom does our monthly accounts and statutory returns and the other who does our annual tax return and superannuation planning. This gives enough time for everyone to have a chat to everyone they might want to catch up with and for "Mrs Claus" to hand out the "Christmas Bonus" to each person (casino chips based on $25.00 for every three months of employment with Exetel). The food was via a couple of charming waitresses who moved around the room offering finger food with an Asian bias and rounded off as the bar closed with small cartons of fish and chips. After that most people spent some time in the Casino using their Christmas bonus in whatever ways they deemed best and I played craps for a while while Annette moved around having a further chat with the newer employees who she doesn't get to see very often. We then had a couple of drinks in the bar and said goodbye to those employees we passed on our way out who seemed to either be winning enough to stay for a while longer or were just happy to watch their friends play. It was a thoroughly enjoyable night (at least it was for Annette and me) and we didn't have to wait very long to get a taxi home. I'm always impressed with our employees and it's a great pleasure to be part of helping them start (for the main part we recruit recent uni graduates and Exetel is their first job) their professional careers and help them develop as quickly as possible. As we drove home we 'reminisced' about how we were in Exetel's first few months before there were any 'employees' (we worked for the first 4 - 5 months on no remuneration) and how amazingly quickly the last four years have gone - in the proverbial "twinkling of an eye". Exetel is still a very small company where I have personally selected each person who works for Exetel and know their background and review their career development plans and assist them make the right decisions in those career plans. We are still very fortunate to have a very, very low loss of people over the years which, as Annette remarked, was very obvious from the number of chips needed for the Christmas 'play money' this year. For a company that has been going for four years the average length of employment is 2 years and three months. It would be nice if that track record is maintained in to the future. I don't think it will be possible for me to retain the level of involvement at the 'nitty gritty' levels I have been able to do to date in the running of Exetel and that saddens me. The workload has become very demanding and my body and mind continue to exhibit the increasing wear and tear of the passing years and we will need to pay more attention to the development of our personnel so they can take a greater part in the day to day decisions that continue to increase. It was nice to relax with the people you work with for a few hours - I just wish I hadn't had those last two Scotches. Friday, December 14. 2007Couldn't Have Happened To A More Deserving BunchJohn Linton I take little interest in the small ISPs around Australia, except for Exetel of course, but I do take some interest in Eftel (probably because of my still white hot hatred of what I beleve to be their unprincipled actions in trying to put Exetel out of business so I was really amused when I read this article yesterday: http://www.thewest.com.au/default.aspx?MenuID=30&ContentID=50565 What sort of company is this where half the directors appear (based on this article) to think the other half are incompetent crooks and vice versa? What an unedifying fiasco that must have been - right down to the Old Testamentish " and brother shall smite brother". I wouldn't have liked to have sat at that family dinner table that night. I'm glad that someone other than me finally noticed that their ASX filing showed the company had a negative current asset/current liability ratio and that the auditors had strongly stated on page 22 of Eftel's FY07 annual report that: "The financial report has been prepared on the going concern basis, which assumes continuity of normal business activities and the realisation of assets and the settlement of liabilities in the ordinary course of business. For the reasons described below, there is significant uncertainty whether the company will continue as a going concern: i. At balance date the company has net liabilities of $3, 857k and has incurred a loss of $746k after tax in the current period; and ii. As at 30 June 2007 the company is not in compliance with its banking covenants. The ability of the company to continue as a going concern is dependant on its ability to: • Generate sufficient cash flows from operations to meet its financial obligations, • Achieve future profitable trading operations, and • Renegotiate its banking facilities. At the date of this report and having considered the above factors, the directors are confident that the company will be able to continue as a going concern. Notwithstanding this there is significant uncertainty whether the company will continue as a going concern and, therefore, whether it will realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial report." It wouldn't be hard to fix Eftel's short term problems, assuming there is still time to do that - all they have to do is to cut their payroll in half and raise their prices by a few dollars a customer. However, as with all such situations the question raised is why is this small company in business at all? From what I can see it has no service differentiators and no operational advantages in an industry that is hyper-competitive and very price constrained. Why would anyone buy its offerings which aren't very good value, are ultra-basic in content and aren't delivered over an adequately provisioned infrastructure? Clearly not enough people do which is why it reported an almost $A1 million loss for the last reporting period and, pending accommodation from the bank that loaned it money to buy up loss making businesses (what a great idea that was), it's in trouble in that it's breached its loan covenants - not a happy situation. And this is a company that is planning to borrow some $A3 - 4 million more money to deploy HuaWei DSLAMs starting early next year - how are they going to fund that, very complex and demanding operationally implementation? I filled in the latest ABS ISP questionnaire earlier this week - I'll be interested in seeing the results in terms of how many ISPs there are left in Australia when the results are published in 2008. POST SCRIPT I don't usually bother to add to my random ramblings but this person sent an email to Steve Waddington who forwarded it to me so I thought I'd add it to this entry. God knows why anyone would bother to read my personal views and then take umbrage but, apparently, he must be some sort of very sensitive little 'soul'. So here is his 'foot stamping" demand: "---------------------------- Original Message ---------------------------- Subject: Exetel - A Bunch Of Unprincipled Scum.htm? From: "John Lane" Date: Fri, December 14, 2007 8:24 pm To: johnl@exetel.com.au Cc: stevew@exetel.com.au -------------------------------------------------------------------------- John, I've just had the attached defamatory material brought to my attention. We didn't know Lorraine Rose in 2005, and had in fact never spoken to her until 2006, a few days before we met you in your offices. Your conspiracy theory regarding the time when you nearly went broke is completely unfounded. We had nothing to do with your Lorraine Rose difficulties. I really don't know whether you just make this stuff up out of whole cloth, or whether somebody else has made a fool of you, but either way I demand that you remove the material, retract the allegations, and apologise on your Blog and your forums. We reserve our rights in relation to all of the matters. Regards, John Lane." I have no idea why this person I met once, by accident, thinks he can address me by my given name but then ........ I guess Eftel must be in real trouble for someone associated with them to think my personal views expressed in a blog are somehow important to them. But what the hell........ Hey Eftel people , if you weren't involved with Lorraine Rose in her actions, which she insists you were, then - kissy kissy - "I apologise for asserting you were" You never know do you: One person says one thing. Another person says something else. When a board of directors accuses each other of being crooks and incompetent, at least as reported in the press, how do you know who to believe? Thursday, December 13. 2007If You Ever Thought It Was Difficult To Earn A Dollar.....John Linton ..try seeing how hard it can be to give a dollar (or $20,000 a month) away. As Exetel has 'consolidated' it's grip on some sort of meaningful 'longevity' as a commercial entity and as this is, or some claim it used to be, the "season of good will" we have been looking at making some meaningful contribution to the country we live in and/or the planet generally. Obviously commercial entities aren't set up for philanthropic purposes but small companies like Exetel are run by people who are very close to their businesses but have views outside the narrow confines of the daily commercial grind. While Annette and I were in the UK earlier this year we came across some of the fauna protection programs and species 'revival/re-introdction programs in that country and were very moved and impressed by what we saw. On returning to Australia we saw some programs on TV that focussed on similar programs being run in a variety of countries including New Zealand. In our own ways we are very fond of anmals and birds and we both contribute to various charities that are devoted to, in our opinion, very worthwhile programs and activities - one of these is the WWF (no - not wrestling.) Over the past few months we began to look at ways in which we could leverage the efficiencies and abilities that have been built to develop and grow Exetel in ways other than they are currently used for. One of the things we do very efficiently is bill and collect money from our customers. It occurred to us that most charitable organisations require fairly significant amounts when seeking donations which are beyond the 'comfort zone' for many people. One idea we had was to explore the possibility of asking our customers to make a monthly donation of an 'almost meaningless' amount of money of itself (say 50 cents) which if multiplied by, say, 40,000 contributing customers would amount to $A20,000 each month which could be added to their bill and automatically deducted from their bank account/credit card each month and then paid as a single amount of money to one or more 'save this Australian species' programs. Another thing is we have over 350,000 unique vistors to our web site each month and certainly a proportion of those people would look at information about topics other than communications. We considered matching the donations one a 1:1 basis and therefore being able to significantly assist one or more sensible programs. We also considered a variety of ways we could provide added services in return for the donations (such as free SMS or FAX or downloads) at some 2:1 value to the amount donated to maybe encourge donations of greater than a few cents. All well and good - or so we thought. So I sent a few emails to organisations I thought would find some extra donations useful to their protection of animal activities and, eventually, got some replies by email asking me to call to discuss what could be achieved. How very disillusioning calling some of these organisations turned out to be. I'm clearly deluded in my beliefs that organisations set up to help the helpless are staffed by dedicated altruists whose sole purpose in giving their time for the legendary pittance to such organisations is to ensure that their programs are adequately funded as quickly as possible. I pictured such people as being long on compassion and caring and relatively short on commercial acumen or avarice hunched over their telephones in their 10 year old anoraks and jeans wearing their mended with sticky tape glasses (sort of like John Lennon after a bad few days with Yoko). As I haven't met any of the people I've talked to face to face that may well be the case but they sure don't sound like that over the phone. I was taken aback by the casual, in some cases closer to dismissive, replies I got to offering what I thought was relatively significant monthly donations - by no means huge but I would have thought $A20,000 plus a month would be considered as useful. To date I've contacted four organisations, three of whom thanked me for my enquiry and they would get back to me (yet to hear from them again) and one who after expressing some interest told me they couldn't accept any donations from us because a large telecommunications company donates to them and has a veto on who they can accept money from which included a company like Exetel. So......if you know a very reputable organisation dedicated to protecting native flora and fauna which would actually take our 'tainted' money perhaps you'd let me know? I wouldn't want to have to look outside Australia. Wednesday, December 12. 20072008 - Boom Or Bust?John Linton I've been reading the financial press a little more thoroughly over the past ten days to try and get an 'impartial' view of where Australia's disposable incomes are heading over the next 6 - 12 months. As you'd expect - you can read any view across the spectrum of wild optimism to deepest pessimism. I thought this short article: http://www.news.com.au/adelaidenow/story/0,22606,22909357-913,00.html encapsulated the current measurable trends succinctly and with little/no bias either way. As is almost invariably the case each year, order inflows for all services are very strong in the last 10 days of November and the first 10 days of December - with the expectation that the strong order inflows will continue right up to around December 20th. This is, obviously, fueled by people buying for Christmas presents (for themselves) and, in the case of parents with children, doing their best to provide 'entertainment' for the endlessly stretching school holidays. Looking beyond December 24th 2007 there is not much to sustain an optimistic outlook from the viewpoint of a company like Exetel. "Disposable income" is an amorphous term that is impossible to really determine or apply in a micro economic way to a services business like telecommunications. Higher interest rates can demonstrably affect new housing builds and the sale of established homes and the metrics tying housing transactions to interest rate levels is fairly well documented. The same applies to large ticket item electrical goods such as flat screen TV screens and home use computers - but even those sectors blur in terms of what is 'disposable' and what is now 'essential' spending in terms of education, work and entertainment. I look at more mundane and more directly measurable 'indicators'. One of these is the default percentages on credit card and direct debit monthly payments. Another is the percentage of 'arguments' submitted asking for credits for various reasons. In terms of payment defaults on the 1st December bill run of well over $2,500,000 - there was nothing unusual with the default percentage on the first pass in line with previous months and the collection of those defaults, if anything, tracking a little ahead of previous months - so no indication there. In terms of disputes of no merit I also can't detect any change - again, if anything, they are slightly down on the rolling average. So - no signs of anything out of the usual at this particular time and, without wishing to jinx anything, it appears that December will be another record total revenue month for Exetel (the 46th consecutive month on month record) with the bill run on January 1st again, even at this early stage, almost certain to set another recurrent revenue record. So I ask myself why do I feel so uneasy? One factor that has caused me some concern is the 'departure' of so many of the first and second level contacts from companies who supply to Exetel. While I may not hold those people in very high regard I don't think I can remember a time when so many people have decided to "pursue their career opportunities elsewhere" at this, difficult to get another job, time of the year. Another, possibly more worrying factor though this may sound perverse, is the number of suppliers who have offered lower pricing for a wide range of products and services we buy over the past few weeks during our contract renewal discussions (ignoring the amazingly good offer I previously referenced from a DSLAM manufacturer which still baffles me). I suppose the new Labour governments immediate repudiation of three of its "core" election promises: 1) "We never said we'd agree to those climate change carbon emission reduction percentages being demanded by those unrealistic UN/Kyoto Accord Renewal people" 2) "We never said we'd allow boat people refugees in to Australia and not immediately send them back to their country of embarkation without review of their status" 3) "We never said we'd actually deliver a national high speed broadband service in less than 5 years" As The Australian wryly noted earlier this week "The first week of Labour in power has dealt them a jolting reality check of the difference between criticising the government and promising to do the reverse and being the government and finding that isn't really possible. So there will be the expected "policy turmoil" that comes from 'me tooism' coupled with rash and hopelessly forlorn ideological promises which in turn will slow everything down (the most obvious of these actions affecting Exetel is the throwing out of the recommendations by the last government's expert committee's recommendations on a new fibre broadband service and setting up a new committee to do exactly the same thing. (Sir Humphrey must be having a quiet smile of satisfaction in bureaucrat heaven - "Yes Prime Minister, we'll immediately set up an inter-departmental committee to examine that in detail and report back in the fullness of time after the appropriate consultation with the various stake holders within and without government and.........."). So no new fibre network for you in the forseeable future then. Maybe it'll all become clearer in January? Tuesday, December 11. 2007Web Marketing Means You Never Have To Say You're SorryJohn Linton From 'Day One' Exetel has based and grown its business on using a web site for all aspects of selling its products and services. While we have had, for much of the past four years, a 'sales' number that people could call that number was always answered by engineers who were part of the support structure - we have never had 'sales personnel' nor, Heaven forbid, a 'sales manager' and absolutely no 'marketing manager' or marketing personnel. We get around 200 'residential sales' enquiries each day at the moment which is about a 30% increase over previous months due to the recent release of naked ADSL (which we obviously haven't explained well enough on the web site). The majority of sales calls usually consist of someone reading the details from one of the web pages and then saying "is that right". However we worked out over time that our residential sales increased by approximately 15% if we had a sales number than when we took away that facility for 9 months. We built our 'corporate' business without having any 'sales people' with all contacts from prospective and then actual customers being dealt with by the network engineers who did the installation and maintenance of the corporate services. As our larger business customer base grew we did assign a person who wasn't an engineer (but had been a part time support person during university vacations for us since our early days) to look after those customer's requests and to provide prospective customers with information and we have recently added a second person as we increase the emphasis on accelerating the speed at which we grow our corporate business and the diversity of services we offer. As someone who has been in sales as a rep for ten years then as a manager of increasing 'seniority' for most of the rest of the time I've been in this industry I have been fascinated and then amazed at just how well a web site based sales program can perform versus a 'feet on the street' sales force. While millions of other people around the globe have seen the potential and then implemented a web based sales operation long before I did, I first began to see the potential for this amazing resource only in the late 1990s. It has been an eye opening experience for me to see how Exetel has grown from ground zero to over $A3 million a month based on a web site and some associated web based processes. I was reminded of another benefit of web based marketing over the past ten days as I've had some 'catch up with you for Christmas' conversations with people I've known in 'past lives'. As Exetel is planning to now make a significant investment in rapidly building the percentage of 'corporate' customers to total customers over the next two years we have to put a 'sales force' in place for the first time. I have no reservations about doing that having built sales forces from the ground up several times in my working life to date but one thing I never liked (and have been forcibly reminded of during recent conversations with old 'colleagues') is the problem of saying goodbye (firing/dismissing/showing the door/giving the heave ho) to the one category of working personnel in commercial enterprises who have glaringly obvious targets that even the most hard working and competent person can miss. Perhaps I've grown too used to only dealing with making changes to web pages and text and pricing that produce the order streams that Exetel needs to survive and grow to remember the very real pain of advising a sales person that they're no longer required. I don't recall having to do that very often but I very vividly recall that I really hated the process and never came close to getting used to those situations. According to the people I've been talking with over the past week or so it is something that occurs more often than it used to with many sales forces having 'attrition rates' in excess of 30% a year even after very rigorous selection processes. Apart from the disruption caused each time any employee is asked to leave a commercial organisation the waste of money and loss of 'momentum' in the 'territory' affected are very expensive. So I need to find a sales force of around 8 - 10 people over the coming months and, more importantly, find ways of not having to hire and then having to fire any of them. My conversations with people I've known who are still managing all or some aspects of sales forces in the technology marketplaces are not very encouraging. While I could take some comfort in the arrogant assumption that I was always better at developing and managing sales forces that achieved really good results than anyone else I ever knew - I won't be doing that; partly because I haven't managed a sales force for a while (losing much of the required in depth up to date knowledge and skills) and partly because I think times have changed a great deal. Maybe its old age manifesting itself in yet another way - at least when I 'terminated' a non-performing web page there was no personal or collateral damage. Monday, December 10. 200711 'Working Days' Until Christmas....John Linton I was reminded that this year is effectively over for the majority of Exetel's suppliers by the number of 'out of office' responses I got to my emails over the weekend and this morning. Of course the 'embargoes' of new infrastructure provisioning seem to start earlier each year and last longer but I've become accustomed to that and the few remaining ways round such restrictions. I amused myself, though I'm not sure "amused" is quite the state of mind generated, by seeing how long it took to get a reply from one of Exetel's largest suppliers to my query on when a vital piece of infrastructure (that was already weeks overdue) would be completed. So I started last Wednesday at 11 am to try and get a direct answer to a question that I regarded as relatively important. As the supplier is pretty unhelpful in providing a usable escalation process/contact details, this took some time and more than a little ingenuity to actually carry out. When I originally asked for a base 'organisation chart' some years ago I was told I'd never need one as "your account manager' will always be available and has the ability to source whatever resources might be needed from time to time to address any requirements". Fair enough....I've personally never known that scenario to ever be practical but then my experiences must be far more limited than those of the wet behind the ears junior ****head whose pontification I just quoted verbatim from his sanctimonious email. (of course he left that supplier shortly after writing that email and I actually never met him face to face). I had the current 'account manager's' contact details (whom I've also never met) and after his office phone and mobile went to voice mail and there was no reply to an email after 24 hours I gave up on him. So, courtesy of his voice mail, I repeated the process with his voice mail suggested 'back up contact' "in the event my request was urgent". Same result; voice mail and no response to my email. By spending 10 minutes of oleaginous persuasion I managed to get the name and contact number of the current 'account manager's manager from some general contact number I obtained after an almost 20 minute wrestle with multiple IVRs and three helpful but in the event useless people who transferred me through their IVR mazes. Same result - call went to email. I used the same email name convention to send my query but received no reply to the three versions of the address I sent it to. So late on Friday of last week I again wrestled with the IVR maze and the helpful but uninformed personnel who are integrated in to that process and eventually obtained the contact number and, heaven's above, their email address of the manager's manager's manager. In jubilation I immediately called trying to get through before 5.00 pm on a Friday. Pointless. Call switched to his PA - PA's number switched to voice mail. So I sent an email and got an immediate reply! "I'll be away from the office on annual leave........." So I called 'legal'. Got on to someone or other who suggested I send them a letter, by fax if I wished, outlining my complaint and I would get a response within seven working days. No matter how I'd tried to explain I hadn't got a complaint, at least at this stage, but I wanted some information (and no my account manager and his back up were not responding to my calls and emails). She, politely could provide no further contact details but would look out for my fax but apologised that she was going on a month's annual leave starting in a few minutes. So I sent a fax to 'legal' and I suppose I'll wait until December 19th December for a response. One last try - earlier this morning - I called the CEO's office. Voice mail from the PA rostered to take such calls. I wonder just how many days a year and how many hours a day people within larger telecommunications companies actually work at their jobs? Given that I can't actually contact any people in some telecommunications companies in the ways and for the time frames I've set out above - perhaps the word 'telecommunications' should be redefined for such companies? No wonder their prices are "premium" - they have to pay a whole lot of salaries to people who don't actually do any work for days at a time. Sunday, December 9. 2007Telstra's Influences From Here OnJohn Linton Earlier this morning I finished reading, and then re-reading the various press reports flowing from Telstra's 'briefings' last week. As you would expect from what different journalists (and then their sub-editors and editors) write about what they hear and what they read in the handouts there are more than a few anomalies and the statemets by the head of Telstra Country Wide seem, on two key points to directly contradict the Telstra CEO's comments on the previous day. Much of the lack of clarity would be because Telstra, like Optus et alia, is indulging in pre-tender 'sabre rattling' and therefore the statements made in that context are completely meaningless - probably all of the statements made last week by different Telstra executives are completely meaningless in any context as they aren't known for disclosing their real plans - as is entirely their prerogative. Two things caught my eye though. One was the statement, not validated and probably not even anything but an off the cuff throw away, by the CEO that he expected mobile broadband revenues to hugely expand and within three years exceed those of wire line broadband - its such an unlikely view that it must, almost certainly, have been mis-reported......but the more I think about it the more sense it makes. We still can't find a sensible way to offer data over wireless though we keep looking and will continue until we find a sensible way of doing it. I think that Exetel's long term future will be in providing residential services over HSDPA and business services over Ethernet in the CBDs and major business suburbs and we must remember to keep our eyes fixed on those twin objectives. The second thing that caught my eye was in the 'analysis' of the various comments by Testra, other parties and the new Government. This was the speculation about Labor actually trying to carry out it's often stated view (and constant criticism of the previous government for getting the sale of Telstra so wrong in the first place) of using the proposed federal funding of a new fibre network to legislate for the break up of Telstra into the three parts it has said for the past ten years should have been done in the first place: Network Infrastructure Wholesale Sales Retail Sales In its doctrinaire/union strictured phase of government it is more likely than at any future time that it could seriously consider doing what it has said should always have been done - and many competent commentators originally agreed with that view including our neighbours across the Tasman and, despite Telstra's statements to the contrary, most other OECD countries actions around the world. It's hard to see, after all the tub thumping and rhetoric subsides, how any government could hand over $A8 billion to a 'private' company or group of companies without actually requiring a very big 'say' in the subsequent 'disposal' of what that money buys. After Telstra get over their current phase of "under no circumstances will we ever........"; and gratuitously insulting the current government in the totally inappropriate ways they insulted the last government, (though I think that's just for show and we will see a much 'meeker' approach after the first 2 - 3 weeks of going through the motions of pretence) reality has to kick in. Reality = Massive Federal Government Investment Will Entail Federal Government 'Control'. Of course the Labor government could hand $A8 billion to Telstra and eliminate the tiny bit of competition that currently struggles to exist in gratitude for the Telstra campaign donations but would it win the next election if it did that? ummm....who knows.....but not really worth risking it. So Labor has a tough set of decisions to make (assuming they aren't going to back down from ten years of intense criticism of the previous government) and they have $A8 billion to make their decisions stick.....though any sensible ball park estimate would seem to indicate that 4 or 5 times that amount will be needed. Which ever way they 'jump' I think its sensible to have a contingency plan for a move away from ADSL over copper relatively quickly once the tender process becomes a reality.....though I'll give long odds against anything actually happening as long as El Sol and his pals still control Telstra. Saturday, December 8. 2007Data Over 3G/3.5G - Another Step CloserJohn Linton I attended the aftermath of yet another supplier Christmas 'thank you' lunch yesterday (aftermath = met our account manager at the bar where the 'stayers' were continuing to down the free booze provided by the supplier after they were kicked out of the restaurant). I have never accepted invitations to 'Christmas thank you for being our customer events' as, apart from the universally bad food and inferior alcohol, I've learned the hard way that business and alcohol don't mix and most of such events are unrelievedly boring. On this occasion I was offered the opportunity of speaking directly with "the CEO" about the possibility of gaining gateway access to a carrier 3G network which was an irresistible opportunity to actually get a real feeling for if and when such an opportunity could exist for a sensible volume of business. I was happy to see that the two people I was introduced to were drinking mineral water and appeared to have been doing that throughout their time at the 'event. Being grateful for the opportunity and understanding that they were probably bored witless at the inanities they had had to sit through for the past 3 hours or so, I briefly outlined Exetel's likely volumes and those of the two 'partners' we were involved with and asked my two simple questions to which I got immediate and unequivocal answers. The first answer was not unexpected - we would need to offer significantly greater volumes than I'd suggested for them to consider making gateway access available. The second answer was unexpected - they would make gateway access available if I could work out a deal with another company who had made a similar approach to them to 'joint venture' the gateway until either party's stand alone volumes reached a level that justified separate gateways. Their follow up comment was even more unexpected. The CEO suggested that this could be made available by the carrier to such a joint venture on a 'turnkey and lease basis' undertaken by the carrier if a contract for a minimum of 48 months exclusive use of the carrier's network was contracted. The whole conversation lasted less than 25 minutes and concluded with a promise of a three party meeting, after/if they had obtained agreement from the other company who wanted gateway access to be held early in the new year with the objective, if everything worked out, of piloting the scheme in mid 2008. Of course, there are many dependencies but I thought it was the first real indication that I've seen in over 12 months of similar meetings/discussions/enquiries that Exetel might be able to find a data over 3G solution in the forseeable future. Perhaps I need to reassess my 'policy' on attending 'business lunches'? Friday, December 7. 2007"Unified Messaging/Quintuple Play"John Linton One of the objectives we had in 2007 was to begin the move from offering 'simple' DSL services (in other words just a DSL connection with a generous download allowance) to a DSL service that we could also provide other, useful, services on and which was 'independent' of the current over copper delivery method. I notice that Telstra's CEO was reported in today's Financial Review as saying he expected data over mobile revenues to exceed data over wire line within three years so I'm glad that Exetel, in its minor way, managed to notice this directional change a while ago. By useful I exclude previous 'generations' of pointless add ons such as streaming radio and "free" downloads from peering points which are "so yesterday". 48 gb of off peak downloads at no charge has always taken care of the "free" download scenario and I doubt that 1 in 1,000 users ever got any value from streaming obscure radio stations - and that's a wild over estimate. The other major commercial add on pursued by many ISPs (and all carriers of course) has been, and quite probably is, getting the rental of the telephone line plus the profits from the telephone voice calls made on the telephone line used to provide ADSL. Exetel, via the Optus ADSL2 services, has offered that and it provides some useful revenue but that revenue is not going to be sustainable and will steeply decline in 2008 and become effectively non-existent in 2009 - not something to invest in any further. IPTV is another aspect that would deliver significant additional revenues but, while that is much closer than it was at the beginning of the year, it still isn't commercially deliverable in the various forms that exist today - at least as far as I can see (and I don't count a few free channels supplied by TPG to some exchanges as being even remotely commercially sensible - IPTV has to be a FoxTel-like equivalent). We got close to making a usable Chinese IPTV service available in late 2007 but 'fell at the last hurdle'. However the progress we have made on this aspect of deliverable services plus the knowledge we have gained is making it much more likely to be able to offer this in the not too distant future. What we did achieve in the second half of CY2007 was a very promising start to this eventual 'sea change': SMS via Email FAX via Email VoIP via wifi Equipmentless VoIP (truly Australia wide) VoIP at much lower costs but at toll quality Faster P2P (essential for the future of legitimate P2P) Of course, we need to continue to add functionality to each of those 'add ons' and we have plans in place to do that to truly provide a 'unified messaging/quintuple play' solution to our business and to many of our residential users. We also need to make rapid progress on generating the volumes of business that will allow us to buy better and therefore make these new services sensibly profitable by the end of the current financial year. That involves some scary, to us, numbers such as 500,000 SMS per month and 10,000,000 VoIP minutes per month which is going to be a tough ask. We will also be in a much better position in 2008 to provide some sort of VOD service that will provide real value and real titles but that is something that is dependent on new 'delivery mechanisms' which are now beginning to become available. There are a number of very interesting and very promising new 'twists' on the current options which, if the become realities will remove at least one of the two current problems with delivering a useful VOD service. It seems to me that our first three years were spent rapidly building Sydney based infrastructure required to deliver simple DSL services and since around April of 2007 all our efforts (and money) have been going in to adding value to those basic services with the current plans for personnel and money in 2008 being overwhelmingly allocated to services and structures other than buying ADSL tails/Ethernet links from other companies - which is the very definitely what has to happen. Having said that we are now 'almost there' in getting the second GigE connection commissioned to more than double the current 900 mbps capacity we deploy to NSW ADSL1 (and perhaps even ADSL2 in the not that distant future) users and we are continually upgrading almost every connection to all other services in NSW, QLD and VIC on a monthly basis and seem to be purchasing the additional routers and switches needed for the increased bandwidths at an ever more rapid rate. Finding and developing the new skills that these new (to us) services require will not be the least of our challenges in 2009. Thursday, December 6. 2007Major Projects For Balance Of FY2008John Linton Amidst the many minute by minute tasks that occupy most of every working and weekend day I have been attempting to finalise my recommendations for the major projects that Exetel needs to aim for and how they should be staffed and funded over the balance of this financial year and into FY2009. I haven't been able to shake off the feeling of 'doom and gloom' that descended on me after the recent election and the subsequent early statements by the doctrinal throwbacks to the 19th century who will now attempt to play out their ill understood fantasies - err - policies over the next 18 months before reality consigns their 'initiatives' to where they belong. However we have responsibilities to 65,000 customers and 30 employees not to mention to our own major financial exposures that are more important than how that bunch of no-hopers fritter away the financial well being that has been bequeathed to them. I think I have culled the options to a realistic short list in terms of a sensible project list for the coming 6 - 12 months which has the two projects we failed to complete this year - find a 3G data delivery solution to which Exetel can add real value and find a better price/performance routing solution to the current Cisco 7300 scenario plus some/all of: 1) decide on the viability/schedule for MSANs in capital city CBDs and related business areas. 2) decide whether wireless could provide a better business solution than MSANs 3) complete Phase I of GURUS 4) implement large scale mirror facilities with/without Akamai/other company involvement 5) activate WA PoP 6) decide on international bandwidth strategy involving STM16 from Southern Cross or another major carrier 7) negotiate gateway access to a major mobile carrier's network 8. decide on what future ADSL has past 2008 and put in place the service offering strategies that will protect Exetel 9) decide on direction of support processes moving forward 10) determine the funding strategy for Exetel over the next two years (sell company/inject personal money/lease/issue shares) While it's pretty easy to, eventually, distill the actions required to manage the continuing existence of a company of Exetel's size to a simple list like the one above it's obviously a very different matter to make any of it happen not least because practically all of it needs additional funding that is unlikely to become available from month on month profitability. For financing reasons alone it won't be possible to do everything on the current short list though this 'short list' is the result of removing double that number of desirable strategies/investments. A rough count of the money required to do everything on the current short list is over $A7.5 million which we would have immense difficulty finding even if we approached the prospect of doing so with far more confidence than I have at the moment. The danger is, as anyone who has ever had to make a choice on where scarce financial resources get spent, is do the easiest things and leave the harder/hardest things out of any real planning process. I will now need to spend as much time as I can make available over the remaining days before the Christmas break to finding out just how much money we can 'procure' from the various real options so that we can know exactly what we can and can't do in terms of affording the required investments - not my favourite pastime by any means and also not something I'm very good at. In the mean time there are daily targets to meet and the usual number of 'urgent issues' to address. Wednesday, December 5. 2007VoIP Over WIFI - Just How Safe Are Infrastructure Investments?John Linton Not being a mobile telephone enthusiast I'm seldom aware of the 'latest' developments in mobile functionality (I've never used the camera function on my current phone and have never got around to even creating a phone number list). I use a mobile phone to make a few calls a month and occasionally receive one - I doubt that I've ever reached the minimum spend of $20.00 on my phone plan except when I'm away from Sydney. I've been vaguely aware of the ability to make VoIP calls using wifi for a few months but have never taken much notice of it - I just assumed it was another "look what I can do on my brand new XXXX handset" which was just another way mobile handset makers convinced people with too much money to throw away their perfectly usable handsets to buy something with a feature they'd use once in a blue moon after they'd demonstrated it to all their friends. So I was surprised when I looked at the actuality of using the latest mobile handsets to make calls using a VoIP service - my surprise was how easy it was to install the settings and then how easy it was to make a call that, if anything, was of a better quality than the normal standard for the mobile network. I can see that, given a few more weeks, months at the most, there will be a wide choice of handsets and simple to use 'application software' that will provide VoIP over wifi and therefore huge call cost reductions for people who are able to use this facility. I'm not sure what its going to do to the major mobile network owners revenues in the longer term and that might be a serious concern - depending on how it all turns out. I had children in their early teens when Optus introduced the first of the 'free time' plans that allowed the user to have unlimited mobile calls at no charge from early evening for up to 12 hours - I don't remember the details. As I was paying for their mobile phone bills at the time I was amazed to see them make hour long/more than an hour long calls to their friends most days of the week and then multiple calls on weekends when the free time had extended periods. It wasn't unusual for one of them to sprawl in front of a TV program leaving their mobile on to one of their friends with an ear piece making or receiving the occasional comment while they watched the same show or movie. I only reference this as I can see that now that 'free time' mobile plans are not as free or universally available as they once were VoIP over wifi mobile will quickly replace it. Whole not being 'free' a VoIP call using the common wifi networks in many homes these days will only cost 10 cents a call to anywhere in Australia and in any event that 10 cents will in most cases be paid by the parents. While I realise that teenagers aren't the only mobile demographic they are certainly a fairly major user and influence - just look at what drove/drives the usage and development of SMS around the world. While it won't be of much interest to me personally, I can see that it will have immense appeal to the mobile phone users who are both cost conscious and heavy users - which is an increasing percentage of total mobile phone users. What will happen if every teenage mobile phone user in Australia became able to use this 'service'? Apart from the loss of revenue to the mobile carriers what will happen to the 10 cents untimed national, or even local calls, that are part of almost every VoIP service in Australia? I don't know whether you subscribe to the theory that the cost of 10 cents for an untimed national call came about from an advertising mistake when Engin released their service - there was a typo in the advertising copy that changed $1.00 to $0.10 (while that may very well be apocryphal I first heard it a few days after Engin's first advertising hit the press and have heard it several times since from people with some likelihood of having access to the facts). Irrespective of how the 10 cents per untimed national call came about it certainly is timed as far as the VoIP provider is concerned and it certainly isn't premised on a million teenagers around Australia making 2 - 3 hour calls for ten cents! So, once again in the 'history' of technology we see a simple new way of using a few lines of software code to use hardware in ways that were never envisaged by the organisations who made mega investments in deploying that infrastructure. Whether the 10 cent untimed national call also survives is a minor issue in comparison to how wifi VoIP calls may change current mobile network profitability - itself the 'shining jewel' in the current two major Australian carrier's profit contributors. Tuesday, December 4. 2007Colder Winds?John Linton I don't know what to make of this email sent to Steve from iiNet yesterday evening: "Would you be the right person at Exetel to speak to regarding peering traffic? For some time now, iiNet has made its Akamai farm available to Pipe peers at no cost (others have closed farms). The model was based on that fact that our user base generally required the content anyway and the incremental cost of allowing other ISPs to access this service was minimal (ie most of the time it was cached content) However, Exetel has become a significant user of this service (15%) and we are finding that the hit rate on the cache is diminishing to the point where I am wearing an international transit cost to support Exetel traffic. Compounding this is a need to re-scale the service to manage the increased volumes (extra HW etc - $$) We are looking at a number of models and I am sure you will have a few ideas as well (host your own, take from another local or international farm, pay for the service etc). Our plan is to resolve the matter by Xmas (before it becomes a QoS issue for iiNet customers) and this may involve removing the ability for you to access our farm. Conscious that some of our actions may cause an impact to your customers and happy to chat about ways to minimise this Regards Greg Bader CTO" I appreciated the courteous (courtesy from a 'competitor' is not something seen very often in this industry - in fact if such is the case here it would be the first time I've ever seen it) advanced notice of a possible disruption of traffic flow to a previously available preferred destination (Akamai hosts many large software company's distros and updates and a Sydney based download source is always going to be a preferred option to any overseas download location for any end user). iiNet can and should do whatever is in their own best interests, and I'm sure they always do, so I wondered why sending this email to Exetel (a small and irrelevant competitor) was actually done. On face value a courteous advice - perhaps that's all it is - except for the last line of the email. "Conscious that some of our actions may cause an impact to your customers and happy to chat about ways to minimise this" Does iiNet want to charge Exetel for traffic downloaded from their resources? Seems to be the most likely implication - but why would a competitor who (having worked out that they were providing a cost benefit to a competitor) want to do that? It sort of goes against the whole concept of peering and why make the Akamai data available in the first place? Perhaps they want Exetel to provide a quid pro quo and give iiNet customers access to the P2P cache if it turns out that there is significant traffic available from that resource? Unlikely. I, a completely non-technical person, was also deeply puzzled by the line in the email: "and we are finding that the hit rate on the cache is diminishing to the point where I am wearing an international transit cost to support Exetel traffic". As far as I'm aware the whole point of Akamai locating disk arrays in different cities around the globe is to ELIMINATE the back haul charges by downloading a file once to a 'local' server and then allowing tens of thousands of downloads of that file at no additional back haul. I also didn't understand the reference to "cache" as, again as far as I'm aware, no 'cache' is involved - the image is either on the local drive or it isn't. So I remain puzzled and just make an assumption that iiNet has introduced some new 'accounting system' whereby it's requiring its internal 'service departments' to move from cost centres to profit centres and this is just a way for iiNet's CTO to generate external revenue - though I had thought that iiNet set up Chime to do that? We'll respond politely thanking them for their courtesy and asking them what they really have in mind - I can't work out what it means. Maybe there just is one exceptionally courteous (to competitors) CTO in the ISP industry? (40 years of a working life time say that is never going to be the most likely case) Monday, December 3. 2007The First Grating Warning Of Union DisruptionJohn Linton It didn't take much longer than I expected for the change in government to begin sounding the death knell of any reason to expect business to be in anything other than dismal from now on. This first indication that union thuggery is back to ensure that business will slow down across the country came care of the rasping, sneering and poisonously worded rhetoric of Sharon Burrow on AM at around 7.15 this morning. God, that woman must have the worst speech therapist in the world to allow her to speak in the grating/rasping tones she constantly adopts - or maybe she just smokes three packs a day - though that wouldn't explain her sneering delivery and the almost tangible hatred she expresses. Anyway, as far as I could make out, Ms Burrow was sounding off warnings to "employers" (apparently a 'class enemy' a la her 1860's Marxist education definitions) who "shouldn't take advantage" of the period between now and when Labour gets its new industrial relations laws passed through the Federal Parliament some time next year. Given free rein by the Labour stooges employed by the ABC as 'current affairs' interviewers and program managers Ms Burrow was her usual self in threatening retaliation against any 'employer' who took the opportunity of 'letting any employees go' before the unions gets new draconian unfair dismissal laws re-enacted. During the interview" she also railed against the Commonwealth Bank who she said was "forcing its employees to sign AWAs" before Labour could legislate for their removal'. Funnily enough (and maybe its just my personal paranoia) she made no reference to Telstra who was reported in the press earlier last week doing exactly the same thing (Telstra/Labour entente anyone?). Fortunately I parked before she had finished her peroration so only had to listen to a few minutes of her dinosauric understanding of modern day societies (doesn't she realise Stalin is dead?) but it cast a black cloud over the start of the week which at this very pleasant time of year I could do without. I'd heard the 'flip side' of her threats from our accountants when we had a brief meeting with them last week. They mentioned that the common view among their clients was that all thoughts of employment were now on hold and the scaling back of investment and new projects was almost universal. Great to hear when you're finishing off your planning for the remainder of the financial year. I can find little to be positive about when determining what Exetel should do over the next 6 - 12 months. The very strong influences are to make no new investments and to plan to hire no additional personnel and to let any employee generated resignations allow a gradual reduction in the monthly salary expenses. As those influences go totally against all of my 'natural' inclinations and a working life time of practices, I'm finding this period very difficult to deal with. All my instincts tell me there are very hard times coming and yet I'm 'genetically engineered' to only want to do new and bigger and better things with what remains of my working life. In mulling over the short list of possible projects for the next 6 - 12 months, I keep crossing things out and then a few hours later re-instating them. My wife thinks this is me reaching a late in life maturity which has escaped me to date but I find my current inability to quickly make a decision and move to the next one correcting any mistakes as I go on very strange. Maybe things will look clearer tomorrow? Sunday, December 2. 2007And That's It for 2008John Linton Well, it's the last month of the year and we are in the final stages of completing the last of eight of the ten 'major' projects we had planned for the calendar year. The year has, as usual, gone by in a flash with the only disappointments from a technical innovation standpoint being the ongoing failure to deploy a wireless based broadband solution via 3G and our failure to find a more cost effective routing solution than Cisco. The last two projects to be completed are the P2P caching and the launch of the calling card service via retail outlets in the State capital cities. We commenced live activation of the new P2P caching service late last week and it appears to be going very well in its initial ramp up stage with no-one reporting any problems and many people reporting download increases of up to 1,000%. Good to see and hear. The P2P caching is the second part of a three part program to not only control the impact of P2P traffic on an ISP's network but to improve the speed of delivering P2P based data and, finally, to make enough money from delivering the data at premium speeds to not only eliminate P2P as a negative aspect of operating an ISP but making it a positive contributor. So far we've successfully achieved Stage 1 and Stage 2 remains looking like being delivered within the near future. Everything has been done in preparation for the distribution of the first 100,000 Exetel VoIP calling cards except the printing of the posters which is scheduled before the middle of December. Our aim is, via this distribution method, to increase our VoIP traffic minutes to over 5,000,000 a month by March 2008 and to over 10,000,000 a month by August 2008. This has been an 18 month project that had to start with Exetel installing its own VoIP switches and then gradually building the VoIP traffic to a point where we could compete with established 'mass' voip providers. Our VoIP service (which Exetel uses totally as do I and most other Exetel people on their home phones) is of excellent quality and we are seeing a gradual, but continual, take up of the service by our ADSL customers. We figured that by increasing the VoIP minutes to levels not achieved by our ISP competitors we could provide not only a toll quality service but we could also deliver it at prices (that made a profit for us) that no competitor could get close to. It will be interesting to see how this plays out over the next 6 - 9 months. The technical projects already completed earlier in the year, all designed to enhance the value and usability of Exetel's base broadband services were, in case you've forgotten already: 1) Stage One of P2P management - using the Allot 2250 to control P2P traffic (and save $A100,000 a month) 2) Installing the Iron Port Spam and Virus filtering 3) Providing SMS via broadband 4) Providing Fax by broadband 5) Increasing no charge download alowances from 30 gb to 48 gb and expanding the period of use from 8 hours to 12 hours each day 6) Delivering "Naked" ADSL at affordable prices with usable download inclusions It's been a busy year to date and we still have a lot of loose ends to tie off before we start 2008 - scary thought - less than a month away. |
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