John Linton's Personal Musings

...for those of you who know the scene where Colonel Kilgore/Robert Duval speaks that line.....you'll understand the context of the words below.

I think life, in terms of decision making in a small business operating in a highly competitive environment in difficult economic and uncertain times, doesn't get much harder than it is at the moment. The easy stuff of the past four years has been done (and to me it never actually seemed that easy - more unrelentingly difficult with several periods of on the brink tiptoemanship) but now the really difficult stuff has to be attempted (similar to trying to catch the right hand break amid mortar and machine gun fire). Like Kilgore, it seems every where you turn your gaze there is a new or more intense fire fight and the surf wasn't as good as expected and the casualties are mounting up.

Time to get the MGB into the water and move on to the next phase - it can't be more difficult than this phase.

It's clearer than ever that the ADSL market will continue to become even more difficult in the future than it has been at any time over the past 7 years that I've been involved with it. How the current scenarios will eventually play out is beyond my abilities, which I used to think were better than average, to actually get any sort of grip on. I'm not sure whether this is the beginning of the end of the stupidity I see in almost every direction or in the words of WSC - simply "the end of the beginning".

Either way a lot of decisions now have to be made to at least have a realistic chance of making the best out of whatever transpires.

My conclusion in the early hours of this morning was this:

1) There would only be three 'wholesalers' of communications services by the end of 2009 - Telstra (by legislation), Optus (by 'need') and Vodafone (by preference).

2) Internet services would be just one part of a combined 'suite' of services offered as 'bundles' by those three carriers in terms of what 95% of the residential market bought and used.

3) Current internet providers of any size such as AAPT, iiNet, TPG and any others you personally think will fit into this category will have consolidated amongst themselves/been bought out by each other and, at best would have formed a maximum of two very small (in comparison) 'service providers' of combined communications services.

Some assumptions on which I base this view:

1) The current government's FTTN/FTTH plan will die a slow death based on the fact that the 'G9" don't want it (it destroys them financially because of their misguided DSLAM roll outs) and Telstra don't want it because they don't want to share and as long as the current management call the shots wholesale is as welcome as AIDS.

2) This, alone, forces merging of DLSLAM roller outers as the costs/logistical difficulties of multiple third party DSLAM installs in Telstra 'real estate' are already crippling them.

3) The mobile network owners are getting to grips with how to provide data to an increasing number of users and this will put enormous market share pressure on the wire line based providers and that pressure will become unrelenting by Q3 this calendar year.

4) The pressure from the mobile data providers will squeeze the margins of the wire line providers who have already responded (Telstra/Optus ) wire line to the pressures of their own mobile services by making low cost (make that massively money losing) offers to stem the flow.

5) The wars that Optus and Telstra mobile will fight with Telstra and Optus wire line data operations which are urged on by the pricing and offerings of VodaPhone and Hutchisons will end up creating the greatest 'cannibalisation' of ADSL user bases you can imagine - times ten.

ohhhh......what's a girl to do....?

Not being a girl I don't know.

Being an old man with his life's savings invested in Exetel whatever is done better be pretty damn smart

So we will begin to re-position Exetel to provide mobile/voip/data and other services in a combined offering and more seriously pursue a 'mobile gateway' solution with the money we have now decided not to spend on DSLAMs or wireless infrastructure (I knew that $A3 million would come in handy some time in these troubled times).

Today or tomorrow we will 'launch' a combined ADSL/Mobile/VoIP service that will be the first in a range of services that we will provide over the next three months.

Our four years of ADSL, three years of Mobile and two years of VoIP experiences have given us a solid base and a fair bit of hands on knowledge of how to do this but we expect to learn a lot over the coming 12 - 18 months so that we can actually have the volumes required to make a mobile gateway worthwhile for the mobile carrier and make a sensible economic return for our $A3 million.

I'd forgotten just how much I do love the smell of napalm in the morning.