Sunday, March 16. 2008Maybe A New Supplier Can Eliminate Today's Major Problem?John Linton ...and I wish someone had come up with a better description of this service before constant usage has made it impossible to change. After a little over three months of offering ADSL2 services without the need to rent a telephone line and also, therefore, either using VoIP or a mobile when the user wants to make a phone call it appears there is a reasonable demand for this service among the more technically confident users of broadband services but there remains a great deal of hesitation among the vast majority of the Australian marketplaces - at least those that consider Exetel. Personally, I still see data over 3/4G as the only real solution for the increasingly 'merged' needs of the majority of residential end users of communications services but, at least as far as Exetel is concerned, that is something that we will not be able to offer for some time - earliest seems to be late calendar 2008. We will have a meeting with Optus next week to determine whether we continue to sell their ADSL2 services after our initial contract expires mid this year and that meeting will determine whether or not we make more effort in the ADSL2 part of the market and, more importantly, just how we can make ADSL2 minus the need for an active telephone line more appealing to more end users. If we listened to our provisioning and support people we would not continue to offer ADSL2 services as their cost of support is far too high and as Exetel bases its broadband oferings on a margin of between $1.50 and $2.00 a month the Optus ADSL2 services have lost us money ever since we put the service up on our web site in May 2006. To date I think our losses on offering that service are approaching $A1 million with no real sign of reaching a break even let alone making a profit. Not the best decision I ever made (I seem to be saying that a lot more often these days - I wonder whether my decision making has got so much worse or my ability to accept my own failings has become so much more mature?) But then someone very close to me would say that it's difficult to construct a sentence that includes both 'mature' and John Linton'. In terms of ADSL2 with no active telephone line there appears to be an opportunity to make some sort of headway with a 'bundled' ADSL2/Mobile/VoIP service at around $A50.00 a month as it would be cheaper than the lowest cost 'give away' current ADSL plans that typically end up costing $A50 a month including the telephone line rental. I was given some ADSL2 costs on Friday by a 'new' provider that provide much better margins than the current Optus (or the late lamented AAPT) costs and I'm curious to see their network details and will visit them next week to have an in depth look at how they have provisioned and now manage their network. If what they say is true - then.......who knows.......could be a sensible thing to do. So I'm coming to the view that a 'comms in a box' service for the technically hesitant with some sort of 16 x 7 support and a whole lot better customer 'tools' might be the way to go with an ADSL1 service available anywhere in Australia and an ADSL2 service available in the major user areas in the main capital cities and regional centres. The 'bundled' ADSL1 plans are already on the web site and it may be possible to offer an ADSL2 based plan by the end of March along the lines of: ADSL2 speeds $50.00 a month (The Exetel fax via email service overcomes the need for those people who still have faxes (more than I used to think) to keep their line for the occasional fax.) I t would be nice to just have four plans (2 ADSL1 and 2 ADSL2) and only one supplier to the customer last mile circuits with network visibility so that the issues of carrier back haul that have been an issue for us over the past four years could one day be a thing of the past. It's a pleasant Sunday morning and it's nice to dream sometime. Saturday, March 15. 2008More Money Magically Changes All Sorts Of ViewsJohn Linton Someone, whom I can't remember, once said "I keep getting told that money can't make you happy but I wish they'd at least let me give it a try". I empathise with that view, at least in terms of running Exetel because we have never had more that 'just enough' money to meet our financial commitments and have therefore made it a virtue to the company generally, and ourselves personally, to do without the sorts of things that the overwhelming majority of our competitors take as necessary for them to start their working day. Friday, March 14. 2008I Love The Smell Of Napalm In The MorningJohn Linton 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. Thursday, March 13. 2008Has The North Sydney Clock Tower's Clock Stopped?John Linton I noticed that InterNode announced yesterday that they had started offering "naked" ADSL2 services using the Optus ADSL2 network as it gave them a 350 exchange coverage compared to their own 100 exchange coverage. The plan pricing they are offering is, to say the least, "very unexciting" and their published pricing rationale is just plain bizarre. I suppose the pricing only makes sense in the context of their other statement in the announcement that they will "shortly begin offering "naked" ADSL2 on their own 100 exchanges - in other words they will offer substantially lower pricing on the same plans when connected to their own exchanges was what I inferred from that comment. Exetel has been offering the Optus ADSL2 services since June 2006 and the "naked" version of the same Optus ADSL2 service since early December 2007. We were the first company to offer both those Optus services and, in terms of the ADSL2 with telephone line service, we were the only wholesale Optus customer for many, many months. I'm sure the "months of testing" Internode allude to in their announcement have been meticulously carried out and all aspects meticulously documented before they made the decision to 'proceed'- which piques my curiosity. I wondered what different view Internode must have formed over those "months" than Exetel has experienced over, presumably, the same months. On consideration I think it's more likely to be an indication of Internode's experiences with their own provisioning and fault resolution of their own ADSL2 services. I make that semi-cryptic comment because I feel like Michael J Fox in the first of the three 'Future' movies which I really enjoyed so many years ago. I say that because I've spent some time re-working Exetel's business plan for the balance of calendar 2008 and it feels like I've stepped back in time. Three years ago, the future, at least as I saw it for Exetel, was based on a rapid move to ADSL2 and a progressive 'escape' from the clutches of the ever more difficult to deal with Telstra.....and that has been the basic premise of Exetel's business plans for the past 30 months ever since the arrival of the new Telstra management team. When I was looking at the various 'versions of the future' for Exetel over the next twelve months I am now seeing almost the reverse of that with a significant increase in ADSL1 growth and a much reduced amount of growth in ADSL2. Partly this is due to the decision to stop selling the AAPT/iiNet based ADSL2 service due to provisioning and fault resolution problems (the actual service itself has always been very good - until a line problem has to be addressed). However the major reason is the probability that ADSL2 as it now stands for the rest of calendar 2008 will become unprofitable as a service for Exetel to provide to new customers and therefore future estimates of new ADSL2 connections have had to be pretty drastically scaled back as far as Exetel is concerned. To attempt to compensate for that possible new revenue reduction we have had to re-look at how we could increase our ADSL1 revenue and customer bases. I haven't done that for a very long while and the reasons were self evident - Telstra's systematic targeting of other ISP's ADSL1 customers with the consequent rapid slowing of overall ADSL1 growth - at least for Exetel. So, indeed back to the future - with an Exetel business plan showing month by month changes but not away from Telstra but, unfortunately, a continued increase of growth in planned payments to Telstra. I never thought I would be a part of making such plans and I'm still bewildered by what I've looked at doing over the past few weeks. So the most 'innovative' (in a completely retro way) work that we are doing at the moment is developing new ADSL1 plans based on 1500/256 services at very low monthly costs that also include (to achieve the low costs) mobile and VoIP services at equally low costs. The last time I did this was in November 2005!! I'm not sure whether this means I've completely lost the plot or that i see things more clearly than anyone else......though as a rational being I have to think that I'm lucid enough to perceive my own lack of lucidity....but then such tortuous thinking gives me a headache. Maybe I have finally lost it but it has occurred to me that there may well be a time in the not too distant future when, assuming Exetel remains in the ADSL business, we will buy all ADSL services from Telstra again so I'm keeping an eye out for clock towers where the clock doesn't work. Wednesday, March 12. 2008No Fool Like An Old Fool?John Linton The biggest mistake I've made in my time involved with Exetel was right at the beginning. Back in January 2004 Telstra Wholesale operated a price structure for ADSL circuits that was based on a pretty dreadful price for 1 - 999 circuits, then a big drop from 1,000 to 4,000 circuits (that may have been 5,000 or even 3,000 - I can't remember without referring to my old records and then a very slight decrease after 3/4/5,000 with the next discount level at 30,000 or some remote figure beyond any realistic medium term plans we had then. It seemed like a good idea at the time to 'combine buying' with another start up ADSL ISP to reach at least the first 'threshold quicker and then after the 3/4/5,000 threshold had been reached - go our separate ways. Good common sense - not. That easy come/easy go relationship nearly killed Exetel when on the Friday of the Anzac long week end 2005 the nice person we had helped establish her business (by providing everything involved in operating an ISP including the web site, plan pricing, back end automation and 'free consulting' every day for over a year) began progressively canceling over 10,000 of Exetel's customer's services without warning and refused to respond to phone calls, emails or faxes. We went through Hell over the following three weeks getting the services re-connected as they got canceled and, literally, worked 72 hours straight that long weekend to try and reply to the thousands of emails and phone calls we received - over 5,000 on that weekend and another 35,000 over the following ten days. We survived that horrendous piece of criminality with the loss of around 500 customers and some compensation payments of around $A40,000 which was a very significant sum of money for us in those days plus we had to pay TW to reconnect all of the canceled services which cost us, all up, another $A500,000 and, of course, we lost the money we had already paid for those services. Anyway - justice prevailed and Lorraine Rose and her scummy company, aaNet, went broke a little later and the aaNet customer base was picked up by EFTel. It was a truly dreadful mistake and the result of that truly dreadful error of judgment on my part was even more truly dreadful for the 12,000 customers it affected and the Exetel personnel who for three weeks worked more than 12 hours a day dealing with, quite rightly, very angry and often abusive customer phone calls. So you would think that, even a total moron, having gone through an experience like that would be able to continue to make at least one simple decision for the rest of his business life which would be to never get involved in anything like such an arrangement ever again. So what came over me when I found myself suggesting to an ISP of a very similar ADSL size to us that, because of their combined spend with TW on wire line and other services resulting in them buying ADSL1 circuits at much less than we pay that we should combine our buying power and enter in to a joint arrangement with Telstra Wholesale. I actually not only suggested it but seriously considered doing it. ...some people never learn.....and I never thought I'd be someone that stupid. Fortunately I don't get to make decisions like that unilaterally so the most sensible of our directors took one look at the suggestion and responded with the lady's version of: "Are you out of your f***ing mind?!!!!" My lame response that it would result in Exetel reducing its costs by around $50,000 a month got a dismissive: "You can always find a way of doing that if you really wanted to, just sell more - subject closed". I guess I'm an old fool. Tuesday, March 11. 2008Continuing The Process Of SimplificationJohn Linton "Unsurprisingly, the credit squeeze is affecting business plans, with 56 per cent expecting a tighter credit market will adversely affect operations and just 9 per cent expecting to use credit to expand their business in the final quarter of the financial year." I can relate to that, and was possibly part of that negative statistic, having canceled Exetel's plans to borrow around $A8 million to fund two infrastructure projects and new premises. I referenced in a previous musing that we had put in place plans to reduce the complexity that had 'crept in' to the Exetel business by making changes to our supply and delivery processes and the range of our offerings. This is easier to agree with in principle than to deliver in practice as I doubt that many people, and especially people like me, ever want to plan for reductions - it's much pleasanter to plan for never ending 'growth'. So it was with some great reluctance that I wrote to AAPT ending the relationship with 'Powertel' for the supply of ADSL2 services. Powertel had been the very first supplier we had signed an agreement with back in early January 2004. By 'end' I mean advising them that we will not be offering services based on their infrastructures going forward but we will continue to support our own customers who are connected via the old Powertel networks for ADSL2 and SHDSL and Ethernet. This decision wasn't based on financial considerations but on the operational difficulties, and therefore level of customer unhappiness generated, since AAPT took over Powertel and began the inevitable processes of 'integrating' the old Powertel provisioning and fault resolution processes into the, very different, AAPT provisioning and fault resolution processes. Needless to say AAPT was heavily retail oriented with, unsurprisingly, retail based processes which are completely different to the totally wholesale oriented services provided very successfully to Exetel over the previous four years. We have been trying to be as accommodating as it's possible to be over the last few months in 'forgiving' the increasing amount of difficulties we experienced in getting new services provisioned and activated but, and this may well be our inadequacies, we have watched with dismay becoming alarm at the rapidly increasing number of 'problem installs' we were experiencing and ever lengthening delays in getting even the simplest of line faults fixed. Doubtless AAPT will get whatever we perceive to be the problems sorted out in some reasonable time frame but the time frame that we have understood that they have suggested to us, even if it was to be achieved, was not something we could continue to live with. It is the first of several major 'steps' we need to take to lessen our financial and operational exposures over the coming months. The other major decision we need to make by the end of this month is whether or not we continue using the Allot Net Enforcer to control P2P traffic moving through our network. The use of P2P filtering was always seen, by us, as a three part project with the 'brutality' of controlling the amount of P2P traffic allowed at any point of time onto our network being the first stage of a program we begun in late 2006. The effectiveness of that program has been, to date, quite exceptional and I doubt that we could have continued to have grown the business every month the way we did without using P2P 'filtering'. However one major part of the deployment of the Allot box has been achieved (the discouragement of the heavy P2P users from joining Exetel and the encouragement of heavy P2P users to leave Exetel mainly out of fear and umbrage because there was never any reality in their views). The implementation of the Akamai cluster, the likely future volume of P2P delivered from the PeerApp and the fall in IP costs starting this month will allow us to remove the Allot from our network and therefore remove a significant complexity in our minute by minute network management. So, we will make the first two major decisions (of the 8 we planned) before the end of March 2008. These decisions have been difficult to make but I think they have been far easier, in some ways, than the next two decisions we have planned to make in April. Monday, March 10. 2008It Never Rains But It PoursJohn Linton There has to be a better way to start the day than to read the financial press - this being a typical example in the SMH: "AMP Capital Investors' head of investment strategy, Shane Oliver, said - The further fall in US share markets on Friday night and futures trading in Australian shares indicates the Australian share market will fall another 90 to 100 points or so … which will take it below its January 22 panic low of 5186 on the ASX 200." I suppose if you don't own shares such statements may not really have much impact (I don't own shares) but the clear implications that people who do own shares (including the massive corporate investors such as your and my superannuation funds) are now worth less money and therefore have less money to spend are fairly obvious. So I read through the rest of the SMH business section and the AFR with pretty much the same consequences as on Saturday - all I read was doom and gloom and endless sets of statistics trying to pin point exactly when things were last this bad. It's impossible, at least for me at this time of my life, to constantly be confronted with uniformly bad economic news and still retain some sensible level of 'optimism' in making daily decisions. Each day that I read these constant streams of pessimism makes it harder and harder to sensibly plan for any future beyond the next few months because there appears to be every chance that there will be problems in the future that are going to much harder to deal with than the ones that are already difficult to deal with today. Earlier this morning I took a call from someone I've known for a very long time who I hadn't heard from since mid last year when he was very 'gung ho' on how well his business was going and we had a pleasant hour over really good single malt in one of those club like CBD bars while he talked persuasively about how we could mutually profit from an investment he was about to make. It was a depressing conversation and really sad to hear the desperation coming through the phone as he got very close to begging me for financial assistance to help him salvage something of his life time's savings all of which had been ploughed in to his business including several re-mortgages of his home and other property. He sounded a lot like I must have done some 15 years ago when I was confronted with an Australian 'business downturn' and faced the same disastrous personal financial and business consequences of my actions, or more exactly, my inactions. I couldn't/wouldn't assist in the ways he needed help with and when the conversation ended I put the phone down with a very shaky hand. As you get older in business you, inevitably, know more and more people in more senior positions in various Australian and other companies around the world. So while to some people who read about this or that company's demise and the affect that has on the owners/directors of those businesses with that mixture of 'they got what they deserved' and 'serves those bastards right' attitudes so carefully generated by the popular press and the trashy free to air TV stations I find myself, through personal experience and phone calls such as today, with very different views. There is little doubt that every human being does silly things, or things that if they'd given more thought they wouldn't have done, and this applies to every aspect of all of our lives - except of course for those saintly beings who never did anything they regretted ever. I suppose the chances of any single individual doing any single silly thing isn't going to cause much of a problem even for the silly decision maker themselves under most circumstances. However a 'business down turn' or recession or worse - a depression is caused by one or more significant underlying assumptions affecting many, many people's decisions changing that in turn causes many marginally correct, or maybe just marginally incorrect decisions turning in to major incorrect decisions that, because they are in some ways linked to other people's marginally incorrect decisions bring about consequences that have terrible effects on all sorts of people who are in some ways, often unknown to themselves, linked to some other person's marginally incorrect decision. I can't help feeling that we may be about to be involved in such times and maybe the duration of the events and the consequences of those events we are all about to be 'touched' by are going to affect us far more adversely than the previous two, most recent, 'business down turns'. Not a good way to feel at the start of the business week. Sorry for sharing. Sunday, March 9. 2008Time To Change ADSL Offerings?John Linton Exetel hasn't changed its plans/prices for over a year now with the exception of some minor included peak time quota changes and the gradual increase of the off peak download allowance from 36 gb to 48 gb and the extention of the off peak period to a full 12 hours a day each day of the month. We have added 20 free SMS, low cost fax and increased the free web space allowance but these 'add ons' don't affect the basic plans. So I spent some time yesterday trying to determine what could be done (no reductions in Telstra, Optus or Powertel port/back haul prices have occurred as yet) so any 'reduction in prices would have to come from already paper thin profit margins - typically Exetel makes around $1.50 per month from its ADSL services which usually results in a 'break even' result (allowing for all the things that 'go wrong' in any given month) from going to all of the expense, effort and heartache of providing ADSL to the Australian marketplaces we currently service. With the not too distant contract end dates for our premises, IP traffic, GigE links and several other less expensive monthly costs now could be a good time to decide to get out of the ADSL business completely over the coming 12 to 18 months. It makes a lot of sense to seriously consider that option as the other 9 services offered by Exetel are now of sufficient size to provide a good, and growing income, and all deliver realistic profit levels with minimal infrastructure and support costs. I spent much of the 'small hours' of this morning (courtesy of very painful knee ailment) watching Manchester and Chelsea lose their respective FA cup matches while mulling this over. It has a lot to commend it and would provide a significant profit increase while it was happening as the best way of accomplishing it would be to increase all current plan prices by $5.00, $7.50 and $10.00 (depending on current monthly charges) which would immediately generate an additional $A300,000 profit a month - which would be a pleasant bonus for the past four years incredibly difficult and unbelievably demanding efforts. However as first Chelsea and then Manchester lost their respective games (which perversely cheered me up immensely after Arsenal's dismal performance in the previous round) and the extreme pain I was suffering from which had made it impossible for me to sleep eased losing its fight with the 4 Neurophins, I started looking at the other concept of producing lower cost plans. This is, obviously, much more difficult to do and after some consideration I came back to the conclusion I have always come to when trying to find ways of reducing plan costs in the absence of carrier cost reductions - it could only be done by devising plans that suit completely different sectors of the market than the current Exetel customer bases. I had begun to devise lower cost plans based on 'bundling' low cost mobile minutes and low cost telephone calls/VoIP calls and equipment which were beginning to make some sense when my mind followed my left knee's pain in being overcome by the Neurophin assault and I fell asleep. This morning, over breakfast, I looked at the notes I had been making, at least the ones I could decipher, and there are some germs of good ideas in those 'drug influenced' thoughts. One of the concepts that, drug induced or not, appeals to me immensely as all simple ideas always do. That was the one plan fits all concept of: 1) Base monthly charge - $30.00 It needs more work but it may well be something that can produce a real result. The problem with ADSL,for a small company like Exetel, is that the margins achievable have never been very good even 4 years ago before the current intense price oriented campaigns put in place by Telstra.With Telstra and Optus trying to beat each other as to which company can give away the most. It's not clear to me any more why Exetel should offer ADSL services as part of a financially sensible business plan going forward. Saturday, March 8. 2008But What Does It All Mean?John Linton The last thing I read before going to bed last night was this item in ITWIRE: http://www.itwire.com/content/view/17025/50/ which had an attention getting headline: Australian IT jobs ads drop like a stone not really borne out by the statistics subsequently quoted in the text but, as an indication, interesting to consider. At a time of full employment (which the peope who talk about such things consider under 5% unemployment to be) it would normally seem odd that a 'boom' industry like IT would suddenly reduce hiring and particularly reduce hiring of sales people and managers. It's only one indicator and not a particularly valid one but added to all the bad news spread through the whole of today's AFR it is very depressing. I'm particularly struck that there should be such a marked reduction in the advertising fr sales personnel in an industry that has always had trouble finding anything like enough competent personnel to promote and sign up new business. Perhaps it means that IT companies are switching to the Exetel model of only using web based marketing? In dealing with our suppliers we see continuing signs of 'belt tightening' both in termPerhaps it means ths of personnel 'reductions' and in the 'stream lining' of the services being provided. Some of this is beneficial, at least in the short term, with more 'desperation' to win and retain business clearly evident. However I also am seeing worrying signs of 'under provisioning' and dangerous 'skimping' by more than one supplier to Exetel which will have, if they aren't already having, adverse affects on Exetel's customers and therefore on Exetel. One, more, consequence for Exetel of the continuing flow of bad economic 'news' and 'financial forecasts' is that we have decided not to proceed with our $A3 million investment in buying a CBD office floor and investing in our own data cente. I have no rational reason for bringing this initiative to a halt at the '11th Hour' other than the nagging doubts that this is not the time to use up all the 'spare' money we have to invest in a project that will increase our costs in the short term (while still acknowledging that in the medium term it will reduce costs). I have a feeling that we might need that money for some, completely unknown to me at this stage, emergency or even some sort of opportunity over the coming nine months. Perhaps this means that Exetel, in its incredibly minor way, is contributing to the generally negative outlook for the Australian economy by cancelling both the DSLAM and Real Estate purchase plans that were around $A8 million in new Australian investment. I never regarded myself as someone who 'scared easily' so maybe it's just one more indication of increasing age that I seem to be erring so often on the cautious side of decision making over the past year. I think the time has come to be very, very conservative in planning future business volumes and future business investments though, contrary to the ITWIRE articl we will begin looking for sales personnel over the next few weeks. Always contradictory information and signals. Friday, March 7. 2008Is This The Telstra You're Looking For?John Linton As a person involved with a company that spends almost 50% of the money it receives in revenue with Telstra (some $1,500,00 each month and continually increasing) I would really like, if not a 'friendly' relationship with such a supplier, then at least a 'neutral' one. I understood from the comment by Mr Trujillo within days of his arrival in Australia that: "wholesale customers are parasites" that any chances of even a 'neutral' relationship were unlikely to be possible so I'm not making an issue out of something that Telstra has made abundantly clear. I had a particularly bad day yesterday (everything I touched went wrong) so I held off commenting on this press release from Telstra until a new day dawned and with the dawn springs eternal hope: http://www.telstra.com.au/abouttelstra/media/announcements_article.cfm?ObjectID=41897 Of course this is just marketing spin with heavy legal vetting but it is a strange and, I suppose in some ways, an ominous set of words as it seems to clearly indicate that Telstra is unable to accept the first principles of operating in some sort of democracy which are - obey the laws of the society in which you live. ""Today's decision shows how the law is being used by a rogue government agency, the ACCC, to arbitrarily redistribute the investments of more than one million Australians. "In some cases this redistribution of wealth means the savings of Australian investors have been handed over to highly-profitable foreign corporations that have no right to be subsidized, least of all by Australian investors," Dr Burgess said." So, Dr Burgess, an American being paid a great deal of money, after a High Court ruling insists that the High Court is wrong and that the Federal Government is acting illegally. What other connotation can be put on his statement? Especially in the context of this statement by Telstra's chief legal 'gun slinger': "A victory today would have meant more investment, more infrastructure and more competition for Australia, all of which would have been good for Australian consumers and businesses," Telstra's Group General Counsel, Mr Will Irving, said today. "We accept the decision, but we are disappointed because it means Australians lose an opportunity for more investment, more competition, more innovation and more choices in broadband......" What else can be made of this than this senior Telstra spokesperson is threatening to take his bat and ball home and find more ways to 'punish' the recalcitrant Australians who actually have given his company the full ranges of due legal process right up to constitutional challenge to make their case? The Federal Government authority (ACCC) and every level court process in Australia gives Telstra the opportunity of making its case for the pricing it believes should be charged and, every single level of court due process, doesn't accept what Telstra claims....and now there are no more levels of court available to, yet again, appeal the decision Telstra's first public statement is to threaten all and sundry with 'withdrawing investment in maintaining the network'? As this is the 'authorised' Telstra position, obviously completely vetted by their lawyers (given that the two people 'quoted' are both lawyers) I can only speculate that the upper echelons are a seething mass of resentment and, like all bullies who get their first punch in the nose in the playground, are almost certainly involved in "we're gonna getcha for this" group gabfests. Personally....I think that Telstra should be nationalised by the Australian government (I never believed it should have ever have been privatised but then one insignificant person's views are always irrelevant) who should get rid of the imported 'rogue' management and have it run for the Australian people and the best interests of the Australian people. If communications capabilities are important to the future of Australians then the current situation with Telstra has to be addressed as it is simply ensuring that progress in offering better services at reasonable costs will continue to be glacial. Thursday, March 6. 2008Do Many Employers 'Trust' Their Employees?John Linton Exetel, like every other company, constantly looks for ways of improving the services it offers by either reducing costs or adding value and therefore I constantly look at 'add on ' products and services that appear to have some sort of suitability for us to add to our offerings. One of our first suppliers was/is Netcomm who have had their fair share of problems with their chosen option of providing modems and similar types of hardware to the Australian and NZ marketplaces - probably an even tougher daily challenge than providing communications services to those marketplaces. Various people within Exetel have been talking with Netcomm about an NZ developed product and service that they have begun to provide in Australia details of which can be found here: www.makonetworks.com In essence this service, costing around $A250 per month, provides a business with a wide range of network management tools from firewalls, through spam and virus control to filtering by employee as well as a very useful range of reports by work station user. To me, it looked like a very low cost way of providing very specific and very tight controls over internet usage and protection within a LAN from 5 to 100 users - or larger probably. One key element of the 'sales pitch' struck a jarring note with me though I understand the reasonableness of it in general terms. The 'jarring note' was the constant references to employee mis-use (and therefore expensive time wasting) of the internet resources provided as a necessary tool for them to perform their work by using them for personal messaging and other non-work related purposes. I'd previously read about estimates of such activities in, mainly US, press articles that cited studies showing that an average of one hour and fifteen minutes a day per employee was being wasted by the employee using their internet connection for personal use. I don't doubt that there is a fair measure of truth in those statements and citings and, similarly, I didn't doubt the sincerity of the NZ Mako person making similar claims about organisations in NZ and Australia. There is undoubtedly a lot of 'work' time wasted by employees using the internet for personal activities. However, I also doubt that some sort of computer based invigilation is going to make much difference in improving the amount of time an employee spends on his/her work related tasks compared to the time he/she spends 'skiving off' on personal interests while at work. I think that if an employee has both the time and need to use part of their 'working hours' to undertake personal activities then they will do that irrespective of what 'preventative measures' are taken - that has always been the case and will always be the case. So, I wondered at the concept that, according to the nice, and very competent and truthful, Mako person and the sellers of similar services, so many employers would find this concept appealing to the point that it's THE major sales 'advantage' stressed in this instance and in previous 'pitches' for similar services. My own view is that if your hiring policies are so bad, your work allocation processes so lax and your supervision so careless that you actually have such a problem then a 'service' isn't going to be much use to you as an employer - you have far more serious problems to address than this. I have little doubt that Exetel employees make use of their work internet connections for personal use just as I'm sure they make and receive personal telephone calls or send and receive personal emails or take extended lunch hours etc, etc. I am certainly not condoning that usage/time mis-allocation (I personally pay for it in Exetel's case) but I think the hiring policies, work load allocations and general supervision of any sensibly operated company ensure it never is or becomes a problem from the highly efficient operation of the business processes. Maybe its time I re-thought these attitudes? Wednesday, March 5. 2008Carrier Bottlenecks - Is There A Solution?John Linton One of the things I never expected to have to deal with, and I'm sure that demonstrates my inexperience and naivety, is being a commercial provider of services to end users that is dependent on third parties for the quality of those services. I realise how stupid that makes me sound/read. For most of the past 24 months we have noticed an increasing number of inexplicable (to us) degraded performances across the country that 'ebb and flow' and can never be tied down to a specific scenario. Over the last three months of drenching rains in much of Eastern Australia these instances of slow speeds have been somewhat masked by the significantly increased number of "drop outs" and long periods of "service unavailability". Over the last twelve months there is no doubt that Exetel's moves to use P2P filtering and, over the past 3 months, P2P caching may have contributed, slightly, to some strange instances but not really that much - in fact those initiatives have given much more positive than negative results to the overwhelming majority of Exetel broadband users. What is becoming very clear, both to Exetel and without any doubt all other ISPs and carriers is that, as ADSL2 and higher speed ADSL1 services account for a larger percentage of total network use, the overall demand for bandwidth increases in every section of the network path is exceeding even the most generous allowances. For example - when Exetel connected its first broadband customer in February 2004 we provisioned the bandwidth between the customer and Exetel and between Exetel and the 'outside world' at a ratio of 25 kbps per customer - which had been over the preceding 3 years of providing ADSL1 services via other companies on the generous side. Over the past 4 years that provisioning ratio has risen to around 50 kbps for ADSL1 customers which reflects usage of streaming video and much wider use of P2P. OK - surprising but understandable and with the fall in pricing of IP bandwidth (no fall in customer connectivity bandwidth pricing) sustainable with only relatively minor end user price increases - the other mitigating factor over that time being the reduction in ADSL1 port rental costs from Telstra Wholesale. What is clearly not sustainable, at least by the carriers in terms of their back hauls, is the dramatic impact that ADSL2 services have had on those parts of the networks (from the end user via the carrier's network to the ISP). Exetel originally provisioned the parts of its network used for ADSL2 traffic at 50% greater than the parts used for ADSL1 traffic (per user). However over the two years we have been providing ADSL2 services we have increased that to 100% greater than ADSL1. We would be prepared to increase it to, say 200% of that provided to ADSL1 customers if we now believed it would eliminate the constantly shifting (geographically) end user complaints of periods of slow speeds can't play games etc, etc., but we have reached the point where we see no congestion/saturation at any time but there are still issues with packet loss and speed degradation. While it may well be that there are still issues we need to address that we haven't yet identified I, non-technical person that I am, have reached the end of my ability to believe that this is the case. I wouldn't be surprised if we now found something that we had overlooked but I no longer think it's remotely likely. The problem is almost certainly summed up in one of the carrier's contracts with a clause that states: "Carrier" will use its best efforts to maintain bandwidth equivalent to 30 kbps except if other ........: The other two carriers make no such statement other than to say they don't guarantee anything. So there is the problem: We see a need to provision an ADSL2 service at 100 kbps per user and at least one carrier sees it being acceptable to provision it at 30 kbps by contract although they do say they actually "over-provision" it at the moment - by how much they don't say.. I'm not sure what can be done in the immediate term. Stop selling ADSL2 services? Seems to be the only way forward. Tuesday, March 4. 2008Hard To Get Past The Bad News Each MorningJohn Linton I am, at worst, a phlegmatic sort of person in the face of depressing predictions still retaining some vestiges of over confidence/arrogance that irrespective of what happens I will be able to find a way through whatever mess engulfs everyone else around me but I have to say when the "D" word is used by a relatively conservative and competent commentator as in this statement about the real state of the US economy: "We are seeing the deepest housing deflation since the Great Depression and a massive unwind of the largest credit binge ever, and fiscal and monetary policies are more limited in their ability to respond than earlier this decade. Not good news for the economy or the equity market," I nearly spilled my coffee. The article can be found here: http://news.smh.com.au/shares-us-dollar-tumble-on-economy-woes/20080304-1wo6.html Now I am not so stupid as to believe that I have any kind of economic grasp on either world's or Australia's economic movements or directions (I have little enough grasp on our household's economics most of the time) but I can get a general impression by reading quite widely and testing what I read against my quite significant previous experiences. Among the many positive implications of the March 1st bill run was one quite significant negative - that was the level of credit card defaults which set a new record and were almost 30% higher than in the February bill run which itself was a new 'record'. One of the very first indications of 'economic problems' is people running out of credit with credit card defaults on what, for many people are quite important monthly expenditures, being the earliest warning sign. I will be looking at the defaults on payments via direct debit which won't be known until today to see if that trend is continued - direct debit payments have a much lower level of default than credit card payments by a factor of 5. As I said - I'm not an 'alarmist' (in any sense of that word) neither am I a person who accepts what he reads with anything but a very wary eye for exaggeration or polemics. It's getting hard to escape the feeling that things, economically, for a significant number of people in Australia aren't going to be as good in 2008 as they were in 2007. Worse, we have a totally inexperienced government whose contribution to addressing that situation (if in fact there is anything an Australian government can do) is, on current indications, going to make things worse with absolutely no positive moves or contributions and, based on the ridiculous statements by Crazy Kev and Dopey Swan to date will be content to sit back and take their fat salaries and continue to say "it's all the previous government's fault - what can we do or be responsible for?". (someone should tell them "You're the government - stupid - you're expected to deal with whatever eventuates - not try and explain why you can't). Leaving that aside - the 'micro signal' (the record credit card defaults) have to be 'listened to' even if the senior Merrill Lynch economist can be ignored as an alarmist quoted by a newspaper who wanted to be the first to have a meaningful use of the "D" word now that the "R" word is so passe. Exetel have been reducing our financial exposures from the morning after Australia became saddled with a Labor government and my view was things would become very difficult very quickly. Irrespective of what now happens I believe small companies like Exetel are going to find it extremely difficult over the coming 12 - 18 months and I'm unsure how to deal with many of the decisions that need to be made. Obviously the easiest, and now clearly absolutely correct, decision was to abandon any massive infrastructure investment which we did, formally, at the beginning of last month. I would hate to have that burden right now. It makes the decision to invest nearly $A3 million in buying office space a difficult call - it's a sensible medium term financial decision that will reduce data centre costs within two years but it's a major financial 'unknown' in terms of "never buy real estate at the top of the market" - my completely uninformed view is that CBD property prices are, right now, as high as they are going to go for a long while to come. There has to be a better way to start the day. Monday, March 3. 2008Sydney's Woes - Working In Central LocationsJohn Linton I noticed this reference in the SMH this morning and it was also in the on line version: http://www.smh.com.au/news/national/the-great-sydney-exodus/2008/03/02/1204402275498.html which effectively says 22% of Sydney's population is thinking of moving somewhere else because of travel times and general living costs. I've always been aware of travel time to and from work ever since I made a 'lifestyle decision' when I worked for IBM in Melbourne in the 1970s and chose to live some 30 miles NE of the Melbourne CBD in the tiny 'settlement' of Panton Hill which had a post office/general store/petrol pump, a pub and a one teacher primary school and maybe 150 people scattered around on 5, 10 and 20 acre blocks or on real farms.(10 'miles' further out than Eltham itself regarded as 'rural' in those days). It took me a hour or so on a good day to get to work leaving home at 6.30 am and about the same to get home if I left after 6.30 pm. These days the traffic would be far worse and such a decision would probably be impossible - but I haven't lived in Melbourne for over 30 years. I notice that a fair number of Exetel's employees live in suburbs whose names I haven't heard of and tell me it's not uncommon for it to take them up to 3 hours of travel time each day to get to and from the North Sydney office. This lengthy travel time was, partly, why some two years ago we began the process of putting in place abilities for people to, truly, work from home on a full time basis. At that time Steve,who lives in Perth, spent two weeks of every month working from home, Annette seldom comes in to the Exetel office and I work several hours each day, and all weekend days, from home. We hired two engineers in Sri Lanka in February 2006 and that has worked out very well - we have hired two more Sri Lankan engineers who will come to Australia next week for a three week initiation/training session. For the first time in late December/early January we 'advertised' (on our forum) for additional support engineers and gave the opportunity for applicants to work from their homes and be located anywhere in Australia. Today, the first person hired on that basis will commence his familiarisation training in Sydney before returning to work as a support engineer from his home in the ACT. As Steve, Annette, me and the two engineers in Sri Lanka have noticed there is no difference, in terms of access to systems or people (each has a VoIP handset connected to the office Mitel PBX) whether you are in the office, at home, or in some other country. The 'face to face' social interaction is the only thing lacking in this method of working. The obvious advantages in the saving of travel time and cost (and greenhouse emissions) are key positives for both the individual and the employing entity. So, I guess, this means that Exetel is 'future proofed' against the talent/skill drain that is being pointed out in the SMH article but perhaps there is something more than that - why do people still have to travel to work in some far away place that takes so much time away from their lives and is so pointlessly costly to so many people and the planet itself? Habit? "It's the way it is?" Fear of lack of dedication by 'remote' employees? ......etc, etc....appear to be the only reasons. Is there really any reason why Australian employers in non-process/manufacturing 'industries' should continue to set up their operations in central locations in big cities? When we complete the first phase of GURUS and when we decide on whether or not we will move our current operations to the CBD to accommodate our need to reduce data centre costs maybe Exetel wil become one of the first/the first? Australian company to have the majority of its personnel working from home. Sunday, March 2. 2008Complexity Is Not A Preferred Option In BusinessJohn Linton Exetel have been doing a great deal of work in changing the 'network model' with which we created the business and operated it for the past 4 years to a much more complex model that has many more longer term considerations and is far more complex to manage. |
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