John Linton's Personal Musings

I made my last call for this trip to one of the SMS providers whom we had attempted to do business with on an HSPA service for Australia last year but had failed to reach an agreement because of the required volumes which were much too high for Exetel to commit to. However, they were/are very nice people and I made arrangements to visit them if they were available before I left Australia.

As it happened one of the people I knew was in London so we had a brief meeting late this afternoon. SMS is a big and constantly growing business in the UK as I imagine it is in the rest of the world. In the UK they send around 1.4 billion text SMS each week and that volume is continually increasing. The company I met with account for almost 15% of the UK text SMS sent per month and, unsurprisingly, have pretty good international SMS buy/sell arrangements with many countries around the world.

Exetel introduced an SMS via broadband service in the second half of last year which has proven to be increasingly popular with our residential and business broadband customers and even more popular with 'stand alone' large business customers who send tens of thousands of SMS each month in Australia. While it may never be a major revenue (or profit) contributor to Exetel it is a very useful, low cost 'add on' service for our customers and has proven to be a good 'door opener' for gaining new business customers.

We currently buy SMS services from Australian wholesalers at reasonable prices for our relatively low volumes at this stage (sub 500,000 per month). These arrangements suit Exetel (some business and government clients insist on an Australian SMS gateway) and our constantly increasing monthly volumes suit our wholesale supplier. Our buy prices are good enough to provide our casual residential and business users with an SMS via broadband service for 5 cents per SMS with rates down to 3 cents or so for large volume commitments (pre-paid).

I don't think we can do any real business with a UK provider below 2 - 3 million SMS a month but if we ever reach those sort of volumes then we can cut our per SMS buy pricing by over 80% and provide our Australian users with an SMS services for around 1 cent per 160 character SMS and make a significant (percentage) profit! It just goes to show you what enormous profits the mobile carriers in Australia are making on SMS services.

So we are reaching the very end of our UK visit which has been immensely enjoyable and very productive in business terms. It is a very different place to do business than Australia and, in many ways, a much better place to do business - even if you represent a start up company as I have been doing.

I think we will be able to make a much better judgment as to how/if/when an Exetel operation in the UK could benefit the Australian business and also the Sri Lankan business (the time difference between the UK and Colombo is almost identical - the other way - to the time difference between NSW and Colombo).

There is still so much to do in Australia before we can consider Exetel to have become solid enough and well run enough to be able to operate without the current level of minute by minute management that is currently used and we have barely made a start in Sri Lanka and have a great deal to learn about how to operate effectively there. So we won’t be making any decisions on doing anything in the UK/EU before the FY2010 year but at least we know enough now to make far more solid plans.

So much to consider - so little time left.

I met with one of the possible financial 'backers' this morning to begin the process of determining whether, or not, Exetel could offer services in the EU. I had provided the background information they required prior to leaving Australia and had refined the requirements in terms of money actually required and the time frames of using that money in response to their requests prior to arriving in London.

It's very different for me to deal with 'financiers' as in the whole of my life to date I have only dealt with Australian banks. London financiers are very, very different to the Australian bankers I have ever met and it was a pleasant experience. We spent around an hour going through the base business plan for the UK operation that I had put together, only in concept, and then spent another hour on the Australian operation's progress over the time it has been in business.

It was a very useful meeting and the upshot was that we could borrow up to GBP 3 million based on our personal security (house second mortgage in Australia) for a three to five year period or we could could get a mezzanine investment partner who would require interest on their money plus a share of the company of at least 20% - 30%. It was a good experience and I learned a lot in a short space of time. However the thought of mortaging our Australian home to such an extent to finance a risky business venture is not going to find favour with at least one person I know quite well.

Following that meeting I met up with a possible HSPA 'wholesaler' for the UK and four other EU countries. Again, it was a very useful and productive meeting and, again, it was easier to deal with the people who could make decisions (or at least appeared to me that they could) than it is in Australia. Based on the very simplistic model I had sent them before I left Australia and the subsequent replies to their follow up questions we had a good starting point.

Once again, the volumes they want to begin a business relationship are very demanding but doable if you take a deep breath. What surprised me more than a little was the pricing for minutes which, after 40 minutes of explaining I just wanted an HSPA only arrangement (not mobile voice and SMS or anything else), was almost half the cost we have negotiated in Australia for volumes that, in reality, aren't that much higher.

They also quoted some interesting statistics claiming that 80% of the UK's population was now covered by 3G - not my experience over the last two weeks though, admittedly, I was using a 'rival' network. As a mobile carrier they were more interested in bundling mobile voice services than a 'pure' broadband replacement and they cited recent research stating that data via mobile phones had increased hugely in the UK over the last year (I had read one of their sources - Vodafone saying that UK mobile data revenue had increased 31% in the last year). Overall they were quoting worldwide data over mobile revenues had increased to GBP100 billion in the current year from GBP 77 billion in the previous year.

In the event that any final contract reflects the discussed pricing then it would be possible, for instance, to offer much better rates in the EU than we can do in Australia in terms of monthly plans and we could make a realistic profit from 'day one' rather than accept the Australian scenario of breaking even until we build much larger volumes. Of course we would have to take the major gamble that we could find a cost/effective way of building a 'presence' in the EU using different methods than we have done in Australia which is always pretty daunting.

From what I have learned to date the cost of delivering a gb of data to an end user in the UK via an HSPA network is around $A7.20 compared to the price in Australia of around $A15.00. Of course that is based on Exetel's miniscule buy power in Australia and even less in the UK - but in the UK their overall economies of scale and lack of 'distance' seem to significantly reduce their operating costs - or maybe I have presented a better case for Exetel after two weeks 'holidays' than I was able to do in Australia.

If we can somehow eventually link our buy volumes in the EU to our buy volumes in Australia it could, eventually, be a major set of benefits (assuming the large capital investment risk is considered viable).

A busy but productive and exhilarating morning.

We returned to London today amid a 28 degree 'heat wave' and after checking in to our hotel and having a pleasant Italian lunch, Annette went shopping and I attended a  'teleconference meeting' with a possible future supplier of wholesale services.

It was interesting to learn so much in so little time from people who are direct, informed and 'senior' enough to actually spell out what is and isn't available to a start up purchaser of services. I had given them a lot of the base information they required via an email exchange over the previous few weeks and this 'meeting' was to determine how to proceed if both parties wished to proceed. It was succinct (slightly less than an hour) and very much to the point meeting.

Two things are immediately apparent when comparing Australian cost structures to UK (EU) cost structures. The first is that per mbps interconnection from the BT telephone network used for wire line broadband is less than one quarter what Telstra charges Exetel in Australia. The second is that IP bandwidth costs less than one fifth of what we are paying in Australia today and that is based on the relatively trivial volumes we would be able to commit to in the UK compared to the 2 gbps+ volumes we use in Australia. The third, and overwhelming difference is the monthly port cost for a high speed/ADSL2 port (which are available almost everywhere in the UK - as opposed to ADSL1 speeds) at a cost of half what we pay in Australia.

So far so good after a little less than 15 minutes.

The volumes of connections required to become a wholesale customer are more than a little frightening for a start up company but, as was pointed out, if such volumes couldn't be achieved why would you bother investing in the required interconnect points which would cost around $A2,000,000 before you actually have a single customer connected?

It was a useful 'meeting' and has helped firm up what Exetel would need to do should we proceed down this path.

I have begun to update my analysis of what is being offered in the UK in terms of broadband and telephony services but will need far more time than I, personally, have available right now. There are so many 'free broadband' offers that it's difficult to actually work out what is being offered and how to separate the different 'bundle' components to determine what the cost to the end user is of any specific service. What is apparent, or appears to be apparent, is that the UK service providers are budgetting around GBP 16.00 (around $A34.00) for an 8 mbps ADSL1 or 20 mbps ADSL2 service as the most acceptable cost of a broadband service (of itself) once you strip out the costs of the other 'bundled' components.

Given the much lower 'port' costs and much lower IP costs this seems to be a relatively easy to achieve target price for an end user broadband service. However, as far as I can see so far, no provider is offering a strictly broadband only service - they offer broadband as part of a bundle (mainly voice and mobile but also broadband and Pay TV and broadband and HSPA and mobile). This is just going by the ads in the newspapers and magazines.

My, 'back of the metaphorical cigarette packet' calculations show that the cost of offering ADSL2 broadband services in the UK are much less than half, much closer to a third, of what they cost in Australia - and this is based on 'start up' volumes rather than 'mature' volumes.

We definitely pay a premium to live in Australia when it comes to basic techology services.

[PS: This is the 366th (2008 is a leap year) consecutive daily entry I have made since I commenced this blog and I therefore, subject to adjudication of the content of the last 15 or so entries, have won the bet I made last time I was in London a little over a year ago. It has been an interesting experience and a true test of self discipline - it has also, as promised, delivered all of the benefits listed in the original documentation.]

Some months ago I made the presumptuous statement that the immediate goal for Exetel was to double the number of sign ups for our broadband ADSL services. In July 2008 we will achieve that objective and, based on what I see now, we will more than achieve that objective in August and September 2008.

Of course, our current small volumes make no impact on the total wire line broadband market in Australia and even if we were to increase our sign ups tenfold it would make no real impact.

It does, for me, raise the question as to why prospective and current broadband users select the ISPs they do and what motivates them to do that. When we started up Exetel we subscribed to the lily pond theory of marketing that, essentially, posits that if you have the lowest cost service in any market that delivers the equivalent or better service than any other provider then, by word of mouth, you will in less than 7 years have 100% of any market you set your service to address. This premise is based on the FACT that price outranks every other consideration when every other aspect of a service is equal.

After 4.5 years it's pretty clear that Exetel has been able to deliver, consistently, the lowest cost ADSL service available in Australia but has yet to deliver the equivalent of the highest levels of quality across the key metrics that are used by potential users.

Part of this failure has been the buy pricing of the 'upstream' services we need to provide ADSL services and the other major failing has been our technological competence in integrating the constantly changing new technologies that make up the core backbone of the services.

Our ability to automate and to innovate has been a key contributor to overcoming our buy pricing disadvantages over the last 4 plus years and as our volumes have increased the buy pricing disavantage 'gap' has continued to decrease. This month (July 2008) has seen a major 'upswing' in our new and churn sign ups matched by an equal significant decrease in our 'move aways' which is highly satisfying to someone who is 12,000 miles away and has made no contribution to whatever Exetel has achieved over the past three weeks.

Our July 31st results seem likely to show that our new and churn ADSL applications will be double what they were in March 2008 while our churn/other loss will be less than 25% of what it was in March 2008. A very encouraging and, in many ways, surprising result.

Why has this happened? I have no real idea as we haven't changed our pricing materially in that time. It's obviously a combination of a number of initiatives we took in March which included:

1) An emphasis on ethical issues such as wildlife protection and environment consideration.

2) A new user benefit scheme

3) A different agent commission scheme

4) The 'final resolution' of the protocol identification processes in the P2P control processes

5) The addition of P2P caching with enough User - Exetel bandwidth increases to deliver this benefit

6) The introduction of the option of 'shaping'

Whatever one or more or mixture of these initiatives produced the very significant growth in new and churn sign ups is unknown to me. What will be interesting to see will be whether the trend upwards in daily sign ups continues. From my, personal and simplistic perspective, I can't see any reason for any person wanting a cost/effective broadband service selecting any ISP other than Exetel.

I do subscribe to the 'lily pond' theory of marketing and in my view I would expect Exetel to increase its daily new and churn sign up rate by a further 25% each month (compounded) from now until June 2009 - providing the Exetel network is adequately provisioned and maintained on a day by day basis.

This may well be the optimism of distance but I don't think so - as someone who is well aware of the problems that Exetel has faced each day of each month since we commenced in business I am more confident today than I have ever been of handling the difficulties inherent in providing Network services.

I was prompted by a comment on one of my recent musings about HSPA being a sensible replacement for wire line broadband as the download quotas became more realistically priced (from the user's point of view) and the 3G speeds became more widely avaialble (and HSPA connections didn't return to 56 kbps dial up speeds in so many places) to more thoroughly test 'pings' over the past two days.

As we drove progressively nearer London the HSPA speeds continued to increase even in the very rural locations we have stayed the night for the past three nights. At the moment I am showing I get a 3.6 mbps connection on my TMobile service and when I download from Australian sites I am getting around 1 mbps on downloads and 400 kbps on uploads.

Pings to Exetel's servers are around 400 ms as are pings to other Australian ISPs. Given the traces to all the Australian sites. As these pings are traveling around 20,000 kms (London via Los Angeles to Sydney) the ping results are quite good as can be seen from this trace:

Microsoft Windows XP [Version 5.1.2600]
(C) Copyright 1985-2001 Microsoft Corp.

C:\Documents and Settings\John Linton>tracert exetel.com.au

Tracing route to exetel.com.au [220.233.0.9]
over a maximum of 30 hops:

  1   113 ms   100 ms    98 ms  172.18.51.98
  2   107 ms   139 ms   119 ms  10.64.74.137
  3    97 ms   109 ms   109 ms  10.111.227.217
  4   107 ms   110 ms   139 ms  10.111.227.197
  5   124 ms   118 ms   119 ms  10.111.227.133
  6   103 ms   110 ms   120 ms  10.111.227.82
  7   105 ms   130 ms   119 ms  10.111.227.6
  8           105 ms   111 ms  149.254.195.194
  9   112 ms   119 ms   109 ms  10.126.168.169
 10   117 ms   109 ms   119 ms  193.159.226.21
 11   233 ms   489 ms   249 ms  217.239.40.62
 12   239 ms   249 ms   249 ms  62.156.128.126
 13   249 ms   259 ms   239 ms  ge-0-0-0-0.plapx-dr2.ix.singtel.com [203.208.149
.2]
 14   263 ms   270 ms   259 ms  ge-1-0-0-0.laxow-dr2.ix.singtel.com [203.208.149
.254]
 15   402 ms   399 ms   399 ms  203.208.148.6
 16                          Request timed out.
 17                     *     Request timed out.
 18   384 ms   379 ms   380 ms  EXETELPtyLtd.o2gsc76f03.optus.net.au [203.202.84
.66]
 19   389 ms   389 ms   389 ms  33.2.233.220.exetel.com.au [220.233.2.33]
 20   388 ms   389 ms   389 ms  candlenut-web.exetel.com.au [220.233.0.9]

Trace complete.

As a good ping from a fast broadband service in Sydney to Los Angeles will seldom achieve better than 170 ms tto 200 ms, the additional distance (which is approximately the same)  is comparable.

I don't have a WOW or other games set up on my laptop so I couldn't test actual player response times on any game either in the USA or in Australia but when I called TMobile technical support pretending I was having trouble with WOW they immediately tested the server I told them I was playing on and they said they had no reports from WOW users playing on any server having problems and their tests to the server I nominated showed no speed issues at all. So I apologised for wasting their time and hung up.

None of this means anything in terms of an Australian HSPA service that Exetel might provide in Australia (which we will obviously test in Australia over the next 4 - 6 weeks from various cities) but it does seem to indicate that there are no inherent problems in playing interactive games via an HSPA service. At least that's what it seems to me based on my extremely limited engineering abilities and knowledge.

I've now completed testing HSPA as a service in the UK and my conclusions are these:

1) As a traveler it is so much better and cheaper than the alternatives of internet cafes and hotel WIFI or Ethernet I wouldn't use anything else

2) For picking up email and web browsing and intranet access on a train or on a major highway it works fine

3) Once you move outside the 3G coverage areas you can expect dial up speeds or slightly better which is servicable but most internet cafes will provide a much faster service

4) It id almost certainly the 'only' service to use for a traveler.

5) As a wire line broadband replacement it is suitable in any area where you can get a strong 3G signal

For me, on this trip, it has been a life saver (or at least a bet saver) and as Exetel now progresses towards offering HSPA in Australia this has been a very valuable 'end user' look at what such a service may be able to deliver.

I'm looking forward to getting a few of our customers in Australia to test the HSPA service we will be offering in Australia when I get back in mid August.

Doubtless, if you're interested in internet and its ramifications you would have come across this article in the SMH on the 24th July:

http://www.smh.com.au/news/web/british-isps-clamp-down-on-illegal-downloaders/2008/07/25/1216492692380.html

It made the main BBC1 news for the last two days in the UK and both the UK newspapers I read.

It's a little 'so British' in what it seems to be doing but the key points, to me, were that major ISPs had agreed to do anything at all and the UK government is involved in 'brokering' the arrangements. Ofcom appears to be far more useful, and therefore effective, than its equivalent ACEMA in Australia and the actual deal now being put in place seems to have some interesting understanding of the current situation.

I doubt whether any 'hardened thief' is going to be worried about a letter tch tching at their alleged illegal downloading and uploading but I would think any parent who gets such a letter would take a lot of notice. So, I think the idea will reduce copyright infringement by those people whose parents pay for the family internet - I wouldn't know how to quantify what percentage of illegal downloaders that is but it's probably quite substantial.

While the 'hardened thieves' won't be concerned by such letters they may start getting concerned by the fact that all of the major ISPs in a pretty much democratic country are now tacitly agreeing to co-operate with governments and media owners to begin to prevent property theft via a ISP's network rather than attempting to target an end infringer. The dumber thieves may well think "good idea - it means I'm even safer" - and that may well be the case - except you wouldn't have got these major ISPs to agree to such a scenario if in fact that was the likely end result.

I, of course, have zip, zero, zilch actual/real knowledge of what has been agreed between the ISPs, the UK government and the UK music copyright organization. However the FACT that six major ISPs have agreed to act together in this scenario raises the obvious next question.

What is going to happen next? Are the ISPs going to agree to cut off persistent infringers on some mutually agreed basis? It seems an almost inevitable next step - or next step but one.

Again, the 'hardened thieves' may well think - "who cares? I'll just sign up with another ISP and take the minor inconvenience and any churn fee which will also be minor." That might well turn out to be the case. Then again it might not because of what this new scenario could mean.

One of the things it could mean is that the six UK ISPs agree that they will, in conjunction with the copyright organisation and the UK government keep a data base of customers cut off for copyright infringement. This could be used by the 'participating ISPs' to refuse a churn/new broadband application from a copyright infringer.

Unlikely? I don't think so - based on what I read into the same articles/information that is available to you. I think that it must have crossed the minds of the people in the UK who have put together, and got government agreement, to this step which is almost certainly only a first step of several that the best way of stopping copyright infringement is to cut off the means of infringing. Removing internet access, from any provider, to a copyright infringer will do that more certainly and more cheaply than anything else.

While the EU may not approve of what the UK is doing the French have already enacted much harsher laws to prevent copyright infringement via the internet. The UK has always been very 'property right protective' (remember they used to hang you for stealing a loaf of bread - or worse - send you to Australia).

Looking at this:

http://www.misaustralia.com/viewer.aspx?EDP://1216960666914

and realizing that the UK already has such a process in place, sanctioned by the UK government, it wouldn't be a real 'stretch' to see ESS trying to recover his shredded credibility by trying to extend government 'control' on what an Australian may or may not download from the internet from child pornography to copyright infringement - let's face it; his NBN 'tender' proves he really is that stupid.

Never a dull moment in ISP land.

PS: In today's Guardian (26/7/08 - Page 13) there is an update to the main government press release that quotes a 'leaked' letter from the UK Minister For Business in which she states that the UK Government has set a target of an 80% reduction in illegal file sharing over the next three years. If a government of a major democracy is involved to the point of setting such targets then you may be sure this is not just some Crazy Kevin sound bite 'stunt' masquerading as policy.

…the rush caused, not by Johnny Horton’s “gold”, but by our dawdling an extra day in Lochinver and then an extra day in Perth because we couldn’t tear ourselves away from Scotland’s beauty.

So having used up two days that we should have spent travelling back to London we had to face the fact that we would have to get off the one track roads where we could keep stopping to admire, and take pictures of, the wonders that just keep coming in to view and do some serious motorway miles or our schedule was shot to pieces.

As Annette wanted to again taste the very best fish and chips in Britain we drove the 280 miles from Perth to Whitby in around 6 hours plus a one hour stop at North Berwick to see the Sea Birds Of Scotland remote cameras on the offshore islands  a really great use of technology – mounting cameras that can be ‘panned’ both laterally and vertically and ‘zoomed’  to look at nesting puffins and a range of other sea birds that migrate to those islands – unfortunately the Sea Eagle camera was out of use.

The fish and chips were worth going out of our way (the fish has a batter that is more tempura than anything except, well, tempura, and the chips are amazing).

Before leaving Scotland I did some preliminary calling today to the UK contacts I was given in Australia for possible wholesale of HSPA services. It was quite productive in that it established that Exetel could establish a relationship with a wholesale provider in the UK on reasonable terms based on our Australian business volumes and some reasonable volume commitments over the first twelve month period of any agreement.

There’s not a lot more that could be done over the telephone and via the emailed details I had sent before leaving Australia so I will find out some more detail when we get back to London. However the preliminary pricing is a great deal better than has been offered in Australia with similar volume commitments and the pricing at much larger volumes provides an indication of why the pricing on offer in the EU is so attractive.

I’m not sure how to go about marketing an HSPA service in the UK yet as I haven’t determined what market(s) we would aim at in the event that we did decide to invest time and money in the UK while the NBN fiasco plays itself out to some sort of conclusion in Australia. And a timeframe for whatever is decided is established.

Looking at the current UK offers is confusing to say the least for a foreigner to just how services in the UK are sold and supported. The broadband offerings seem to be similar in most respects to the mainstream offerings in Australia in terms of end user pricing.

This surprises me because the wholesale costs of both connectivity and IP are far less than in Australia and I don’t understand why the very competitive providers are charging such high mark ups for basic internet services. I’m not going to find out while I’m ‘on the road’ so I’ll get a clearer picture once I talk to some people in the business and within possible suppliers – clearly, I have overlooked something vital.

Something else I mulled over on our long drive South today (from Perth to Whitby) was how to deal with UK employment issues which I have some knowledge of but nothing like enough to fully understand the costs of ‘labour’ in the UK in terms of the sorts of people a start up company would need. I’ve looked at the UK IT employment web sites and I’ve been given some broad estimates by three ‘employment agencies’. I’ll meet with one of the employment agencies early next week with my ‘shopping list’ and will get a much better idea after that meeting.

Business is beginning to intrude more ‘intrusively’ into our ‘holiday’.

I read several UK print media publications today and found three interesting articles on the progress of HSPA in the UK and in the EU generally. One of the articles was on testing the about to be released 7.2 mbps service and the methodology they used was pretty much the same as what I have done with the commercially released 3.6 mbps service - they connected in different population density ares and on trains and cars. Their results mirrored mine, unsurprisingly. Where 7.2 mbps was enabled they got between 6.6 and 6.9 mbps as a maximum and as they moved to lower population density districts they dropped back to 3.3 mbps and then steeply to 500 kbps and ended up at 50 - 60 kbps.

Another article was based on speculating on the 14.4 mbps HSPA services due to be released in time for the Christmas marketing frenzy and what the impact on current wire line based services these new speed HSPA services would make. W - and at arouth the current dowload/upload inclusions being around 6 gb in most EU countries for the equivalent cost of $A50.00 the press seems to believe that by Christmas the same price will be buying 8 - 10 gb and with speeds in excess of 10 mbps down that is a true ADSL 'killer'.

The third article speculated on the reality of 150 mbps services becoming available towards the end of 2009/early 2010 and what these service could be used for. They didn't reach any conclusion except that no current application that was likely to be used over such a service needed such speeds but that if such speeds were achieved then they would free up the HSPA bandwidth allowing the penetration of HSPA to increase over the current spectra licences.

It was interesting speculation and, in terms of Exetel and Australia, it was sobering reading. I, obviously, don't know what the Australian mobile carriers will be doing over the coming 12 months, other than attempting to tear each other apart, but it seems likely that they will be doing pretty much the same as the EU mobile carriers. The current ADSL revenue streams controlled by Telstra would be a truly juicy target fr the HSPA providers to aim at. Telstra's alleged "mums and dads" user base that downloads less than 1 gb per month would be a 'no problemo' market sector to aim an HSPA service at.

There are, based on pure guesswork, probably over 2,000,000 low download Telstra users. These users are paying around $30.00 to Telstra for an ADSL service with almost no included downloads.

How easy would it be for Optus and Vodafone to offer these 2,000,000 customers a 1 gb service at 50% of what they are currently paying Telstra? (and of course the low end usage customers of every other Australian ISP?).

Pretty easy - and pretty compelling.

With both Vodafone and Three already at the 5 gb for $A40.00 stage of their marketing campaigns it doesn't need much imagination to understand that 3 gb of downloads takes care of somewhere around 65% (possibly more) of the TOTAL current ADSL user base.

Of course, ADSL2 still has a speed advantage and getting the full coverage of 7.2 mbps across Australia is still some distance in the future but HSPA, aggresively rooled out and marketed has the potential, and probably the actuality, of ding this:

1) "Churn Away" all of the current low end users from the ADSL broadband ISPs

2) Reduce new low end sign ups with ADSL ISPs to virtually zero

3) Increasingly "churn away" mid range ADSL users.

4) Reduce new mid range sign ups for ADSL services

5) Leave current ADSL ISPs with no lucrative low download customers (which they depend on to balance their high download custmers) and therefore drive them out of business with their only customer base being unprofitable high download users.

Too simplistic? No doubt about it.

An obvious marketing campaign from at least three Australian mobile carriers? Absolutely.

Interesting few months coming up.

...which means that hotels charge $A30.00 a day for fairly slow speed internet but HSPA works at around 512 kbps.

We drove from the far North highlands to just outside Perth (Perthshire) today only stopping to look at the Culloden battlefield and take a brief afternoon tea break before arriving at our hotel. Had a bit of trouble finding it as the vilage it's in is not listed on the A - Z so had to resort to instructions from the Swedish receptionist who seemed to be as lost as I was but we eventually made it. Lovely surroundings, heavily wooded grounds and a view of the river from our room and reasonable speed internet if you wanted to pay for it.

I caught up on my email, which I hadn't been able to access for three days, and had a look at what's happening in Australian comms (and also checked the AFL scores from the weekend - nice last quarter). I see that Three has begun to offer 6 gb of downloads for $A39.00 a month on a 24 month contract which is quite something and is better than Three offer in the UK (or in France from what I can see and assuming Orange is Three.)

From what I know of HSPA and mobile data network pricing the offer of 6 gb for $A6.66 a gb is going to lose Three a huge amount of money over the next year assuming that the people who sign up for the service use more than 2 gb of down/up loads a month. It will lose even more money with the give away of the 'dongle' - however that's always been the way the mobile carriers have operated so it is not surprising. Three's coverage remains the major problem for them, and of course their users, but it seems, in the right place, Three is offering a sensible alternative to wire line broadband NOW and that will only get better in the future.

It will be interesting to see the offers made by the mobile carriers as 2008 draws towards the Christmas marketing frenzy - just how much loss leading is available to the different carriers at that time will influence what's offered but I am assuming it will be more for less in each successive month between now and then. Having signed away our lives on our current deal, Exetel will have to live with what it has 'negotiated' for a while and hopefully meet the commitments we have made so that we can improve our offerings in 2009.

It seems that the general ISP business contiues to boom in Australia based on the various comments attributed to the different ISP 'spokesmen'. However when I looked at the share prices of the companies who are listed on the ASX it seemed to tell a different story. TPG/Soul hit yet another new low of 17 cents compared to its take over day price of 45 cents - a drop of more than 60% in its value in three months - a very strange scenario for a company that constantly states it's more profitable (in percentage terms) than Telstra and makes hugely more than all of the other ISPs (except Telstra and Optus) who are listed on the exchange.

http://www.asx.com.au/asx/research/chartsSearchResult.jsp?asxCode=SOT&TimeFrame=D6&compare=index&indices=XJO

That's a conundrum that defies explanation.

I ignored the plethora of NBN tender 'reports' and speculation as they are worthless with neither the reporters nor the people speaking to the reporters having any facts to base their speculation on.

I'm feeling very relaxed and will start to look at the UK comms press in more detail now that I will have more sensible internet availability and access to current newspapers and magazines. I've also arranged to meet with BT in London next week as well as a couple of other business related organizations so will have to alocate some thinking time to those projects.

But now it's time to continue my tasting of the (I'm told) 5,000 different single malts available from the main distillers and their offshoots before trying my first pheasant in many years.

It's really tough running a small and struggling ISP but someone has to do it.

….and in the far North Of the Scottish Highlands back roads each corner is only a hundred or so metres away which makes for quite a lot of beautiful views on a 100 mile drive.

We drove to Durness today through what was promised to us as the most beautiful mountain, island and water scenery in the world. I’m not competent to judge it on that basis but it is the most beautiful I have ever seen. I threw a ‘symbolic’ pebble in to the North Sea at one of the most Northerly points in the UK before turning the car round and repeating the experience on a, largely, different route back to the hotel via the Summer Isles Smoke House where we had bought the best smoked salmon we had ever tasted almost thirty years ago.

Sadly, as with the hotel on the Lochinver trawler wharf we had stayed at on our first visit to this part of the world so many years ago, it had changed – hardly surprising. No venison sausage or wild boar pies and definitely no wild smoked salmon. The original creator of the smoker still owned it but it had moved to ‘factory’ style premises (from its run down shed behind the local pub) and only smoked farmed local salmon and a bit of trout and haddock. We bought some anyway and then drove back to the hotel via the extremely narrow, heavily wooded on either side, twisty and turny, one lane road we remembered from our previous visit (yes, it’s that memorable).

We got back to the hotel and a couple of Balvennie’s for me and strong black coffee my traveling companion restored our ability to deal with life and business…..sigh….nothing like a week’s holiday to make Australia and Exetel seem quite remote.

I read the various mainstream Australian press accounts of where the current the labor Government, Telstra, Optus and the NBN stand and, as can be expected from the Australian, or any other country’s, reporters very little understanding of the issues of such a technically difficult to understand concept is being demonstrated.

So, what I get from what I read can be summarized as:

1) It’s beginning to dawn on CK a ESS that this project is REALLY COMPLICATED and they don’t understand ANYTHING involved in it. (fair enough – no-one outside Telstra and Optus would have ANY idea of what would be involved in actually building such a network and neither of them have previously done it because the actual concept is far too difficult).

2) CK via ESS is now more obviously playing down the scope of the original ‘sound bite policy’ and is overtly talking about ‘lowered expectations’ and a ‘significantly longer roll out’.

3) In fact all thoughts of delivering anything via this tender before mid 2010 is now being more clearly put in to words by ESS and Labor generally.
The facts remain as I originally (and some less than kind people might suggest precipitately) proclaimed – it will never happen unless:

a) Telstra does it on its own terms

b) Labor saves face by promising rigorous validation of the prices Telstra charges for the service

c) Nobody ever uses the NBN because it’s too expensive and HSPA and ADSL2 deliver better services at much lower costs.

I’m probably wrong on every count - quite frankly I no longer care what happens as it will not happen in any meaningful time frame and I have my part to play in delivering real services in real time frames at really affordable prices – and that takes all the time that any small company like Exetel has available to it.

So - NBN – a political nonsense that will continue to waste time and money of any parties foolish to involve themselves in any part of the ‘tender’ process and will simply make communications in Australia more expensive that they are today.

“Thank you waiter – I think I will have another now you press me.”

…….but the scenery is as spectacular as I remember it.

We left Mull via the midday ferry and continued to make our way North driving the length of Loch Ness in the process. There were plenty of tourists and countless “Nessie” shops but no sign of the mythical plesiosaur rumored to inhabit Loch Ness since the middle of the 19th century (at least).

We made our way through the increasingly remoter areas of the UK but the HSPA service soldiered on at ever decreasing speeds and retained 50 – 75 kbps right up to the outskirts of Ullapool before we lost it somewhere on the way to Lochinver where we hope to get some close sightings of Golden Eagles than we did on Mull.

North of us is only Cape Wrath and the most northerly point of the UK – John O’Groats - so I think we can safely conclude that 3G (2.4 – 3.6 mbps services) are only available in major cities while for the rest of the country there is coverage practically everywhere but that coverage is often of dial up speeds – at least at this stage of the roll out in these countries.

No problem, our hotel in Lochinver has wifi and in any case we are here to do other things.

So I’m writing this in my hotel room facing a window that has a fantastic view down the loch with mountains on either side so it is a ready distraction as I try to re-engage my mind with the issues of the Australian communications markets and ‘politics’.

I see that Even Stupider Steven has, yet again, pushed back the close date for Crazy Kev’s sound bite grand communications strategy for a national broadband service – I’m soooooo glad I pointed out this idiocy and how it would play out over seven months ago so that I can continue to underline how inadequate this apology for a ‘government’ is without sounding opportunistic.

From what I read over the past hour or so it is beginning to dawn on Crazy Kev that he in major, major dog doo doo and he is going to confirm himself as a total fool before he can wriggle out of his idiotic pre and post election statements about how “Almighty Kev” is going to ensure that “NO Australian is going to live in broadband poverty by December 2009” – what a total f***wit; – his ‘tender’ may not have closed by then.

So……..ADSL2 lives on for a while, much to the relief of the people who invested in it (including Telstra), and Even Stupider Steven will have to fall on his sword before the end of the calendar year……Crazy Kev will limp on a sadder, but unlikely to be wiser, dimwit while continuing to mouth his nothing platitudes and pretending he never really believed in …….well…..let’s just move on…..inane Cheshire cat grin and inane tone of voice mumblings.

Another advantage of this room is that as well as its great view it’s mini bar has 11 different single malts to choose from which makes flicking through the Australian comms industry press less painful that it normally would be.

I don’t see anything of much interest that’s happened in the last week but maybe I’m just not in the mood to read as carefully as I normally would. Exetel has had a record week (– good to see – must go away more often) – and from I read of what other ISPs are doing it seems that the internet business is booming for them even better than it is for Exetel.

I was puzzled by the strange comments from AAPT about not offering naked ADSL2 because it’s too expensive to support and other ISPs are selling it too cheaply. Maybe I’ve misunderstood what was actually being said but it was beyond my ability to sort out those contradictory concepts.

Otherwise I think it might be better for me when (maybe that should be ‘if’) I get back to working in the industry to not spend as much time reading the comms industry press because I’ve just scanned a week’s worth and they say almost nothing - and “almost” is probably an exaggeration.

Why are so many words published, from so many different people that provide so little in the way of factual information?

……..But Definitely The  Wrong Side Of Mull

So HSPA doesn’t work on one of the Inner Hebridean islands (Mull) and neither does my mobile telephone. 

However the whole purpose of coming here was to see a White Tailed Sea Eagle and the internet will have to wait.

I sort of cheated posting yesterday’s blog via emailing the written copy to Steve (and asking him to post it on Saturday (Sydney time) as our ferry left just before midnight on Friday night (Sydney time) and as I guessed there would be no internet where we were going to stay – in fact the whole island is effectively a communications free zone.

The weather remained atrocious  with sheeting rain for much of our trip to the ferry terminal in Oban and it got even worse after we disembarked on Mull. Nice conditions to undertake a 45 minute drive on a single track road with progressively worse visibility and oncoming cars hurtling towards us at express pace. Despite the less than accurate directions we found our hotel on a remote part of the island (though I suppose that should be ‘remoter’ as with 3,500 people on a land mass of 350 square miles it isn’t exactly over populated).

The hotel was great and the welcome (large ‘wee dram’ of a single malt) followed by a wonderful meal  soon consigned the weather and the travel difficulties to fading memory.  The purpose of our trip was to see the Sea Eagle and if possible the Golden Eagle. The immediate bonus was that one of the 9 pairs of breeding Sea Eagles had nested less than 500 meters from the hotel and had one chick a few days away from leaving the nest. Our friendly host booked a local guide to show us the two eagles and the other Mull wild life so we did that yesterday for the whole day. We saw three golden eagles , the Sea Eagle chick and as we were on the last stage of driving back to the hotel (sea eagle sightless after 7 hours) there she was – this huge and magnificent  bird  flying along the loch parallel to our car- less that 200 meters away.

You have to see it to believe what a bird with an 8 foot x 2.5 foot wingspan looks like in full flight. As an added bonus two herring gulls (not like our gulls – but birds with 5 foot wing spans of their own) were ‘attacking ‘ the Sea Eagle making her twist and turn and half roll on to her back to expose her enormous talons to the attacking gulls. It was an awesome sight and as she twisted and turned and jigged and jagged she passed over head at less than 15 meters. Absolutely breath takingly beautiful.

So we returned to the hotel very happy and had the ideal meal (at least Annette’s idea of an ideal meal) of local smoked salmon followed by local oven baked salmon followed by Scottish just picked strawberries and local fresh cream.

Altogether a truly memorable day.

I have to admit that I haven’t thought about Exetel, HSPA, the internet generally or new plans or services for the past waking day so this blog mightn’t qualify as being ‘vaguely business related’ but then I would be lying if I tried to make out that any of my thoughts today ever strayed to any ‘vaguely business related’ subjects.

Back to the mainland tomorrow and back to more realistic thought processes.

HSPA works well for me as a traveling person who needs internet in different locations at different times of the day and night and likes to use their own laptop/notebook . It is really easy to use if the carrier has good coverage which, in Australian terms, I think Optus do.

I think my few days experience has demonstrated that the promised 3.6 mbps download is not a reality yet and how the imminent 7.2 mbps and by the end of 2008 14.4 mbps speeds will actually be delivered has to be seen – certainly Telstra are very confident they can deliver such services and they are the current Australian leaders in delivering these sorts of services.

The issue, in Australia and from what I’ve seen so far in the UK, is that ‘real’ download allowances are not going to meet the needs of medium down loaders (and will never meet the needs of ‘heavy’ down loaders) in the immediate future and may never do that.

Looking at the ‘plans’ offered by HSAP UK service providers indicates that the apparent price per gb downloaded is around the equivalent of $A10.00 – which to me seems to be an excellent deal. However the reality of what an HSPA end user will actually be able to download may well be only 50% to 60% of what the plan’s allowance is stated to be.

I am basing that statement on what I know of the ‘real costs’ to the network provider in July 2008 of carrying traffic across an HSPA type of network. Firstly, let me say that my knowledge of the ‘real’ costs are based on two years of discussions with Australian, Asian and US providers of HSPA type services which means I extrapolate from the prices offered to Exetel and prices offered to wholesalers whose volumes are 100 times larger than Exetel could dream of doing plus what I see in Australia and the UK of the carriers own plans.

I certainly don’t know any actual internally generated carrier pricing models.

So let’s start with my UK HSPA service from TMobile who offers me 3 gigabytes of traffic (download and upload) for the equivalent of $A3.00 per gigabyte – providing I use the whole allowance in a single 12 midnight to 11.59.59 period. I tried yesterday to download for 9 hours from a super quick site and managed 410 megabytes on a connection that was telling me it was downloading at 2.45 mbps. During that download, and I was either at dinner or asleep, it uploaded 310 megabytes; something I would have thought was impossible (I was not using P2P). My other usage during the 24 hour period was less than 150 megabytes downloaded and, again strangely, 85 megabytes uploaded. In total, I downloaded less than 600 megabytes for my $A10.00 – and I tried really hard to ‘hammer’ my connection. So my actual charge per mb downloaded/uploaded was still a very cheap $A12.00. On the previous two days my combined uploads and downloads didn’t exceed 300 megabytes and I would think they would be typical of my general usage on email and browsing and you could add another 200 megabytes on top of that for other things I would normally do on a daily basis but haven’t been doing on this trip.

So my ‘average use’ would be costing me somewhere North of $17.00 per gigabyte used – if there was no daily limit – which on this plan there is so it costs more than that using this plan. Either way the plan costs $A300.00 a month and I don’t think any residential user could begin to consider it.

So the other plans in the UK are so similar that they may as well all be offered by the same provider and their per gigabyte cost to the end user on a 24 month plan is a theoretical $A12.00 per gb per month once you strip away all the nonsense. Sounds Ok but if other people get hit with the strangely large upload statistics I’ve experienced over the past few days the actual cost per gb downloaded looks closer to $A20.00 per gb per month. I’m not saying that there is any ‘cheating’ going on – just that the uploads using HSPA (on a single sample) are approximately two times higher than what I personally experience using ADSL.

I don’t know what to make of the aberration on uploads vs downloads and will wait until the end of the trip before drawing a conclusion if it continues.

My current view is that if Exetel charges $A15.00 per gb DOWNLOADED (no uploads counted) it would be the best offer (true value) on the UK market for any person who had actually experienced using another HSPA service and didn’t fall for the marketing flim flam that exists in the UK “sales material”.

The UK providers charge of $210 for a HuaWei E220 ‘dongle’ that costs them less than $A60.00 (probably less than that)is another interesting price decision but on 24 month contracts they waive that cost). So that’s my finding now and I’ll re-check the data in 2 weeks time.

As my time displacement is still not adjusted and my body
continues to assume it’s still in Australia I woke up and was wide awake at 4
am as I was the day before. Not having anything better to do I decided to drive
towards ‘civilization’ until I picked up an HSPA signal strong enough to be
usable. It didn’t take long – around 5 or 6 minutes to get a 150 kbps signal
and 4 or 5 minutes later it was above 2 mbps so I stopped the car, in the
middle of nowhere and posted yesterday’s blog and dealt with my email looking
over a dramatic view and watching an approaching ugly looking bank of storm
clouds. Nothing like the UK on a mid-summer’s day.

The Derbyshire Peak District national park is a truly
beautiful part of the UK and I’m sorry we weren’t able to spend more time there
but the rain was not going to go away and we had a long drive still in front of
us to get to the inner isles for the weekend. The HSPA service is (as Telstra
in Australia promises) “internet anywhere” and it’s so amazingly convenient and
very simple to install and use. In the UK this 4 pounds a day offer seems very
expensive (around $A8.75) but compared to the inconvenience (and cost) of using
internet café’s or the flakiness and cost of hotel’s who provide ‘broadband’ in
the UK it is a no-brainer for someone who is moving around as I am doing and
wanting to use the internet multiple times a day in all sorts of different and
inconvenient places (sort of ‘internet café anywhere – except much faster and
without the smelly people  on either side
of you and the awful coffee).

Another massive advantage is that my travelling companion is
able to use internet while I’m driving to check on suitable hotels and pubs to
stay at as well as look for other things that might be of interest. (of course
more detailed pre-trip planning would make this unnecessary for most people but
for people like me it’s a big plus).

So we had the normal huge ‘full English breakfast’ and
headed off North to the Scottish borders which I figured was about half way to
our weekend on Mull. Despite the rain the English traffic was going at full
speed in poor visibility on the M1 with the fast lane still being between 95
mph and over 110 mph. In fact when the M1 became the A1 and only two lanes the
slow lane sped up to around 80 – 85 mph.

We checked the download speeds which were fine near any
large town or city but slowed considerably between population centres. I guess
that the UK has so many more major highways than Australia that they don’t have
the same need to have full coverage on all motorways. The speed was around 100
kps, sometimes 55 kbps, on many parts of our 200 mile drive North but quite
fast enough for browsing and email.

When we reached the Scottish border country, despite the sparse
population, the speeds actually increased and as I’m typing this blog in the
very small town of Melrose I’m getting close to 2.5 mbps. I will try a download
overnight to see what the sustained speed is but so far the service has been
fine with the only off air time being at the top of the Peak District where
there was no coverage for our mobile phones.

So it’s been a longish drive in appalling conditions and I’m
heading down to the bar for a single malt (or two) and a spell in front of
their open fire  - yes, summer in
Scotland is colder than summer in England.

Having had limited success with the TI HSPA service on the train trip from Central London to the ‘wilds’ of Hertfordshire I was interested to see what happened as we got further away from London. The first hour or so of our trip was up one of the busiest motorways in the UK (the M1) for 100 or so miles and as you would expect the HSPA service operated at a lower speed, but continuous, connection on the times we tested it on that part of the journey achieving connectivity speeds of between 400 and 2.400kbps (while the car was doing over 90 mph and sometimes over 110 mph – would be nice to have roads like these in Australia).

Once we turned off the motorway and began to move to the centre of the Derbyshire Peak District National Park on progressively less used roads the download speed gradually dropped but as long we weren’t in a heavily wooded ‘valley’ the browsing speed and email speeds were no different to what I experience on my ADSL2 services in Sydney.

The last time it was able to connect was deep (high?) in the National Park , approaching ‘the end of the line’ in terms of the last village before just the high peaks remained. I was able to use my web mail connection and browse to get the ‘live’ US National League baseball scores at around 150 kbps and there were no noticeable delays.

A mile or so up the road where there was no habitation in sight for 360 degrees with the exception of the truly beautiful English country side and the particular beauty of the high peak tors, gorges and wild uplands there was no signal. So the HSPA service had delivered pretty much as I expected it would and, for a user like me, would be just fine for my needs.

We found one of those great pubs (of which there appear to be ten’s of thousands in the UK) with a great and really comfortable room for the night and relaxed in their bar over a couple of drinks. As I have no signal in this remote place I am typing this blog using Word and will send it when we again get a signal once we are on a road that has a signal.

Some days ago, I don’t remember exactly when, I rambled on about remuneration and sick days and other personnel issues and was incautious enough to comment that the possible new ‘government’s’ “maternity leave legislation” would mean that company’s like Exetel would not employ many/any females in the future. For my lack of political correctness (or what passes for that in Australia these days I received a few comments about my “sexism”.

I didn’t bother to respond as harshly as I was inclined to but I was amused to see an interview with the EU head of ‘equal rights’ in a copy of the Times left in the bar of the hotel who was bemoaning the fact that now the UK, in line with most other EU countries , was about to enact legislation providing for 12 month paid maternity leave and the right to flexible working hours for as long as a mother had children living at home.

What was her complaint?

She said that ‘equal rights’ had now succeeded so well that more and more companies throughout the EU had stopped hiring females and a poll of UK companies indicated that 85% of respondents (protected by anonymity in the poll) – had said they would now no longer hire females.

Uh duh! ……and this seemed to have surprised her!

For the people who accused me of being “sexist” – it has nothing to do with gender - it’s totally economic – no employer would hire an employee who will cost $60,000 more than a suitable alternative and who will disrupt the efficient operation of the company.

The landlord/owner of the pub I was staying at agreed completely. He said that English hotel owners all over the UK were no longer hiring bar or restaurant staff as ‘permanent employees’ but had for several years been hiring other EU nationals (particularly from Poland) on 6 – 12 month employment contracts that had specific ‘no maternity leave’ clauses in them.

So….no “sexism” …..simply financial reality.