Sunday, August 17. 2008Pricing Services Is Never An Easy Thing To DoJohn Linton Not being a monopoly that can arrange to deliver profitable results by simply increasing prices to deliver whatever result is required with no fear that your customers can get their essential services anywhere else makes pricing of services much more difficult. Being a very small company that has many much more established competitors is almost a worse case scenario - just making enough money to stay in business has defeated almost every start up communications company in Australia over the past 30 years (the length of time I've had some knowledge of the subject). Exetel has an even more difficult task in terms of pricing than even its lack of size and buying power and the, what appears to be almost capricious, pricing 'initiatives' of some very large competitors. Exetel has an imperative basis for being in business which is to offer the lowest possible prices for a range of services. If our prices of any service are higher, or even the same, as any other reasonably sized comms company then there is no point in Exetel being in the marketplace at all. This remains a difficult set of circumstances at this stage of Exetel's 'life' which I was reminded of as I re-focus what remains of my mind on what needs to be done in this second month of the new financial year in terms of product, service and price positioning. In such circumstances I guess it's inevitable that I feel some measure of envy of companies like Telstra who can make comments such as the one reported yesterday that "Telstra hasn't changed the prices of [these] services for over two years. I doubt Exetel goes more than two months without changing prices of product/plan definitions and has been 'forced' to do that since March 1st 2004 (when we introduced the concept of no charge off peak services for ADSL) having set our initial plan and price offerings in mid January 2004 - it has remained the same process ever since - but always with the huge restraint of never setting a recurrent price that is anything but lower than any realistic offer from any realistic competitor while dealing with the problems of always paying more than our larger competitors for the components of the services we offer. July was an exceptionally good month for Exetel - setting new sign up and revenue records across eight out of ten of our service offerings with an overall result around 50% higher than any previous month in the case of three services. That was a comforting set of days in July as I was away for almost all of the month and only saw the daily summary results from 20,000 kms away with that view often ameliorated via yet another different single malt. However, I was aware that some of the things I had put in place before I left to ensure that I had a 'worry free' holiday would need to be re-considered once I returned to Australia and that is certainly the case. One of the major difficulties, at least at Exetel's current size, is that if you are going to offer the lower price services than all of your major competitors you are never gong to make very much money and you are going to need to continually operate on the thinnest of margins consistent with staying in business - this means that you are forced to pay a great deal of detailed attention to every nuance, not only of your own business but also of every action of your competitors and every event that occurs in the wider financial environment. This is an exhausting regimen the width and depth of which which you only appreciate in the last few days of your holidays when you actualy feel like you have some semblance of a life again. That feeling, this time, has lasted less than two weeks and the demands of a strongly growing business in a very competitive environment quickly uses up whatever miniscule 'recovery' three holiday weeks provides. Not that I'm complaining, it is a choice not an imperative for me to work in the ways and number of hours I do in this first five years of creating a start up company (still four and a half months to go), but there is a great temptation to be able to do what Telstra has just done and simply raise the prices of all our services by a dollar or two a month and relax the daily regimen of examining and improving every aspect of everything we do and endlessly discuss pricing with our suppliers. The necessity for increasing pricing is not reached So it must be a sign of encroaching age that brings with it a lessening desire to work every waking hour that I compromised on pricing ease of life by increasing the 'sign up' prices for many Exetel services while leaving the recurrent pricing the same and so 'kept faith' with all current Exetel service users but added an estimated $120,000 a month of 'profit' to Exetel via charging that amount of 'extra' money to new customers who will take the start up charges in to consideration when deciding on which supplier they will choose. While that will undoubtedly reduce the number of new sign ups an extra $A1.4 million in annual 'profit' will make life much easier for me, on a daily basis, but will also make life easier for everyone else in Exetel without changing anything for 85,000+ current customers. Too much of a compromise? Perhaps - perhaps even yes. However there's always next month to review the decision and change it if necessary. Saturday, August 16. 2008Profits Are Up For Telstra So It Must Be Time.....John Linton ....to increase prices of low end services.....as you do when you're a monopoly with no incentive to be reasonable because no-one competes with you.(SMH 16/8/08 - page 5). It was interesting to read that Telstra's annual profits increased 13%, Telstra's top eight executives personal pay increased at a higher percentage than that to well over $A50 million a year and, obviously, this meant it was time to increase the telephone line rental charges for all low end users so their next round of very big salary increases can be again justified by linking them to increased profit. Nothing wrong with that as it's what any monopoly does - it can charge what it likes because you can't get the service from anyone else and it's so easy to meet profit forecasts when you can set any price you like. The charges that will increase are low end line rental (estimated to affect 5.5 million customers), calls to 1300 numbers (to 30 cents a call affecting all customers) and mobile call charges which will increase due to Telstra moving from charging per second to charging in 30 second 'blocks' (affecting all customers). It always surprises me that so many mobile services buyers don't take into consideration the very significant additional cost a 30 second billing 'interval' imposes on their monthly bills - typically around 12 -13%. The reason given...well no reason was given other than to 'snarl' "the increases are less than the rate of inflation". Big deal - the communications industry is not materially affected by 'inflation' and is in fact a net beneficiary of increased end user spending and lower operating costs via new technology efficiencies without taking in to account the leveraging of additional revenues (and profits) from new services.The ONLY reason the prices increased was to ensure more money for the top Telstra executives. In ISP Land there appears to be a general expectation by customers that prices will fall, continually, for reasons unknown to me. It's true that most company's wages bills, even very, very efficient ones, increase year on year or month on month as the volume of transactions and services they manage increases as their revenues grow. All efficient companies keep the additional costs incurred from increasing volumes (as well as the cost of things like rent and utilities) well below the additional profit they earn from increased revenues and the greater ongoing efficiencies all commercial enterprises try to build in to their businesses. While prices may not fall from ISPs they generally remain fairly static in terms of data delivered per dollar and data delivered per increase in speed - in general terms an ADSL user oday is paying less per byte delivered and the speed of delivery is more than ten tmes greater than 3 - 4 years ago. The most common monthly charge of $45.00 for an ADSL service deliversfar more in both download and speedterms than it delivered a few years ago and that price point has remained prety constant over the years (and Telstra take note: has never increased in 'real terms' - CPI, COL or anything else) A basic tenet of effective business management is that the cost of doing anything directly under your control (i.e. not involving services or products bought from outside sources) should reduce over time by developing economies of scale in both buying in and prosessing internally. As Telstra controls every aspect of its provision of wire line and mobile services it's hard to see how the cost of providing such services can have increased and, indeed, it can only be assumed that the costs of providing the services have decreased. (other than the salaries paid to El Sol and his friends). So the only conclusion that can be reached is that Telstra are increasing prices because they are a monopoly and no-one else can provide the services and therefore the management can increase their own salaries based on them making more money for the shareholders and thus rewarding themselves with a share of the profits - it's always the same story when any monopoly is involved. ....and this is the company that, with CK's willing assistance, wants to lock up the future provision of internet services across Australia? As CAG said to Maveick towards the end of Top Gun: "God help us all!" Friday, August 15. 2008How Time Flies......John Linton ....when governemnt incompetence is involved. While it doesn't seem possible, it's getting close to a year since we first heard of Crazy Kevin's 'sound bite policy' of "no Australian shall live in broadband poverty by the end of 2009". Of course when I had then come to grips with the concept that such an innate total fool would become the head of a government that would fool around with the idea of trying to make that insane concept become a reality we made the only sensible decision possible and put any investment in infrastructure on hold until either the idiots finally forgot about the whole stupidity or they found a way of diluting the thing down to some half baked concept that wouldn't have any bearing on reality. While neither of those things has yet happened it is becoming clearer that the whole NBN fairy story for the clinically insane will turn out to be just that - a slowly fading stupidity that the Coalition will beat CK to death with come the next election. So it has become time to re-look at the options for infrastructure investment so that no more time will be wasted if one of the two obvious conclusions to CK's cynical election lying does in fact become reality. Over the past few days we have reinitiated contacts with the three companies who had previously provided us with quotes for infrastructure builds in around 100 exchanges to get new figures and to understand what new technologies are now becoming available (I know there are a whole lot of people who still can't get ADSL2 now but that may turn out to be a blessing in the future). Since my trip to Europe (where it became clear that almost every EU telco was in the process of rolling out 40 gbps national backbones) it is obvious that an ADSL2 implementation would have been the wrong decision to have made early this year irrespective of the reality or otherwise of the ludicrous 12 mbps NBN fiasco postulated by CK, ESS and the rest of the doctrinaire dinosaurs, hacks and just plain mad men and women currently in the ACT playng 'government for the very young'. Deploying even a small network such as the one that Exetel could contemplate using 1 gbps backhauls would have been a major error of judgement and even 10 gbps (which we can't afford now in any event) would be pointless as even one of the more conservative EU carriers, Italy's, is already trialling 40 - 150 mbps services for business users in two major cities (Milan and Turin) at prices around the current 10mbps services in that country. A 1 gbps backhaul would not be useful in high speed service solutions and neither would a 10 gbps. If it turns out to be economically feasible (and it seems 40 gbps backbone equipment has already fallen to the price of 10 gbps equipment last year and is predicated to continue to fall as the manufacturer's build volumes continue to steeply climb) then there are now some interesting developments to be considered. However CK's NBN fiasco turns out it will have had one, possible, benefit in that each of the three companies we have contact with have all now looked at providing significantly faster back haul solutions in Australia and therefore the 'local knowledge' is significantly greater than it was a year ago. Perhaps it will all remain a pie in the sky bit of wishful thinking but we will at least go to the prliminary stage of looking at providing true high speed solutions for large and large/medium business users in Sydney and Melbourne and perhaps other places with the 'spin off' ability to provide other services to residential users should some of the preliminary discussions actually produce financially viable implementations. Of course it may all prove another waste of valuable time (at least for the suppliers we are asking for pricing) and CK and the rest of the loonies will actually insist on proceeding with their doomed NBN for some considerable time thus consigning any investment in real network services (by anyone) in to permanent suspension - at some stage of their evolution it may be possible for Yorkshire Blacks to develop flight capabilities? Thursday, August 14. 2008Is The Human Race In Terminal Decline.......John Linton ..........or is old age dulling my understanding of what’s going on and my abilities to deal with it? Annette attended a lunch with some of her contemporaries (mothers of children who attended the same schools as our children) to ‘honour’ the retirement of the kindergarten teacher who was much loved by our youngest daughter and who was consequently much admired by the various parents who came in to contact with her. One topic of conversation during that lunch was are ‘today’s parents’ of young children different to the parents of Annette’s and her friend’s at the same age. While you would think that it would be completely impossible to generalise to such an extent her answer was surprisingly frank and emphatically – YES – there was a yawning chasm of difference between parent of 25 years ago and those of today – in her view – and she is a well educated, very intelligent and very perceptive woman. Her view was that the parents she sees and interacts with today are, in comparison to Annette’s ‘generation’ of parents, extremely selfish, being very much focussed on themselves and their personal needs and wants and strangely indifferent towards their children to the point of being uninterested in them or actually actively indifferent towards them. (her quoted words as best as I remember them from the conversation). It seemed a very forthright and surprising observation but, given the general kindness of attitude I had observed in my brief association with her and the ‘universal adoration’ of the children she taught as well as the mothers of those children who interacted with her quite a lot, she has a great deal of credibility in her views. I basically understand that times change and that the human race didn’t get to dominate this planet by ceasing to evolve and adapt. However as Annette observed during this brief ‘and how was your day dear’ type daily catch up conversation she had observed very similar characteristics in her daily life from playing ‘socially competitive’ tennis against ‘girls’ 20 years younger than she is through a range of other activities and contacts. The common characteristic is that they cheat on line calls quite shamelessly and obviously in 'social' tennis matches, park their cars wherever it suits them irrespective of who else they block or otherwise inconvenience, are routinely late and.....it goes on and on. I would have thought no more about it (except to perhaps reflect that as you grow older you have less tolerance for the ‘young’) but listening to the news on the car radio re-inforced the view that people generally have changed quite markedly from the last to the current generation. The news item wasn’t directly related – it was comments on the Russia – Georgia conflict referencing “Russian ‘hackers’ vandalising Georgian Government web sites in support of their country”. It obviously was of no interest to these people that by destroying the web sites and access servers of the Georgian Social Security operations and other such agencies they would cause hardship to those Georgian citizens who depended on those accesses either directly or by the personnel within those agencies to allow them to receive the benefits they depended on - how can a reasonable person do such a thing? There can only be one answer to that - they aren't a reasonable person - they are a criminal menace. When you actually think about it - it's pretty bad that idiots like George Bush or Tony Blair can decide to invade another country but having some psychotic 15 year old doing the same thing (and make no mistake the ability to cripple a country's computer systems is just as destructive as using cruise missiles to destroy the buildings they are housed in) is a nightmare. Of course those same Russian hackers could just as easily decide to do the same thing to the UK or USA government agencies and its only a short 'hop and a skip' away from the B grade movie scenario of acquiring and using the US nuclear missile launch codes. It struck me that it was so typical of an apparently growing number of children/young adults today who think, and care, nothing about using the anonymity of the internet (and some basic technical skills) to mindlessly destroy things they have no real interest in (think of the damage done to computer systems all over the world by those same psychotic children developing computer viruses) nor have any benefit from destroying other than the fact that “hey – look at what I can do! I've really mucked up the lives of a whole lot of people I don't know".Just like the stealing of movies, tv shows and music, and worse, making other people’s property (movies, TV shows and music) easy to steal by other people all of these things seem to add up into a very different society with very different ethics and understanding of ‘obligations’ than the ones that Annette and I grew up in and therefore became a part of. Perhaps our daughter’s kindergarten teacher’s views on the change in parental characteristics over the past 25 years directly translates in to the actions and attitudes of the uncaring and totally anti-social vandals and thieves that now increasingly permeate the internet? Their parents showed no real care or respect for them and they directly translate this in to no need to show any care or respect for other people? ……..or have I just given these …..holes yet another excuse for their anti-social behaviour - "it's all my parent's fault"? Wednesday, August 13. 2008Automating Customer Service Never Was An "Exetel Only" InitiativeJohn Linton Exetel has, from its inception, put a great deal of time, effort and money into automating as much of its operational processes as possible. We did it for all the obvious reasons including the main reason - that we would only survive by lowering the cost of our operations to a level that was below any other company with which we would at any time be competing. At the time we started Exetel, January 2004, there were no ISPs of which we had any knowledge that had made any realistic efforts to automate the most expensive parts of their operation and we determined that there was a very large operational advantage if we were able to actually deliver automated systems that not only worked as well as systems that involved 'human beings' but that did better than any human being could be expected to perform the same tasks. This was hardly 'rocket science' as automation had been the driving force of commerce since the industrial revolution some 250 years ago. However we began the long, and ongoing, processes of automating the areas of an ISP's business that, as far as we could see, had not begun to be implemented by all other ISPs in Australia - customer service. Steve's and my direct experiences with several ISPs up to 2004 were that 'call centres' were amazingly inefficient and extremely expensive operations within ISPs - often being the single largest expense incurred by an ISP. So we began the process of automating the support functions which Exetel was putting in place on 'day one' and have continued to invest in automating those support functions ever since. Of course, as time goes on every company in any sort of 'service business' has found that web based systems (on line price lists, on line application forms, help forums, on line FAQs etc, etc) have significantly reduced the 'human' processes of providing sales information and taking orders and advising customers of the progress of processing their orders. There probably isn't a commercial entity of any size on the planet today that isn't using web based facilities where once there would be a 'human' doing those jobs either on the phone or person to person which was heavily endorsed by this article I read earlier this morning: http://www.itwire.com/content/view/19949/127/ which includes various percentages of how call centres generally around the world have reduced 'human' responses to customer support queries which included this statement: "human agent transactions account for just over 50 percent of all Within Exetel's operations we achieve quite a bit better than 50% and the advantages of doing so are very obvious. One of the most obvious advantages of automated response systems has always been that they are 'error free' in as much as they are incapable of giving a customer 'incorrect or misleading' information and they are, by definition, incapable of being 'misquoted' by a customer in subsequent events. However the major advantage, as noted in the referenced article, is that it allows 'human beings' to deal with the more complex issues that arise in providing various servces to various levels of customers more effectively and far more quickly. In Exetel's, and so many other 'technology provider's cases, this means that we are able to only hire competent engineers to assist customers (and therefore provide real, knowledgable support) as opposed to the rapidly turned over "script jockeys" that are the inevitable result of a lack of automation in so many call centres in Australia and in other countries. Exetel has over 80,000 customers of our different services and we have 14 support personnel - a ratio of support personnel to customers of a little more than 5,000 to 1 (all sales enquiries are handled by the same personnel. However when an Exetel customer does need to speak to a 'human being' the waiting time required is one of the lowest, if not the lowest, of any company with which we compete - the statistics for the last few months can be found here: http://forum.exetel.com.au/viewtopic.php?f=324&t=27043 Without automating as much of the current processes as we have done the cost of our basic broadband services to the customer would need to be around $A8.00 a month higher than they are today - a stark example of the benefits of a high level of automation or, in contrast, a good example of how not automating support functions adds unnecessary cost to the provision of any service to an end user. When you look at what's happening in Australia (and the cases in point I referenced yesterday are among the more obvious examples) you see that the cost of providing call centre support is very high on the list of reasons that companies such as Commander went out of business and why AAPT is addressing its operating losses by moving its call centres to the Philippines - the costs of these services (no/little automation) is just too high for an Australian company to absorb and still stay competitive. I obviously don't know that for a fact but I'm well aware of the costs of support as delivered by call centre processes over the past 15 years. With the likely economic climate continuing to decline rather than improve it would seem likely that Australia's call centre staffing will decline at a more rapid rate in the near future than it has over the past two years. This may mean employment opportunities in countries other than Australia improves in direct proportion to the job numbers lost here (or even as a multiple of the number of call centre jobs 'lost' in Australia) but it is not going to help the Australian call centre personnel who then have to seek other employment - almost certainly their call centre skills will not be needed in any future postion they find. Maybe a call centre operative is going to be as scarce to find in Australia in the not so distant future as the once omnipresent blacksmith?
Tuesday, August 12. 2008You Have To Wonder Whether Business Ethics............John Linton ......has become an oxymoron - or perhaps it always was? I have a compulsion to read while I have breakfast (except if I'm having a sit down breakfast in company) and as my usual business day breakfast (if it can be called that) is either consuming a glass of grapefruit juice or a bowl of cereal at the kitchen bench lasting less than 5 minutes I'm not fussy about what I read. This morning the closest reading material was yesterday's TV Guide section from the SMH (not something I have any interest in usually) but it was open at a page which had a heading of "Copyright Theft" and dealt with Channel 9's banning from the Olympic games venues for filming in the olympic pool area which is prohibited because the Olympic Games is "owned" by Channel 7. It went on to say that Channel 7 was hypocritical because they had run a section on one of their 'current news for the mentally retarded' programs in which they appeared to encourage copyright theft via illegally downloading TV programs - I really couldn't be bothered, even if I had the time, to actually follow the argument as it was clearly one of those spite pieces that dominate such 'news' sections of the press. However I was reminded of just how large business organisations have moved away from any semblance of upholding responsible attitudes when I read this 'article' some 30 minutes later in today's SMH: http://www.smh.com.au/news/web/isps-join-the-copyright-fight/2008/08/06/1217702054216.html Now, the last thing I want to do, or Exetel wants to do, is get involved in any legal stoush about what is right and wrong in the conduct of the difficult enough business of running an ISP service but, for Heavens sake, the comments made by the IIA (and I realise they are making the comments they are told to make by, in this case, Telstra, Optus, iiNet and Internode) are just too pathetic to be acceptable to someone with an IQ bigger than their shoe size and/or who has been introduced to the theory and practice of ownership and it's rights and wrongs for the under fives. What person over the age of eight would advance this as a reason for not forwarding a notice of alleged copyright infringement:? " Even then the ISP can't say who at the address did the downloading." Just how stupid does the person have to be to whom you are making such a defence to allow you to make such a just plain ridiculous statement? EVERY ISP has a contract with the person who signed up and paid for the service and the contract that was entered into doesn't make provisions for who uses the service - it only covers the terms and conditions of use of the service. So if a third party alleges the service is being used for illegal purposes then the person to be notified is the person who has contracted for the service and, if they allow others to use the service then that is and remains entirely their responsibility. Are Telstra, Optus, iiNet and Internode attempting to say they have no contact details for the person who signed up for the service and whom they bill each month? Clearly not - so what a crock that statement is. As is this one: "Mr Coroneos says the technology is not accurate and recent This is claiming that an ISP's records are so incorrect that they have been deducting payments from the credit cards and/or bank accounts of people who have shuffled off this mortal coil and/or they have illegally entered in to contracts with minors!! Take your pick of which of several laws these ISPs have already broken if they seriously want to use that statement as how they run their businesses. And to cap it off this poor guy has to then finally say: "But Mr Coroneos says the matter must be resolved by due legal Quite right - but that isn't what is being requested as far as I can see. What is being requested is that the "allegation" is passed on to the person alleged to be infringing copyright. Is there anything wrong with this scenario? From what has been reported neither the UK Government nor the six largest UK ISPs think so. At first sight, subject to more sensible reasons being provided than have been made in the referenced report, and also sensible legal advice on the actual laws in Australia I can't see any ethical or sensible reason why an alleged copyright infringement notice isn't passed on, with total confidentiality, to the alleged infringer - all I can see is that it benefits the alleged infringer by making them aware that, perhaps, someone they have given access to is endangering them by using the service they are paying for to infringe copyright and therefore exposing them to legal retribution. Of course if the alleged infringer actually has full knowledge that they are actually infringing copyright deliberately and consistently then the notice of alleged copyright infringement is also of great value to them - they become aware that what they thought was undetectable is not and that their actions might result in unpleasant repercussions should they continue to use their current methods for infringing copyright. Everybody benefits (except dead grandmothers who by definition can't be inconvenienced by such an action) and teenagers (whom, as minors, the law prtotects from the consequences of their own actions). I would be surprised if the views expressed by Mr Coroneos, on instructions from various people at Telstra, Optus, iiNet and Internode, were the views of those organisation's lawyers - I've never met a lawyer, no matter how incompetent, who would be stupid enough to advance such specious arguments. This is my personal view and not Exetel's corporate view. Exetel's Monday, August 11. 2008While "One Swallow Doesn't Make A Summer"......John Linton .....the demise of Commander is some sort of indication that the 'non-recession' and the 'non-credit crisis' is having the inevitable effects on companies that take on debt to 'grow' their businesses. I had previously referenced Commander as a company in a lot of trouble (based on the ongoing press reports of its condition) and the announcement that their lenders had appointed receivers last week came as no surprise: There was a little more detail in Saturday's AFR but not much with the base information being that Commander owed it's lenders some $A300 million and had reduced its earnings forecasts from around $A75 million for the 2008 financial year to around $A5 million over the past six months and had failed to sell off any of it's acquisitions to reduce the size of its borrowings (the acquisitions being basically worthless). Over the past 12 months Commander terminated over 50% of its 2,000 personnel and the future looks bleak for the remainder - itself a set of personal tragedies as I doubt that anyone ever feels sorry for banks who make injudicious loans. In the case of Commander it's almost impossible to understand how it, a spin off from Telstra with enormously profitable business contracts and a very decent size of market share in its field of operations, could be run into bankruptcy but then, stranger things have happened. So, people who read about such things just shrug their mental shoulders and dismiss the issue as one more stupid set of decisions by incompetent management and turn the page. If the page was in Saturday's AFR then they may have noticed a larger article on the opposite page about Telecom/NZ's FY2008 results which, while they won't result in the company incurring the wrath of their lenders, painted a dismal picture - particularly on this side of the Tasman with further write downs of AAPT's asset values and a tightly worded statement from APPT's new CEO (the ex Powertel CEO) about moving call centres to the Philippines and further personnel reductions other than that. There were also more vaguely worded coments about moving away from 'big business' and 'concentrating on smaller business' and 'attempting to resolve the poor performance of the residential divisions'. Paul Broad made a lot of money for Powertel's share holders and was handsomely rewarded by them for selling the business to telsco/NZ who in turn also handsomely rewarded him by making him CEO of the combined operations. A new definition of win/win? The fact that a previously highly profitable division of Telstra can go bankrupt within ten years of being spun off as a separate entity and the fact that Australia's third largest wire line communications company can have its assets written down from almost $A2 billion to practically zero within five years of being taken over by New Zealand's largest communication company are some sort of sign of the times definitely changing and definitely not being easy. Not that any business sector is ever 'easy' but the two pages of Saturday's AFR indicated that the number of 'swallows' had doubled from the number that could be, if not disregarded, then regarded as not yet of concern. Perhaps this is the first of a number of indications that Australia is approaching/already in very difficult financial times (whether you want to use the 'r word or not is immaterial to the 2,000 people who have or will lose their jobs in these two companies 'issues' - they definitely face financial difficulties). it seems pretty certain that, dependng on the financial terms of any contract, 2006/2007/2008 was and is the wrong time to have incurred any sort of long term debt (to have incurred short term debt in that period would have been even worse). Lenders simply have no flexibility in their ability to borrow (in order to continue to 'roll over' the money they have already borrowed to lend on) and therefore are 'closing down' loans they have already made if there's the slightest 'hint' of repayment problems - particularly if the loan is at 'old/low' fixed interest rates. I have no idea what communications companies have heavily borrowed over the past three years to roll out new infrastructures but the fact that all of the small wireless/wimax/VoIP companies that appear in the press recently all do so because they have been forced out of business because they couldn't service their debt they incurred to build their infrastructures (even with $A500 million in Federal Government subsidies over the past few years) is some sort of sign that such borrowings are a deadly burden if they aren't matched with 'immediate' profitability: http://www.australianit.news.com.au/story/0,24897,24160608-15306,00.html As the Commander scenario also underlines, borrowing to acquire 'economy of scale', or worse, 'synergy' was not the smartest decision in 2007 onwards when the financial storm clouds are so very clearly visible on the horizon. (anyone who has ever sailed knows just how close the horizon really is). Also this sort of summarises just why some of these things might be happening: http://www.australianit.news.com.au/story/0,24897,24164960-5013641,00.html Fortunately, Exetel has no debt and therefore I can read the AFR with only a little more than mild interest in what is happening in the financial world of borrowing and lending and how the non-recession and non credit crisis are affecting the various sectors of the Australian economy. However what does interest me is how the current situation (whatever it really is) is going to affect Exetel's buy pricing and our competitor's sell pricing. I haven't seen any significant changes so far but I do seem to detect some signs that communications companies are seeing changes in their various market shares and customer bases that are evident from the various changes different companies are making to their service offerings and also their end user pricing - both people we buy from and people we compete with. I doubt whether Commander is going to be the last largish communications provider to go out of business this calendar year and I would think that more small communications businesses will also go out of business or be 'swallowed up' before Christmas. The challenge is to ensure that Exetel isn't one of them. Sunday, August 10. 2008Broadband About To Change Significantly?John Linton I wonder just how much things are now going to change in the provision of ADSL services now that the NBN fiasco is reaching a point where the two major telcos in Australia are much closer to determining what is likely to happen? As I said back in November 2007 - all the tender means is that 'current broadband' would go on hold while Telstra and Optus worked out what it would mean to each of them if the other one 'won' the right to build a new NBN. That's pretty much what has happened; coincidentally giving Telstra a 9 month 'free kick' at signing up ADSL2 customers on their 900 ADSL2 exchanges at 'special offer' prices on 24 month contracts. Now Telstra has signalled it's about to start my predicted phase 2 of offering ADSL2 on their network (anyone remember all their statements about how they would never do that - listing the reasons why they wouldn't, back in 2007?). Their first sign up was the obvious one as PeopeTelecom had no ADSL2 service and also had a 'whole of service' contract with Telstra. But who else will sign up to resell Telstra's ADSL2 and how will the other, smaller ADSL2 deployers, re-act as their potential (and in two cases actual) ADSL2 wholesale market is now threatened with either declining or never coming in to existence? There are no obvious medium, let alone largish, ISPs left to sign up with Telstra's service - particularly if they make a pre-condition of providing ADSL2 a Telstra only as a supplier condition - that would seem to eliminate all ISPs who have already rolled out ADSL2 which, pretty much by definition, eliminates all likely and sensible possible wholesale 'partners'. This leaves the even more interesting scenario of how the larger ADSL2 networks (Optus, AAPT, iPrimus, iiNet, TPG) react to this, clearly signalled, move in terms of whether they increase their wholesale efforts or withdraw from them. Perhaps Telstra's actual strategy is to offer 'true cost' wholesale ADSL2 to the larger ISPs to ensure those ISPs don't continue to increase their number of ADSL2 exchanges and therefore 'control the damage' of competition in those exchanges. In any event, it's obvious from Exetel's new and churn ADSL applications (which are unlikely to be any different to any other ISP's percentages) that ADSL2 is about to overtake, or has already overtaken ADSL1; and Exetel only has access to the 400 or so Optus exchanges. As ADSL2 is a lower monthly port cost than Telstra's 256 kbps port cost (to Extel as we get no discounts unlike other larger ISPs and 'whole of service' Telstra customers) it makes perfect sense that, given a choice, an end user would sign up for a much higher speed service at a much lower cost. How the latest Telstra 'change of heart' will affect the ADSL2 sign up rate is impossible for me to even guess at but it seems unlikely that it would slow the current very obvious trend of ADSL2 rapidly overtaking ADSL1 on the exchanges where it's available. The likely competiveness of a wholesale Telstra ADSL2 offering will not be known until PeopleTelecom publish there first attempt at ADSL2 pricing (wait for the 'special' and 'early bird' marketing cr**). Based on PT's ADSL1 pricing over the past three years and their continuing failure to make a profit on a $A100 million annual turnover it is unlikely to be 'exciting' - despite their need to try and 'catch up' with all the other ISPs who have been offering ADSL2 for up to two years and Telstra's need to make their first ADSL2 wholesaler look successful. To misquote WSC - "It isn't the end, or even the beginning of the end - but it might be the end of the begining" (of the Telstra re-domination of broadband 'wars'). Saturday, August 9. 2008Finalizing Exetel's HSPA Service OfferingsJohn Linton We expect to start 'customer' testing of the new HSPA service next week - at least in terms of establishing 'benchmark' speeds and latencies around Australia and determining what the issues in terms of gaming and VoIP and other applications might be. We have started to put the HSPA details up on the Exetel web site and will add the rest of the 'content' by the end of next week. At least the coverage 'maps' are now in place and the first two plan prices. The testing we will do will be aimed at three major tasks: 1) Establishing the likely performance of VoIP over the service in areas where 3G is available 2) Determining latency impacts on local gaming servers 3) Seeing how the iPhone handles VoIP and SMS via broadband compared to a standard mobile service The third task came from a 'blog reader's suggestion' yesterday - "if Exetel isn't going to offer a mobile voice service will it offer a VoIP service". Until that suggestion was made I was in despair about how we would be able to compete with the "570 minutes for $0.00" type offers from the Carriers and their dealers - the mobile voice wholesale pricing offered to Exetel by Optus is an embarrassment in terms of the mobile call costs expected by an end user (which is why we have always used Vodafone for our mobile services - at least their rates allow us to be competitive). We can, I think, make an iPhone data offer that is very attractive to iPhone users. We can also offer a very attractive SMS (via broadband) service as part of the data service - I think 5 cents for an Australian destination SMS of 160 characters is far better than any mobile based SMS service I am aware of. The problem is a mobile outbound service (obviously inbound isn't a problem). We can't offer outbound voice calls using the wholesale rates Optus have provided to us at this time - they are just so ridiculously expensive it would kill the appeal of the service and we might as well forget about an HSPA service for a mobile phone user completely. However, following that reader's suggestion, it would be a major benefit to be able to offer outbound calls via VoIP if we could make that happen in an easy to set up/use way - basically using one of the 'soft phone' implementations that the vast majority of PC VoIP users have used since VoIP first became avaialble. Many of the most popular 'soft phone' applicatons are now very, very feature 'rich' and are pretty much 'plug n play' in terms of installation and set up. While I undersand the limitations of VoIP (and the particular difficulties of use where there is no 3G coverage) I can't help but conjure with the ability to compete with all the mobile cost based "free million minute" offers with a 10 cent unlimited time national calls , low cost calls to mobiles and very, very cheap international calls that are available via VoIP. (of course it helps that Exetel had the farsightedness to put in place its own SMS via Broadband and VoIP switches and connectivity a long time ago and therefore have the delivery, billing and programming capablities to integrate those services into a new 'platform'). We could beat the current offer by Virgin by a very long way using VoIP and SMS over broadband and have a very large amount of 'spare' money available to subsidise the cost of additional data that would allow us to also compete with the most aggressive data inclusion offerings currently beng offered by Three and Vodafone (and Optus for that matter). I hear, 'on the grape vine', that both Optus and Vodafone wil be introducing new plans in the very near future aiming at simialar markets to those Exetel had 'identified'. I suppose it was inevitable but I had hoped they would stay with their current pointless attempts at competing with ADSL for a bit longer - at least until we had been able to deliver pur planned HSPA services. Of course, it may not work out as I would hope it would but we will do some extensive testing using iPhones over the next few weeks to determine exactly what can be sensibly achieved - particularly call quality in various coverages and, of course, ease of use. If it can be made to work well and easily - well the future suddenly looks very much brighter than I had ever thought it could. Friday, August 8. 2008New ADSL2 Options Becoming Available?John Linton I mentioned before I went on holidays that it appeared that Telstra was beginning to step up the pressure on the ISPs who had 'dared' to instal their own DSLAMs to offer ADSL2 services that were less reliant on Telstra's domination of the telecommunications infrastructures. For the past 12 months Telstra Retail has been aggressively marketing ADSL2 services to other ISP's ADSL1 customers (and perhaps their own ADSL1 customers) via 'special limited offers' where Telstra have enabled ADSL2 exchanges. It appears that after 12 months of intensive direct approaches to customers on these exchanges that the 'take up' has cost/effectively exhausted the potential and it's now time for the next phase of these operations - making available a Teltra Wholesale version of ADSL2 to add whatever further discomfort this may occasion to those ISPs who have rolled out their own DSLAMs. I suppose the other considerations, in an increasingly uncomfortable prospect of 'operational separaton', are that Telstra also has to try to look as though it does offer a true wholesale broadband service to other ISPs and doesn't simply use its monopoly position to hinder the provision of reasonably priced ADSL2 services to Australian end users. I don't know who would be stupid enough to believe that 'line' but it's hard to think of someone off hand. The other consideration could be that Telstra Wholesale has lost an awful lot of wholesale ISP and telephone service buyers as so many ISPs have moved their previously purchased ADSL and wire line buying from Telstra to be delivered via their own infrastructures (for which they still pay a lot of money to Telstra Wholesale for exchange space rental and line termination monthly and one off charges etc). When you think about it - Westnet was probably the last/latest ISP of any size to move the majority of its business away from Telstra after it was bought out by iiNet. Optus, AAPT, iPrimus,TPG/SPT,iiNet and several smaller ISPs have all moved sizable amounts of business away from Telstra Wholesale over the past 12 months and all of those companies continue to build out their own infrastructures meaning that they are committed to continue to move away as much of their remaining business as they can in the coming 12 to 24 months. I have no idea of the amount of revenue (profit) this has cost Telstra Wholesale and certainly until the FY2008 figures are reported there is no way of seeing if in fact the natural growth in the telecomunications Australian market has offset these moves of business away from Telstra Wholesale in any meaningful way. That will become clear in a month or so. It appears that Telstra Wholesale is now further advanced in its change of practice not to wholesale ADSL2 with at least PeopleTelecom possibly signing up to become the first ISP to re-sell the Telstra ADSL2 services in the near future. It wouldn't be a stretch to believe that if Telstra Wholesale is going to resell ADSL2 to one ISP then it would be offering the ADSL2 service to other ISPs. However, People Telecom is one of the few ISPs of any sort of 'size' (though probably less than 50,000 ADSL1 customers) to not have an ADSL2 offering (having run into trouble with their previous attempt). As far as I can tell all of the ISPs whose names I'm familiar with already have arrangements with Optus ADSL2 (or possibly AAPT/Powertel) or have rolled out their own limited infrastuctures in the main exchanges where they have the majority of their customers and then, in some instances, used Optus to provide some additional exchanges. Where is Telstra Wholesale going to now find wholesale customers for its ADSL1 and ADSL2 services? Perhaps it is going to be 'content' with signing up its major competitors to provide ADSL2 services on exchanges where it's uneconomical for them to deploy their own DSLAMs? While that makes sense it is going to pose some pretty interesting 'marketing challenges' for ISPs who might contemplate doing that given the likely disparity in the costs of providing the two different services. Maybe this is just another 'spoiling tactic' by Telstra to eliminate any sizable ADSL2 wholesale market for people like iiNet and Optus and AAPT who might think that wholesaling ADSL2 ports and back hauls will add economy of scale to their own 'marginal' deployments in remoter exchanges? I suppose additional 'competition' in the ADSL2 marketplace can only be good for Australian end customers - isn't that the conventional logic? Thursday, August 7. 2008What Is It About Apple's iPhone......John Linton .......that completely escapes me? I read this today: and think the general offer (of telephone and data services) is very good and even the hardware at "$A0.00" is very attractive. But what does an Apple iPhone have that generates so much 'desire'? I remember in July 2007 when my NYC based brother in law came back to Australia for a brief visit bringing the then just released iPhone with him that my techo daughter and son were green with envy/desire and James badgered him to buy one for him when he returned to New York which he subsequently did and then got it 'unlocked' before shipping it. I think I mentioned that my daughter got up at five am to queue for one at the Neutral Bay store on the day they went on sale in Sydney and was lucky enough to get one of the 50 units they had which they sold out of as quickly as they could process the sales transactions. Even Annette, who is the least 'mobile handset conscious' person I know (contenting herself to use her childrens 'cast offs' for the last ten years), is now keen to get one as soon as Exetel sources them for the HSPA service. In Bangkok you can buy 'second hand' unlocked iPhones in virtually any of the hundreds of mobile service outlets at prices that are around half of the recommended retail in Australia - they have them in any quantity you can pay cash/credit card for and will ship them to Australia in bulk. I don't know how good the Apple iPhone clones now being offered out of, at least, Hong Kong are but those devices are about one third of the Australian RRP. This is my first day back in the office and I'm looking at the HSPA service details which have progressed a long way since I went on holidays (which is really good to see) and with a projected launch (hardware availability dependent) of September 15th there is very little time to try and make the 100% correct decisions we need to make to ensure this service is as good as we can possibly make it. One of the issues is, of course, the hardware we will offer to connect the service. Our view is that this is a broadband service that connects to a computer via a 'modem' - not a telephone based data device (a la iPhone) and therefore all my efforts have been directed towards sourcing computer based connectivity hardware rather than 'handset' hardware but the iPhone 'chorus' doesn't seem to be diminishing. In the article I cited this comment seems to sum up/fails to sum up the iPhone hysteria: "What we hear from our customers is that they really want the iPhone not just because it's a cool device but they want to do stuff with it, and I don't think that's been catered for in the market so far," said Virgin Mobile Australia chief executive Peter Bithos." I'm not sure what sort of research produced the "because they want to do stuff" justification but maybe I'm still too jet lagged to comprehend the context in which a CEO can make such a comment. Leaving that aside I was intrigued by the pricing in the offer: $A70.00 a month for 1 gb and "$A520 worth of phone calls" which includes an $A864.00 retail iPhone on a 24 month contract. When you look at the actual details here: you find that the actual price is $A74.00 per month and this cost includes $36.00 a month to pay off the "free" iPhone. (if you don't stay for 24 months then you get charged $A36.00 per month times the number of months less than 24). Therefore the cost of 1 gb of data (if you use exactly 1 gb) is $38.00 a month less the "$A520.00" worth of telephone calls. The "$A520 of included phone calls" appears generous but I suppose it depends on what the per minute charge is - I couldn't establish that from my initial look at the Virgin Mobile web site. Seems a pretty good deal to me - if i wanted an iPhone and made a lot of mobile calls (which I personally don't and never do). However, obviously 'typical' mobile phone users do both of those things and, from what I can see, the Virgin Mobile deal is very good. Exetel would charge $5.00 per month (versus $4.00 a month) plus $A15.00 for 1 gb of data (downloaded - not as the Virgin offer is - uploads and downloads which probably reduces downloads to 600 mb or something like that). Exetel would also charge per mb used so it would almost certainly work out less than $A15.00 a month but there is no phone call allowance to 'muddy the waters'. It occurs to me that if an iPhone is so widely desired then it would be worth importing the 'second hand' iPhones (which incidently, based on my limited examinations come in 'factory sealed' packaging and appear to be new) and carry the 'new' warranty risk and charge $30.00 a month over 24 months to meet such a demand. At a cost of $US350.00 a handset plus freight and duty it would provide a very good margin and be far more flexible than the Virgin offering - providing the voice call costs could be offered at reasonable pricing. But.....there are an awful lot of buts to be considered. I knew it was a mistake to get on that plane on Tuesday night. Wednesday, August 6. 2008Not So Good To Be HomeJohn Linton Back in Australia to a cold, damp and (at 6 am in the morning) a dark day. Sometimes it's a nice feeling to come home but today wasn't one of those days - it felt sad to be ending a great holiday on the trip from the airport to our house in the early morning traffic. Anyway....all good things must end and it's past time to get back to work after the jet lag fades. I read the Australian papers in detail for the first time in almost a month (having skimmed the on line versions while I was away) and found nothing dramatically new or relevant to our business in the financial press - if anything they were slightly more pessimistic than they were before I went on holiday with the exception that interest rates are predicted to be cut by 1.5% over the next 9 months which I suppose means something. - if only that "the inflation genie", contrary to Wayne Swan's hysteria at budget time, is either not "out of the bottle" or is back in the bottle or whatever nonsensical statement that was meant to mean. However those cuts will come too late for the people who have lost their houses via mortgagee sales which, according to the same papers, are up 40% over the same period a year ago. Exetel had another record ADSL application day on Monday of this week which is good to get the new month away to an optimistic start so perhaps lower cost ADSL services are being 'positively affected' by declines in disposable incomes due to the higher grocery prices which seemed to dominate much of the three papers I read. and also the early morning TV 'news' program I turned on while catching up on the general 'mood' in Australia. There were some bits and pieces in the tech sections that were of some interest. The Channel 7 annual report contained no usable (to me) information on what their intentions are on using/developing the Unwired network they finished purchasing in December last year. We have a little less than one year to run on the initial five year wholesale contract term we signed in 2004 and we still have around 1,000 users on the Unwired network in Sydney although we haven't been actively seling the service for over two and a half years due to the actions of the then 'National Sales Manager'. If I had to guess, I'd say that Channel 7 wouldn't be interested in renewing any of their Unwired wholesale arrangements (assuming they still have any other than with Exetel) so we have less than a year to find an alternative service for our Unwired users. How a company (Unwired) in it's sixth year of operation can lose $A15.7 million on a turnover of $A22 million is a mystery to me - maybe the annual write downs on the spectrum licences make it impossible for such a service to ever make money. When the current jet lag 'fog' lifts from my tired mind we will begin the final decisions on the HSPA plans to be offered in September 2008 and while a large percentage of the Unwired users, who download less than 2 gb a month, will have a 'natural' migration path should they wish to move to HSPA the other, higher download users, will not find HSPA suitable at this period of its introduction. I don't see any other WiMax type solutions becoming available (I see Commander has had no interest in it's attempt to, yet again, sell off its iBurst acquisition) so it's not likely that Exetel will find a migration path to another wireless service that could deliver larger downloads at a sensible end user price. I read the BigAir and Clever Comunications latest financial statements which were very positive but they have no residential solutions. A difficult problem wth no immediately obvious solution. In terms of HSPA - we need to determine whether it can be, at this stage, a true current ADSL 'replacement' or 'competitor' rather than a useful mobile broadband service for business users. I see that '3' is pushing this concept with its new 7 gb offering but, based on myUK experience, I'm not sure this will turn out to be possible - at least right now. We will do some more extensive testing this month to see just what performace is deliverable (and where) and particularly resolve the latency vs games performance questions that were raised by the UK experience of 80 ms first hop traces. I see that EFTel's share price fell to an historic low (4.7 cents) which means the company is effectively worthless and that TPG's share price remains below 20 cents while other comms share prices haven't changed much over the past month - Telstra's is at a 12 month high. At the current 18.5 cents the TPG PE (price to earnings) ratio is an amazing 2! (compared to Telstra's which is 16!). Hard to see why people aren't rushing to buy TPG shares at such a PE. It's taken me more than three times as long as usual to write this rambling so I'll quit and wait for my mind and body to adjust to EST when hopefully I will be able to write and think more coherently.
Tuesday, August 5. 2008Net Neutrality - Going The Way Of All Myths?John Linton I read L. Gordon Crovitz's article titled "FREE THE WEB - FROM THE FCC" (Asian Wall Street Journal - page 14) earlier today which centred around the FCC (the USA Federal Communications Commission) announcement last Friday that it will "replace market solutions with regulatory review" regarding carriers policies on allocating usage of the bandwidth in their networks. This resulted from a major US carrier (Comcast) restricting/delaying P2P traffic which it claimed that at peak times was taking 90% of available capacity but only servicing 5% of the users at those times. Subsequently, in March 2008, Comcast and BitTorrent agreed that a different technique would be used to manage its network that didn't 'specifically' target BitTorrent traffic. The article quotes the UK Guardian newspaper (that carried the announcement of the UK initiatives on copyright infringement I referenced earlier) succinct summing up of the problem for users and carriers as: "The family gathers for tea, and their are four cream cakes for four people. If one of those people grabbed three of those cakes then words would be said. However P2P users think it's perfectly OK to grab 75% of the communal internet bandwidth." Exetel has 'wrestled' with this issue (as has every other provider of internet services) for over two years. It isn't easy to address and the ONLY solution that provides any sort of realistic service delivery for ALL users is to restrict the ability of P2P users to 'hog the bandwidth" at peak times - irrespective of what ANYBODY says on this issue there is no other financially viable solution. I think, over the past two years, we have come up with a sensible operation methodology that delivers optimum speeds and traffic volumes to all users at all times but it has taken a lot of money, user and system administration 'pain' and a whole lot of other work to reach this situation. The ONLY solution to preventing P2P traffic congesting all users on a network at peak times is to control the amount of bandwidth that P2P applications are 'asking for'. Unrealistic, or just plain lying in the case of ISPs, people will say things like "it's the ISP's responsibility to provide whatever bandwidth is required at all times for all users, irrespective of what they are using, to achieve peak speeds at all times". Interestingly childish and pointless statement - similar to averring that "The NSW DMR should provide enough traffic lanes to allow all road users at all times to drive at the maximum speed their vehicle is capable of". Everybody understands the concept of 'peak hour' and its consequences - so it applies to broad band internet. So let me say that, in the event that there is an ISP/Carrier that DOES deploy enough bandwidth at ALL TIMES to allow their P2P users to download at the maximum of their line speeds (in other words does not restict P2P usage in any way) then they will undoubtedly, over time, attract ALL P2P users who think that their current ISP, which does restrict P2P speeds at peak times, is not providing a suitable service. Like the 'anonymous' ISP who attended the Allot conference in Bangkok attended by Steve recently - Allot said they had to be anonymous because in Australia they continued to publicly deny they restricted P2P although they used the same NetEnforcer equipment that everyone else attending the conference did - NO ISP, irrespective of what their 'spokes people' state publicly can afford the amount of bandwidth such a policy would require - even if they do charge as much for their services as the 'anonymous' Australian ISP does. Whether or not the FCC does begin to introduce 'regulation' of how traffic is carried over an carrier's bandwidth the fact is going to remain that no carrier/ISP can afford to charge a P2P user the same amount for the same service as a non-P2P user if the requirement is going to be "I wan't a guarantee that my P2P traffic will always be at full line speed". So regulation will require a two tiered pricing for broadband plans or an ISP will make it clear that they don't support P2P on their network at all. I think Exetel's current policies are the best possible ways of addressing this difficult issue: 1. P2P is restricted at peak times but not prohibited and only restricted when it begins to interfere with HTTP traffic 2. Large down load allowances in off peak ensure there is ample time to download large files when speed doesn't matter as they can be done as auto timed starts and not interfere with HTTP traffic 3. P2P caching takes care of most popular P2P titles and reduces the cost of providing a P2P file allowing more bandwidth to be provided to P2P applications The combination of P2P 'restriction' in using up stream bandwidth and providing caching in the place of 'up stream' bandwidth will, over time, make the use of P2P restrictions 'neutral' as far as the end user is concerned. P2P has only been able to be accommodated, in Australia, so far because the cost of IP connectivity to the rest of the world has fallen so dramatically over the past two years and many ISPs have used proxies and now are using P2P restricting devices. Hopefully their will be no FCC type regulation of the 'web' in Australia - if there is - prices will increase and P2P will be charged at higher rates. Monday, August 4. 2008End User Broad Band Costs Are To Increase........John Linton ......due to the actions of a relatively small percentage of dishonest people. While this may not happen 'immediately' what is certainly going to happen is that every 'reasonable' ISP's costs are going to increase if new processes have to be introduced to deal with the issues currently coming in to effect in the UK and now being referred to in yesterday's AGE. I mentioned the recent UK ISP/Copyright Protection Agencies initiatives in a blog some days ago. I read this 'follow up' in the Australian media earlier this morning: I found it interesting to see how the two ISP 'spokesmen' reacted to the reporter's questions on what their particular companies would do about any new 'initiatives' in Australia. I can only assume that their remarks had been approved by their legal departments and therefore represented a valid response - I doubt very much that any sensible person would offer such opinions had they not had them validated. However I can't help wondering whether Telstra and iiNet have missed/avoided the point - either deliberately (more likely) or inadvertently (less likely) that the concepts they are decrying leave them open to some copyright protection agency seeking to use the courts to clarify some aspects of both the Telecommunications Act and the latest revisions to the Copyright Act(s)? I found these statements by the Telstra and iiNet spokespeople: "Mr Milne said problems with a three strikes policy that needed clarification included: customers not receiving warnings because they had changed their address, people being blamed for piracy because someone else has hacked in to their wireless network, and that the actions of one person could penalise a household." AND: "Michael Malone, chief executive of iiNet, described the three-strikes policy as "crazy", primarily because "ISPs aren't the ones who should decide what's legal or illegal, and neither should AFACT," he said." to either deliberately or inadvertently miss the point that the copyright agency involved is not claiming that the ISP's CUSTOMERS are infringing copyright but that the ISP is doing so. Right now, Exetel's legal advice is quite clear - we have no obligation under any extant Australian law to provide information about Exetel customers to third parties unless a relevant warrant is issued and we also have no obligation under any extant Australian law to determine the legality or otherwise of IP data streams passed through our networks. Similarly we are not obliged to pass on infringement notices to customers - if the agency claiming infringement wishes to pursue that path they can apply to the appropriate court to issue a valid warrant for details to be provided. Pretty clear and unequivocal - at least until now - the new tack being by the copyright agency (ignored by Milne and Malone as far as I can see) is that it seems to be claiming that the ISP is AIDING AND ABETTING - no need to pass on the notice it applies TO THE ISP - at least that's the way it can be construed. The problem is not likely to go away based on those premises however and whatever now happens it's not going to be easy to address the sort of 'fall out' caused by the publicly expressed attitudes of some particularly silly users when they receive a copyright infringement notice, especially when they are so stupid that their views are publicly expressed on open forums, such as this: "Prior to changing over to ISP XXX, I was with another ISP, and has(sic) been downloading files, in particular movies, via BitTorrent for a few years. Yet I have never received such e-mails. I am giving serious thought about going back to my former ISP" What is it possible to make of such comments? That the person concerned (and he/she is likely to be one of a large number) simply regards his/her routine downloading of copyright material is totally acceptable and shouldn't be hindered in any way? I think that's probably the only conclusion it's possible to reach. I have previously commented on the UK initiative and its possible next step(s) and this particular person exemplifies why those steps will quite possibly be taken - in particular compiling a register of the actual telephone numbers of internet users who are serial copyright infringement culprits and making it accessible to all involved ISPs so this type of user simply can't move away from an ISP that disconnects his/her service to another ISP until he/she is caught again but that the other ISPs he/she seeks to move to will reject his/her application based on the "register". Personally, and as someone with a measure of responsibility to continue to provide various communication services to tens of thousands of users around Australia, I have no interest in Exetel becoming some sort of 'vigilante' copyright enforcement agency - not only is it illegal but it is time consuming and bad for business generally. I certainly don't condone theft of any person's or entity's property by any means at any time. However neither do I consider it either my or Exetel's responsibility to write new laws or determine culpability based on laws that aren't enacted in Australia. Having said that I do agree that it is long past time that parents of children who use the internet services they pay for to actually make themselves aware that their children are indulging in anti-social and quite likely criminal behaviour, and worse, inculcating their disregard for social responsibility and other people's property in to their future behaviour should take some serious actions in ensuring that their children don't continue to develop a criminal mindset. If they don't then they may well live to regret their neglect of basic parental responsibilities. In the mean time it will be interesting to see what now transpires in Australia - whether the UK (and French) initiatives are implemented in some form or other in Australia. Whatever happens only one thing is certain - the cost of providing ISP services is going to increase until some sensible resolution of the breach of copyright issues is reached. It's the last full day of this, very pleasant, holiday and already the demands of business, via the actions of stupid and dishonest people, are encroaching on these last precious hours of 'freedom' - maybe I'll miss the plane tomorrow? Sunday, August 3. 2008And So It Came To Pass - A Great Silence Settled Over The LandJohn Linton I took some time, in my sleep broken, jetlag adjustment early mornings, to see what had happened since I left Australia a little over three weeks ago. I couldn't see any changes in the offerings of the larger ISPs or in their subsidiary services. Also, as far as I could see, nothing of interest had been reported in the telco oriented media with the same volume of informationless comment being made about the Labor NBN 'tender' as when I left with nothing to base the comments on and with no further progress being made. It seems that, at least so far, that I was right in making the assumption that while ever there is the 'shadow' of the NBN there will be no innovation or even any quasi-innovation and we are in for at least a hiatus if not a 'full stop' in the improvement in delivery of communications services around the continent. I picked a perfect time to go away and try and re-energise myself as I don't think I could have found anything worthwhile to do in Australia until the end of July when the first month's results were available. With the second month of the new planning period already two days 'old' there is a lot to do over the coming month to ensure that Exetel actually achieves its objectives this financial year which are far more 'ambitious' than those of the previous two years when we went through the required period of 'consolidation' that is required by all but the very best managed or, in some circumstances, most fortunate, start up companies. A percentage of the 'hate comments' I get from writing this BLOG harp on how small and ineffective Exetel is compared to [insert name of their favourite ISP]. A typical example is, spelling errors and erratic punctuation and layout have been left unchanged, is reproduced below - the writer is the same TPG employee who uses different writing 'styles' and nicknames to look like different people (my guess, based on 'give aways' in the emails, is that it is one of two people who currently work for TPG in 'senior' positions): "bloody idiot.
I came up with this list: 1. Exetel is still in business which is more than 2,000 other start up ISPs which started up and then failed over the past ten years 2. After 55 months Exetel's monthly revenue of $A3,600,000 a month is larger than any other start up ISP over the past ten years (including TPG, iiNEt, InterNode, Netspace etc, etc at the same time of their ISP lives. 3. Exetel makes a month on month profit which is more than Optus, Vodafone, AAPT, iPrimus or RSLCom did in their fifth year of operation in Australia. 4) Exetel has no accumulated losses and zero borrowings having survived on the direct cash and guarantee investments of its shareholder/directors - in stark contrast to EVERY other ISP competitor 5) Exetel provides a range of services at lower costs than every other competitor in Australia which is surprising if they are so much larger and therefore have far better buying economies. Now, those achievements, to date, may not be very significant and, personally, I have never claimed that they are. The point to those Exetel comparison disparagers is this: They are significantly better, in every respect, than [name of ISP/Comms Company of your choice] achieved after the same period of time. So, having got that off my chest - I returned to looking at the ways, in this period of stagnation, that the current Exetel services could be improved in price/performance terms. Having just re-negotiated new contract pricing for most major cost items which have now come in to operation there are limited amounts of things that can be done - one smaller provider has even now come back to us seeking to increase their contracted pricing - a sure sign of the times in one respect. One of the objectives for this financial year is to improve the price performance, in terms of the charges paid by customers, by between 15% and 30%. This can clearly be achieved by June next year but the 'trick' is to see how it can be done progressively over the four quarters of the year. Lower IP bandwidth costs from March 2009 will be a big help for broad band services and lower telephone call costs, due to reater volumes, will also be progressively possible. However the major costs of broadband ports and back hauls is a very significant challenge. Depending on how HSPA works out in terms of actual throughput over the 3G coverage areas it may be possible to begin to use different service 'combinations' to deliver greater value for some parts of the marketplace but I'm not sure of the extent of 'good coverage' at the moment nor do I have firm details of when higher speeds will actually be delivered and how wide that higher speed coverage will be. Over the next week we should know more information on a number of 'under discussion' issues and it will become much clearer then. In the mean time our key challenge, and key opportunity, is to ensure the 'NBN Dark Cloud' is a minimal influence on Exetel's ability (small and insignificant as it may be) to deliver on the planned price/performance reductions to all Exetel customers. |
CalendarQuicksearchArchivesCategoriesBlog AdministrationExternal PHP Application |