Monday, September 15. 2008Bandwidth Usage Per Customer Continues To IncreaseJohn Linton I don't look at bandwidth usage by customer type as often as I did in Exetel's first two to three years. This has come about partly due to the 'pressures' of too many things to do in a day and partly due to the complexity of the multiple sources of bandwidth 'types' now being used to meet different types of customer's needs. In the 'old days' we simply had IP feeds from Optus and Powertel which were combined on to one MRTG chart and a second MRTG chart showing the Telstra connection to and from our NSW customers (we only provided services to NSW in those days) it was a pretty simple thing to look at two MRTG charts to see whether there was a need approaching for more IP bandwidth. Today we have PoPs in every State and Territory except Tasmania and multiple sources of IP feeds in all of those PoPs as well as very different types of feeds ranging from Pipe, Akamai, PeerApp, inter-State cross connects and direct IP feeds in to four different PoPs. It's much more difficult to get a 'quick' view of exactly what is happening as the different services now (Ethernet, SHDSL, ADSL1, ADSL2, VoIP and now HSPA) have completely different time 'profiles' and usage patterns per different user type. It was pretty simple in the 'old days' when IP planning consisted of taking an average usage per customer of 25 kbps, multiplying it by the forecast number of customers at the end of each month and adding 15% as a 'safety buffer' and placing IP and customer connectivity upgrade orders once a month based on that simple arithmetic. It's a lot more complicated now and much easier to get wrong which requires more 'safety buffer' and more inefficiency (cost) because those safety buffers are now required for over thirty different connections instead of three. The good news is that the average usage of an ADSL1 user hasn't really changed much over the past five years - it's increased from around 25 kbps average per user in peak times to around 35 kbps per ADSL1 user in peak times. This is a percentage increase of 40% which is more than offset by the decline in IP pricing of well over 50% and 'clawed back' by the fact that Telstra's customer connectivity bandwidth pricing has remained the same over the same time period. Similarly our SHDSL and Ethernet business customers have not increased their average usage by much more than 20% over the last five years and while the customer connectivity costs have remained pretty much the same the IP costs have declined by over 50%. These small gains in cost/efficiency have been 'swamped' by the growth in percentage terms of the number of customers Exetel now has for its ADSL2 services which are now roughly 25% of all data customers. An ADSL2 customer requires an average of 100 kbps in peak times and that includes restricting P2P for NSW users from 7 pm to midnight. As the percentage of ADSL2 to ADSL1 users keeps slowly increasing this situation will continue to mean that more bandwidth is needed on average each month. There is little/no doubt that the cost of IP bandwidth will continue to fall over the next 4 quarters as more bandwidth comes 'on stream' from SX, Telstra and Pipe. Exetel is already being offered IP bandwidth at 30% below what we are currently paying. There is also little doubt that the ongoing improvements in the PeerApp and similar products will make caching of various types of traffic more efficient and that the growth in the Akamai clusters will produce more 'free' bandwidth. Whether these 'improvements' keep pace with the relatively steeply growing average user usage of IP remains to be seen - right now it isn't but that is due to a number of 'one off' factors for us and is probably affecting much bigger service providers in similar ways. We will look at what we think might happen in much more detail over the coming weeks but one thing I think will result is the reduction in the 'off peak period' from the current 12 hours. Our intention for this period, which has worked out very well over the past almost five years, was to reduce the overall cost of IP traffic by making it attractive to the end user to 'queue' their large downloads to times outside the peak usage periods. This has, largely, been the case and the 'discipline' shown by a large percentage of Exetel's heavier downloading customers in doing this has helped all customers by keeping IP charges very low. As we have grown the 'discipline' of the early customers (who were almost certainly more knowledgeable on average) has dissipated and the downloading results of less knowledgeable customers have caused the savings curve to flatten for the first time and shows every sign of trending down instead of the slight but consistent upward trend we have 'enjoyed' since March 2004. In hindsight, a wonderful thing, I should have realised that the 12 hour period was too 'generous' and not done it but, I have to admit it was entirely my mistake - as usual as I was enamoured of the 'marketing' advantage of "half of each day free". As my maamah used to saaayy 'one more thing to worry about". (apologies to Forrest). Sunday, September 14. 2008So - HSPA - "A New Hope".....John Linton .....is this truly the beginning of the end of the evil Empire? (apologies to Ronald Reagan and George Lucas) I finished the details of the HSPA release for later today in terms of the balance of September earlier this morning and now have a 'free' Sunday - which is nice. We will take it very easy for the balance of September to ensure that the systems we have developed over the past three months work fully effectively and that Optus actually has some systems at the other end of the 'line' and actually have everything else in place that I now have more than a few misgivings about. It seems that Exetel and me in particular have been looking to put an HSPA service in place for as long as Exetel has existed which is pretty true as I never believed that Exetel, or any other very small start up company had any long term future based on being invoved in a monopoly's sourced services. It was only 7 months after Exetel 'opened for business' that we signed a five year contract to offer the Unwired wireless service in Sydney (at that time the service was planned to expand to every capital city in Australia and several major regional areas). Unfortunately that didn't work out and nor did the several other start up Australian wireless options we looked at over the past four years. I've commented before in these ramblings about the frustrations, brick walls and too soon to be snuffed out hopes raised and dashed as I loooked for wireless solutions in Australia and then in Asia and the USA and finally in the EU. While we still have almost 1,000 Unwired customers in Sydney, and some of those are well in to their fourth year of using the service, Unwired itself never ever got its 'go to market' strategies, or even tactics, right and employed a series of lamentably under qualified drones to waste tens of millions of dollars producing one of the worst examples of butchering a good idea that, for once was very well funded, ever seen in Australia - on a much smaller scale it ranks as Australia's entry (Motorola's Iridium satellite project stands supreme and unqestioned as the all time winner) for the award of the greatest f*** up of a truly great concept by dopey people in communications history. HSPA has all the key ingredients to become a 'quantum leap' or a 'paradigm shift' or a 'sea change' or whatever stupid tag someone or other wants to apply to the relentless progress of technology. Just as mobile telephony is driving wire line telephony in to a 'niche' in voice communications, HSPA, and LTE, have the same potential and, unlike all previous 'attempts to break down the Telstra monopoly' - the fact that HSAP/LTE is a 'standard' and world wide change across all markets and, in Australia is supported by all mobile carriers - there appears to be no going back from here. So - as Harry Callaghan once said in the early 1970s - "how lucky do you feel?" Apart from all the other uncertainties introduced in to the HSPA release over the past few days the one great unknown is - of course - how many of these services will people buy from Exetel? Normally in using a base service and adding value to it this is not a major concern. With HSPA there is a concern and that is the 'investment' needed to be made in HSPA hardware and, where that hardware should be sourced to ensure that when someone orders a service we have the hardware required. If we were to source hardware to cover the high end of our forecast of our HSPA sales we would need to set aside/find more than $A1.5 million 'up front' which is 'doable' but tough for a small company. The risks (if sales are much less than forecast) are quite considerable to our cashflow and as we have never used debt to operate our business takes us to new 'ground' and levels of concern. We have taken a very cautious approach and we desperately need real figures to be able to make realistic decisions over the next 6 weeks in terms of the number of modems we need to source and where we need to source them from. It's unlikely that OPtus will prove to be an effective source because of their high prices and long delivery times (their delivery is 3 - 4 times longer than actually getting the units direct from the same factory!). So maybe I won't get my 'free Sunday' after all. Saturday, September 13. 2008T'was The Night Before HSPA Release..John Linton ...when all through the house, nothing was stirring, not even a 'louse'. (apologies to Mr Clement Clarke Moore). I was reminded of that fragment from childhood much earlier this morning when I couldn't sleep and so got up and looked over the final release stages of the new HSPA service we are scheduled to begin making available from midnight tomorrow. Various Exetel personnel have spent most of Thursday and Friday with various Optus personnel in our office checking through the final 'ready to go' list of things that needed to have been done before now - as with every other 'go to market' project we have ever participated in with Optus not everything has been done (undoubtedly that's all because of Exetel's shortcomings and skills - sometimes I really struggle to understand how ineffective and inefficient Exetel seems to have become over the past almost five years). I took the opportunity of my sleepless night to review, over a very large Scotch (or 2 or 3 as it turned out) just what we were going to attempt to do between now and December 23rd 2008 and suffered my usual bout of dismay at how difficult the targets looked. Of course it hadn't helped that my originally planned start date of July 1st was now looking more like October 15th as even the 'conservative at the time' date of tomorrow midnight will now not allow a 'full blast' start of this key development. I got so irritated with what I saw was the results of the delays that I called the HSPA company I have been dealing with in London (the big time difference between Sydney and the UK works for you on occasions) to see if I could get some assistance from them in getting the HuaWei 'sticks' and some other assistance. Always affable and ready to do sensible business they were only too happy to help but (because of the 'branding on the device itself and the software pre-loaded) they couldn't solve my immediate problem of no usable hardware for tomorrow. I thanked them and apologised for the unannouced call and went back to my irritation - only slightly ameliorated by a second glass. It was a sign of my severe annoyance at the situation that I contemplated cancelling the whole Australian HSPA project with Optus for almost an hour as I tried to find a way round losing so much time already and knowing that, based on what I was now seeing and what I had experienced in the past, that there would be too many 'unforseen' issues over the next three months for the simple (and in my stupididity what I had thought were easy enough) targets to be accomplished. So having blamed myself for my lack of maintaining control over the implementation schedule for a gloom laden 60 minutes or so I poured myself a third glass of JW's second best blend and wrote a list of things to be done over the next 48 hours to attempt to address the damage that it was now too late to repair. I then felt able to sleep so I left further thinking till later. So, I've reviewed my list, at least those items that are legible and not too truncated in notation to remain comprehensible in the bright sunshine of a really nice Sydney Spring morning, and will try to put in place a release schedule that has some chances of achieving as much of the original plans as possible. I think I have come up with some realistic 'repair jobs' but, as always, only time will tell. I am very much looking forward to the next few weeks in terms of seeing just how the HSPA service performs in a wide variety of user circumstances and just how effective a very small company like Exetel can make an 'impact' on the HSPA marketplaces (that I believe all other carriers and resellers have got so monumentally wrong to date). We will have to take far more 'risks' than I feel happy about but too many future plans and actions depend on getting the originally planned results by the end of calendar 2008 for there to be any other choice right now. In any event if we can't make this work by spending more money than we had planned over the nxt three months then that will be fairly obvious sign that spending much higher levels of money in Australia over the following six months would simply be money wasted. Similarly, if I am correct in my assumptions, any excess money spent now will return itself much quicker and with more benefits than a slower approach. As Wellington advised - "never fight until you absolutely have to but always take in to consideration that you may never find better ground than you are standing on". Roll on Monday. Friday, September 12. 2008VoIP Over HSPA Begins To Make WavesJohn Linton One of the things that interested me most about HSPA used on a mobile handset was how successfully it could be used to make VoIP calls and therefore reduce the cost of mobile calls to the customer. VoIP charges via ADSL are pretty much established as major money savers for both residential and business wire line users and there seemed, to me, there would be no reason why the same scenario wouldn't apply to VoIP on a mobile using HSPA. I have been aware of the various MSN and Skype versions of VoIP over mobile for a while and had seen the proliferation of handsets with 'standard' VoIP firmware built in to them or easily downloadable from the handset manufacturer's web site. Exetel's own testing and the testing of 20+ Exetel customers of the Optus 3G HSPA service over the past few weeks has been overwhelmingly positive in terms of call quality using various different 3G hand sets and different VoIP software implementations. Everything I read in the US and UK technology press is equally favourable - at least as far as I can see. So I was puzzled by the reaction to Freshtel's "announcement" of its VoIP over 3G plans as 'bagged out' in this article in the Australian yesterday: http://www.australianit.news.com.au/story/0,24897,24324597-15306,00.html While the Freshtel service uses WiFi which is not particularly widespread (as opposed to 3G) the 'slamming' of the Freshtel claims of "reducing mobile costs by 50%" seemed to be more than a touch 'hysterical' and quite odd. Obviously the mobile carriers won't like their mobile network being used to remove mobile revenue but, you would have thought, that they would have known that would be an inevitable consequence of offering a data service - Data = VoIP = Data. No amount of 'secret deals' with hardware manufacturers to disable VoIP use is going to be effective - Luddites never win - "Technology always finds a way" (to misquote Jurassic Park). Personally I wouldn't have thought that a WiFi implementation with 30 cents per minute mobile to mobile calls was particularly worrisome in any event; which made the 'attack' even harder to understand. I would have thought that a 3G VoIP over HSPA service with 15 cents a minute mobile to mobile calls (or free mobile to mobile calls) would be something that would be more attractive and I'll be interested to see what happens when Exetel release such a service in the very, very near future. My guess is nothing - because we are a tiny company and the number of sales we would make would be so small it won't be noticed. Then again - as seen from their recent annual report - Freshtel is less than a tenth the size of Exetel, so maybe 'tininess' isn't the issue. Perhaps it's the concept that has to be attacked with 'ultimate force' in case more than a tiny number of mobile users ever get to understand that not only can they cut their mobile bill by 50% they can almost certainly cut it by 75% and that you don't actually have to commit to 'capped' plans with all their 'hidden' over charges bringing the whole 'capped plan scam' to a screeching halt? I don't really believe that either. It's too early, for us, to make any sort of prediction of how many people will sign up for the Exetel HSPA service when it's released next week or how many of the people who do sign up will do so on the basis that they want to use VoIP to reduce their mobile call monthly bills. If pushed I would only be able to say that there would be a lot of zeros after the decimal point of the percentage of the total number of mobile users in Australia. It does make me wonder though.......about what the mobile carriers in Australia and in other countries have factored in to their future planning in terms of VoIP impact on mobile call revenue. In my simplistic terms HSPA means that mobile calls to land lines in Australia should cost the user 10 cents per unlimited call (plus the IP traffic charge) and mobile to mobile calls should cost 7.5 cents per 30 seconds (plus the IP traffic charge). SMS should cost 5 cents per 160 character message and, using something like fring, many calls would not cost anything at all (except for the IP traffic charge). Sure, the mobile carrier is getting the IP charges (which are relatively expensive compared to land lines but very inexpensive compared to mobile call charges and SMS charges). However all those mobile networks have been built on usage and cost and sell price assumptions that are different to IP charge assumptions. Doubtless all of the 'facts' of possible VoIP usage over HSPA have been carefully considered and dealt with by every mobile network owner. As the article points out - the actual per minute charges if a user actually uses their full 'cap' are a fraction of the 'head line' rates which means that the mobile carriers are charging far less than they used to for calls. I'm beginning to wonder whether the mobile carriers 'experts' saw pure data services as net added revenue and didn't fully take in to consideration that data (via VoIP) would actually cannibalize their over priced voice minute revenue and their 'super cash cow' - SMS revenue? However, at even the most generous estimates, they aren't close to VoIP calls of 10 cents unlimited to land lines and 15 cents a minute for mobile to mobile - at least as far as I can see. The other issue remains that they are fixed minimum spends as opposed to an Exetel type plan which is only pay for the calls you make (at much lower prices). Fixed per mnth charges ALWAYS disadvantage a customer (no sh** Sherlock). I'm going to buy myself a Nokia 95 (or whatever seems the most appropriate hand set) tomorrow and begin my own personal testing of Exetel's VoIP service over the Exetel HSPA service to see for myself how effective the service is in various different areas. If it's as good as the other people testing it say it is then the next few months are going to be very interesting. Thursday, September 11. 2008Are There Any Reasons For Building Any More 'Office Blocks'?John Linton I don't know what the general trend of working locations is around Australia but, being such a large country, it has always meant that a significant number of employees have worked 'remotely' in terms of their geographic location vis a vis the location of their organisation's 'head office'. It's therefore, perhaps, easier for Australian organsations to make the next logical move of dispensing with 'regional' offices than it is for,say, EU countries. Exetel has had 'remote' employees since the first day of it being in business in that Steve has always worked from home in Perth for at least 50% of the time and Annette seldom ever came in to the Exetel office (when we eventually had one some 4 months after starting the business from our 'study' at home in January 2004. Indeed more than 50% of my working hours are away from the North Sydney Exetel office. We currently have Steve, Annette and two support engineers (one in the ACT and one on the NSW Central Coast) who work from home in Australia and are about to have our tenth employee working from our new Colombo office. Over 70% of all sales and support telephone calls are now handled 'remotely' and, once the Colombo office is fully operational 98% of all such customer, and prospective customer, contacts will be handled 'remotely'. This is only possible because of the great advances in both the communications technology, and the cost of that technology, over the past ten years. It's a common concept in today's commercial enterprises to deploy VoIP and VPN solutions that make it irrelevant where any employee is situated to carry out their daily tasks. Our Colombo employees are linked to the same telephone and computer systems and data bases as Steve and Annette are or our engineers in Canberra and Gosford are (or any Exetel employee is when they travel interstate or overseas). Today, or certainly 'tomorrow', it will be hard to come up with a reason for making an employee travel to some location other than where he/she resides to carry out their daily work. The financial reasons (for both the employee and the employer) are overwhelmingly against having to incur travel time and costs for the employee and rental and operating costs for the employer compared to using VoIP/VPN connectivity. The environmental reasons for people not travelling to and from work would make even the most aggressive 'greenhouse gas reduction' targets easy to achieve if all the cars and buses/trains (where there are any) were not clogging the roads for 4 hours each working day. Of course, there would remain training and other issues that reqire some amounts of travel but that would not be much in terms of total 'working hours'. From my point of view, and I realise that I am more used to 'innovation' than many people who don't work in the communications industry, there are only two issues to be addressed - one for the employee and one for the employer. The employee issue is not something that I can readily address as it is going to be different for each individual and is entirely personal - how any individual regards the desirability or otherwise of working from the same place they live. Personally I find it highly desirable and preferable but I realise there are many people and circumstances where that may well not be the case. However, as any change to 'working from home' will be gradual over two decades that should not be a problem for any individual whose employer decides to make such a change over time. The key issue for the employer is to be able to ensure that an employee who works from home gets the same levels of guidance and assistance and career development that they would if they worked in a 'traditional' office environment. (I understand a cynic might suggest that this would not be a problem because some individuals get nothing useful from their current management - but I don't accept that is generally the situation). At Exetel we decided to address this key issue (or set of issues) by developing a computer based job goal setting and management process that we have been working on for almost a year now. It will take another year to fully develop, trial and activate but, based on what I've seen so far, I believe it will address most of the guidance/management issues that a widespread implementation of 'working from home' will demand: http://whitepapers.exetel.com.au/mediawiki/index.php?title=GURUS-_Ultimate_Personnel_Management I would think that any company that was contemplating a significant move to 'working from home' would do something similar. Obviously teleconferencing/video conferencing and similar tools have already removed some of the disadvantages of working in geographic locations that are 'remote' from a 'head office'. Specific database tools should, in my current opinion, be able to replace 'proximity' management equally effectively and, in a number of ways, be more effective. Once we complete the move of all customer provisioning/support/sales/admin/accounting functions either to Colombo or to other parts of Australia (individual's homes) we will have less than 40% of the people we have now working in our one Australian office in North Sydney. I don't think we will be unique in making that happen - I do wonder why more office space continues to be built.
Wednesday, September 10. 2008The Customer Is Always Right........John Linton ......except when they're completely wrong - which is an awful lot of the time. I have always been dismissive, a harsher person might go as far as saying contemptuous, about American marketing folk wisdom (the particular stupidity of the 'headline' is credited to Marshall Field's department store, Chicago in the late 19th/early 20th century) . Two other pieces of arrant nonsenses from the same sort of sources along with the obviously incorrect homily quoted in the title are: 1) An unhappy customer will share his bad experience with 20 other people while a happy customer will share it with only one. Most people have heard that piece of nonsense more than once if they've been involved in commercial life. Few people, other than people like me, challenge the sheer stupidity of such a statement. Next time you hear it - please ask the idiot making it to point you to the research that came up with that conclusion - try to visualize how you would overcome the sheer logistical impossibility of attempting to measure that "statistic". 2) It's easier to sell to someone who is already a customer than it is to sell to a new customer. Total c***. Again, ask the next fool who gives you that advice to cite the research that established it as being correct - there isn't any - and don't try the "it makes sense" line - it actually doesn't at all - try comparing the size of ANY customer base to the size of the market not included in that customer base (excluding monopolies) to point yourself in the right direction. 3) Perhaps you understand the point that I'm making - if you don't, then I can't see that a third example will be of any help. Getting back to the title of this rant - I receive at least one email a week from someone or other telling me that the customer is always right - invariably from a customer, or a 'concerned individual' who is, without a shadow of a doubt, completely and comprehensively wrong about the issue subsequently raised in their communication. Personally (as I have an IQ larger than my shoe size and many years experience in dealing with the human race) I don't equate the act of buying a product or service by someone as the equivalent of the Pope canonizing them as a saint - by this I mean a human being is the sum of their genetic inheritance, their home life and other experiences and their education and buyng or not buying a product or service from someone doesn't instantly change their nature and convert an a**hole into an infallibly correct saint - it leaves them as an a**hole who has bought a product and just as likely to be incorrect in any view they hold as they were before the paid for what they bought - nothing changed in that instant in time. I think that anyone who believes such a scenario is possible should stop reading this opinion now - it can only offend your sensibilities further. The same is not true of, say, an Exetel employee. Firstly we go out of our way in our job specifications and interview processes to ensure we hire on the saint side and completely avoid hiring a**holes. Secondly we train and supervise our people quite well and ensure that any tendencies, irrespective of the provocation, towards a**holeness are sharply curbed and if we have made a mistake in our hiring/selection process then we would deal with it quickly and completely. By putting forward these views I'm not, for one moment, suggesting that any commercial company, certainly not Exetel, delivers flawless services at all times - far from it - I am more aware of this company's many shortcomings better, and in more exact detail, than anyone else. The reality of any commercial transaction is that both the buyer and the seller believed, at least at the point of sale, that both are getting what they required in their separate ways/beliefs. Fortunately, at least if the transaction is between an ethical seller and a reasonable buyer that will prove to be the case for as long as the buyer uses the service. The only exceptions will be if the seller is unethical or if the buyer is unreasonable or some circumstances arise for a particular service that defy timely resolution by the ethical supplier. I obviously believe that Exetel is completely ethical, in fact Exetel is 'bend over backwards' ethical, in all of its dealings with both customers and suppliers as well as with its own personnel. However, I don't believe that the people we deal with (either customers or suppliers for that matter) fall 100% in to that category - in fact, my firm view based on situations encountered and dealt with over the past 51 months, is that there are totally unethical suppliers and customers and, if anything, that admittedly tiny percentage is not decreasing. My only view of the people who write to me telling me how unhappy they are with the treatment they have received from an Exetel employee is always the same: a) Apologize for their experience b) Offer them the opportunity of immediately canceling their service without penalty I then discuss the issue with the employee who is being complained about (if it is a complaint about an employee rather than some aspect of the service) and, almost without exception, I find nothing wrong with the way the issue was dealt with or the diligence applied to dealing with it. If there is something that has been done badly or wrongly then the employee is admonished. You would think that would be enough to deal with any situation. How can it not be? If a service is inadequate in the customer's eyes then moving to a service provided by another, better, supplier is the only sensible thing to do. If an Exetel employee has inconvenienced the customer, an unreserved apology should be all that any reasonable person requires (together with a penalty free cancellation of the service if that's what they want). But that is not the case for a tiny percentage of people. They want/demand to be allowed to go on and on and on and...... with emails, phone calls, comprehensive threats of legal action and "TV exposure" and all because "I am your customer and you must do whatever I tell you must be done". Life is far too short to assign time to such lunatics. Apart from being stupidly wrong, the three quoted homilies together with today's cradle to the grave socialism have ensured that a great many people live their lives in Australia without bothering to take any sort of responsibility for themselves or their actions at any time. I think the mistake I make is actually reading their emails - and then compounding that first mistake by replying to them. Tuesday, September 9. 2008Sometimes You Just have To Laugh....John Linton ....when you read absolute rubbish jazzed up with super hype (not that anyone other than diligent industry followers, such as me, would ever read the c***). I'm referring to an ASX announcement yesterday by one of the WA penny dreadfuls: which contained nothing but amazingly ridiculous statements that must have brought bright red flushes to the cheeks of whoever wrote it. Eftel, a company with a track record of the over use of hyperbole (if that isn't tautological) really excelled itself with its announcement that it had "bought" the "Concept Group Of Companies" (a group of companies with an annual turnover of $A4 million? A pretty grandiose description of an operation with one Australian employee). What it meant was that in exchange for being given a tiny ISP based in Perth (itself an agglomeration of other previously failed tiny ISPs) it had issued the previous owner some 8 million of its almost worthless shares (oh, and it had also made arrangements to pay some real cash in the event that the company ever made any money from the customer base it had bought - something the previous owner apparently had been unable to do). There was the usual incorrect use of words like "synergies" and "period of strong growth" (in stark contradiction of EFTel's announcement of less than 2 weeks ago where it reported no growth for 12 months) and a 'breathless' comment that the wholesale arrangement that Concept had with Optus to resell the Optus ADSL2 ports (should it still exist) would be important to EFTel (again in stark contradiction of their statement of less than two weeks ago that only by using their own ADSL2 DSLAM deployment could they make realistic money out of ADSL). It's just so inconvenient for people who make such announcements as the one referenced here that it is so simple for anyone with the slightest interest to look up their previous announcements - oh dear - 'what a tangled web........' As someone who writes, in my minor way, quite regularly and therefore tends to use quotes from other people I've always been taught that the minimum courtesy (and legal requirement) when using other people's statements is to ascribe them to the source. Perhaps you have to be as old as I am (and have a trivial, jackdaw memory system) to remember that: "I was so impressed - I bought the company" was the key closing phrase of a television advertising campaign, world wide, for the Remington electric razor featuring it's president - Victor Kiam. Very tacky. I have commented before that I can't rmember a single instance where the 'purchaser' (I'm not sure this transaction actually counts as a purchase) of a failed/failing tiny ISP ever got any financial benefit from doing so. However it seems that, despite that pretty correct view, people still base their working life on the triumph of hope over experience.(Samuel Johnson on second marriages). I received another two 'offers' to purchase small ISPs, one on Friday and one yesterday, so whatever is causing the failure of whatever 'business models' are being used is continuing and it will be interested to see the ABS statistics when they next become available. The other 'news item' pointed out to me from the ASX yesterday was the sale by Michael Malone of 3 million iiNet shares. The reason given was sensible and unremarkable but the timing was, perhaps, not so sensible - coming after the unseemly haste of the divestment of Amcom/iinet shares by Futuris last week.What is it about shares in Amcom and iiNet that makes people with a great deal of 'inside' knowledge not want to hold on to them at the moment? Just unfortunate timing and the desire to take a profit from a fortuitous buy is/are the most likely reason(s) - but then again....... I don't know what it is that I'm not seeing about the current communications market but I am getting the very definite feeling that I'm missing something of some importance. Perhaps I'm getting too far away from the basic requirements of running a business in a challenging environment by becoming buried in too much detail as the sheer volume of transactions increases as time goes by? Time to call it quits? Maybe it's moving towards that time as there are so many things that now take me much longer than they used to understand and find useful answers/processes/procedures/other actions to deal with. It's not the 'major' things but the myriad of smaller issues that take me so much time these days. Perhaps it's old age or perhaps the communications business, at least as I understand it, has become too diverse for me to wholly grasp any more. Monday, September 8. 2008Signals Of Major Changes In ISPLandJohn Linton I realize that HSPA hasn't really 'happened' yet - either in Australia or the rest of the world - in terms of being, or even becoming, a serious competitor to ADSL. But the signs of very significant changes to the ways that data is delivered to Australians are becoming more and more apparent - or it looks that way to me. The brief announcement by Vodafone that it was taking a major stake in Crazy Johns might be just a major mobile carrier buying in to a retail distributor of its mobile telephone products and services - that would make perfect sense: http://www.itwire.com/content/view/20448/127/ Similar to the Optus buy out of its distributor Virgin Mobiles last year or something like that. Of course there's always the possibility that the VMS agreement between Vodafone and CJs is falling apart necessitating a bail out but if that was the case then you would have expected some minimal reference to such a scenario. Crazy Johns also owns a 21% interest in PeopleTelecom which you would have to think it didn't acquire for 'synergies' in mobile telephone sales (I would have thought that CJs has 100 times bigger mobile sales revenues than PT ever did) but because of PTs wire line and internet businesses......and this raises an interesting 'conflict of interest' as PT has recently signed an extension of its "whole of business" supply agreement with Telstra and it's not exactly a secret how Telstra regards its competitors such as Vodafone now having access to its 'intimate pricing secrets' as well as whatever other 'confidential information' passes between Telstra Wholesale and PeopleTelecom. Something to be sorted out and not germane to why Vodafone has bought in to CJs. Doubtless CJs is a major, quite possibly the major, reseller of Vodafone's HSPA service over mobile telephone handsets and via PCs and Desk Tops. Obviously CJs provides the benefits of its buying power of these services to PeopleTelecom and equally obviously HSPA will continue to erode the low end ADSL user bases of both PeopleTelecom itself and every other ISP in Australia (including the supplier to the vast majority of low end ADSL customers in Australia - Telstra/BigPond. I doubt that any provider of HSPA in Australia has overlooked the fact that the biggest market for HSPA is Telstra's dial up and low end ADSL user base - it's sort of blindingly obvious even for the twinks that run marketing programs within the mobile carriers - and therefore perhaps Vodafone is putting in place a far greater retail presence (CJs) together with a far greater 'professional' presence - companies currently involved in selling and supporting ADSL services. While PeopleTelecom is now probably close to being the smallest of the surviving ISPs it nevertheless from Vodafone's view point has an attractive business and residential user base of telephony services and support and processing capabilities that Vodafone wouldn't have in place yet. So if I was a mobile carrier preparing to make a major effort to convert the Telstra dial up and low end ADSL users (I have no real figures but would assume there would be over 2,000,000 of these users) who are paying way too much for way too little to Telstra then I might come up with a proposal to buy up some 'in place' ISPs and give them the cash and abilities (read low priced access to their HSPA services) to make a concerted 'attack' on Telstra's low end user base before Telstra can bring themselves to reduce their HSPA prices enough to protect that 'hung out to dry' lucrative revenue/profit contribution. Telstra would have trouble, as any multi service carrier would, because to meet the 'attack' of a non multi service carrier (which both Three and Vodafone are) they would have to butcher an awful lot of margin within their own current customer bases whereas Vodafone doesn't have that problem and can 'swing the pricing scythe' with total freedom. A happy thought if you're Vodafone - a terrifying concept if you're Telstra. Right now HSPA is overwhelmingly being sold through shop fronts either belonging to or franchised by the mobile carriers. Only recently have 'ISPs" begun to offer the service and they are, almost totally, simply reselling the carrier's plans at Layer 3 and almost overwhelmingly aiming the HSPA service as an ADSL replacement to the mid range user (4, 5, 6 + gb of data) which, in my opinion, it isn't yet. However that can, and almost certainly will, change and the 'support' processes needed to take over a 'data' user are already in place at reasonable sized ISPs but simply aren't part of a mobile shop front's go to market strategies - and, as anyone who has tried to do it knows, putting in place support for low end users is not an easy or cheap thing to make happen. Will there be any dial up customers left by 31st December 2009? Will there be any ADSL low end customers left by 31st December 2009? I wonder what Telstra's current business plan shows? Nice to be able to start the week on the other side of that possible scenario (thank goodness we were too chicken to invest in ADSL2 infrastructure last year). Sunday, September 7. 2008Political Chickens Coming Home To Roost......John Linton .....at least in third grade. I was relieved, and surprised to hear Iemma's tearful farewell on my car radio on Friday and was grateful to the WA electorate for sending that smug, dishonest and miscalculatingly cynical d***head Carpenter packing in the west. It's taken the electorate in this State 14 years to be able to send a message to the Labor party that actually delivering education, health, police and transport services to the NSW population is something that's actually more important than swilling lunch at Sydney's three hat restaurants and divvying up the State's money between themselves and their union mates. Iemma has earned the title of the worst premier NSW has ever had and "Running Reba " has been labeled the worst Minister of Health anywhere in the World ever - including Eritrea and Chad. For a summary of the last hours of Iemma's fiasco of "government" http://www.youtube.com/watch?v=aT_8MSzWFt4 [Rated R for some bad language and offence to Labor voting people's ideas of themselves as intelligent members of the human race]. (and give the authors credit - they published it well before the resignation). The oleaginous and dishonest Carpenter's cynical grab for another term by calling a very early election hoping the Olympics coupled with his huge majority would distract the WA voters and get him over the line (as a similar ploy in the NT had done a few weeks earlier) was severely and quite rightly punished by a rout in the west. So Australia's boom and bust States have both removed their State governments within 24 hours of each other. One more sign of things becoming more difficult for Australians generally and, perhaps, a recognition by a few more Australians that they need to make more effort to understand the value and power of their democratic right to select who should be trusted to manage their money. No - probably not. Which is a reminder that the bunch of ill educated, unknowledgeable, self aggrandizing, vapid, doctrinal dinosaurs posing as a 'government' in a country backwater of NSW (some mythical Shangri-La like temple of unreality called Canberra) are rapidly approaching 12 months "in power" and have done absolutely nothing in that time except bring investment in the telecommunications industry to a halt via their NBN (No Bandwith Now) "tender". Like the WA and NSW governments they are unfit for the responsibilities conferred on them by an ignorant and ill informed electorate and, like the WA and NSW State governments, they simply 'play' at being government because they have absolutely no idea of what's required to actually do the real tasks and planning required by governing. The sheer inanity of Crazy Kevins pronouncements exclaimed through that vacuous moon face are breathtakingly stupid and totally pointless consisting of variations of three mantras: 1) Yes I know it's dreadful - but it's all Howards fault 2) Yes I know it's dreadful - but it's a world situation you know and we are powerless to do anything 3) Yes I know it's dreadful - I'll get a committee to look into it What a total waste of space that man and his idiotically grinning wife are. One most obvious sign of the lack of investment is that Exetel has had over 400 ADSL2 applications for connection to exchanges where Optus has ADSL2 equipment rejected due to "no ports available" over the past few weeks. Apart from massively disappointing the customers concerned this situation costs Exetel a lot of growth which in turn makes us more cautious and much less optimistic in our projections of the levels of growth in ADSL2 services over the remainder of FY2009. So, governments do matter to even small companies such as Exetel (and to the citizens of NSW who have third world health services courtesy of 14 years of Labor ineptitude and venality and the lack of talent, and union influence) that results in a total f***wit like Reba Meagher being put in charge of our Hospitals and general medical services (a bit like appointing Paris Hilton head of the United Nations). Never mind, it's a brilliantly sunny and warm day in Sydney (after drenching rain all day yesterday) and it's Father's Day so a good lunch in a lovely Sydney harbour side restaurant is only a couple of hours away. (one of the benefits of having children) Saturday, September 6. 2008You Can Achieve Anything In Life.......John Linton ...Providing You Don't Care Who Gets The Credit. (H S Truman - I cant remember the exact words). A sensible view of how a sensible person should carry out their working and social life. I was reminded how very few people take this view on three occasions over the last week and on each occasion it was a Telstra employee who made my skin crawl in distaste at their self serving utterances. The first one was the newly appointed head of something or other at Telstra, David Quilty (recent ex Liberal party hack) who in saying that ONLY TELSTRA could build the NBN (No Bandwidth Now) claimed that Telstra had been "building telephone services in remote Australia for over 100 years". What a piece of total s*** this man must be and what fools he takes Australians for to make this grossly incorrect and totally spurious self serving claim. Any relationship the current Telstra (a public company barely fifteen years old) has to the governments of the colonies of pre-Federation Australia is so miniscule there actually is no relationship. The British built the first telegraph services and constructed the first capital city telephone exchanges in the late 19th century in the separately governed Australian colonies of Victoria and Queensland and a little later NSW. This was of course when the word "remote parts of Australia" had a meaning in this time before interstate highways, helicopters, air travel and four wheel drives. Remote = 10 miles out of six capital cities. Shortly after Federation the Australian Post Master General's department was formed and amalgamated the seperate infrastructures of the old colonies under one administration and pursued the policies of successive governments until 'privatisation'. That organisation did truly serve the Australian people wherever they lived (sure pork barrel decisions were part of politics then as now) but they ALWAYS built services for people irrespective of costs as part of the ALL AUSTRALIANS ARE EQUAL 'policies'. From 1901 until the separation of the PMG into the Australian Post Office (mail deliveries) and the Australian Telecommunications Commission (wire line and satellite services) in the mid 1970s the PMG was responsible for all 'messages' transmitted around Australia (in article, print or by wire). Only in 1997 did "Telstra" appear and from that point onward the altruistic (or if you must - pork barrel) building of telephony services (claimed by the lying David Quilty) transformed from a Federal Government commitment to the whole of Australia to the vested interests of an unscrupulous 'commercial enterprise' which has since railed against (and fought tooth and nail to degrade and back away from) the "uneconomic policies" of providing those services Quilty now claims the credit for. What a complete wanker. He takes credit for his new employer for actions and aspirations of altruistic Colonial and then Federal Government owned public utility and expects no-one to notice his reversal of the old American President's shrewd observation. The second piece of Telstra vomit inducing self congratulation occurred in Exetel's offices. Because of my personal loathing of pointless 'meetings' I can't bring myself to waste some of the little time I have left on this planet to 'meet' with Telstra's drones more than once every two or three years but, for a variety of reasons, I had been asked by the Exetel person responsible to attend this meeting. I put up with listening to the arrogant, self righteous and just downright stupid and lying statements from three Telstra personnel (two in attendance and one via teleconference) for the best part of 40 minutes (my head buried in my hands for almost half of that time in pretended concentration on what was being drivelled out) before calling the meeting to a halt as it was achieving nothing other than making me feel increasingly physically ill. In that time The Telstra personnel who spoke repeatedly said: 1) Everything Exetel did was wrong and Exetel was the most incompetent wholesale customer Telstra had 2) Everything that Exetel, or Exetel's customers said was an outright lie 3) Everything that Telstra did was 100% correct in each and every circumstance without fail - no Telstra service ever failed. 4) Every statement by every Telstra employee and contractor was the exact truth especially when it varied from what Exetel or an Exetel customer said. 5) Telstra define "truth" as anything they say. Telstra define "untruth" as anything anyone else says that contradicts what any Telstra employee or contractor says. 6) Every one of the 50,000+ Telstra employees and contractors (contrary to logic and population characteristic distribution) has never made any verbal or written statement that is anything else other than 100% true. 7) Telstra is the only organisation in Australia, make that the world (apart from some older communist governments possibly) that is capable of determining what is true or not true in any circumstance or at any time and only Telstra's pronouncement on such issues is final and immutable and infallible. I really regretted wasting so much of my time - and indeed wasting so much of the other people's time who had to travel to our offices to make those ridiculous statements. The third occasion was reading today's press and realising that Australia is so stupid that the CEO of Telstra is paid 330 times the average Australian worker's annual wages to ensure Australia has the most expensive communications services in the Western World. In the article (on page 47 of the SMH - 6/9/08) it quoted the salaries of the head of Japan's NTT (twice the size of Telstra) Norio Wada as being $328,000 (around 5 times that of the average Australian worker) and that of France Telecom, Thierry Bretion, as being $1.52 million while El Sol's salary is around $A20,000,000 per annum. We really are a dumb country - our luck ran out some time ago - when Telstra was 'privatised' - with remuneration policies like that no wonder Telstra charges the highest prices in the world for inadequate telecommunication services. Friday, September 5. 2008No More Mobile Marketing 'Lies'?John Linton Some 14 years ago I had a demonstration of using a standard Telstra 64k ISDN line (Yes, Virginia - indeed there was a time when Telstra deemed 64kbps to be a super fast premium business only service at a mere $A900.00 per month for line between Sydney and Melbourne) to make 6 simultaneous voice calls from Sydney to Melbourne and at the same time carry data traffic between two computers. This was using a new telephony technology called 'compression', a new voice telephony service called voice via Internet Protocol and a pair of 'magic boxes'. It was a stunning demonstration and heralded the start of breaking the Telstra through the roof high costs for business of making interstate telephone calls and of connecting interstate offices to head office data base facilities. It was the beginning of a true revolution for business that some 8 years later began to filter through to residential users and that today is now very common and has spelled the end of the telephone charge/line rental monopoly rip off. Yesterday - I had a demonstration of similar, perhaps greater, impact (at least on me) that will complete the telephone voice revolution and the pricing tyranny that goes with all monopolies. I had a demonstration of using VoIP over HSPA (handset was a Nokis N95) as part of putting in place the final details of preparing to make HSPA services available later this month. I was very impressed - that is an understatement. I made test calls to land lines and mobiles, in Sydney and interstate and also called a mobile overseas and the quality of the voice, on both ends, was equal to or actually better than a PSTN call. It was a stunning realization of something that should have been possible but I never expected such an amazingly good result. At this stage we have decided to use a small Israeli/USA start up company called 'fring' to provide the very, very simple method of enabling any 3G mobile hand set to make VoIP calls and, at this time, this does incur a 400 to 500 millisecond delay as the fring servers we are using are on the West Coast of the USA. However this is a very minor aspect of the performance and we are in the process of addressing that issue by locating 'fring' severs and switches in our PoPs. If the 3G coverage (Optus, Vodafone, Telstra and possibly "3") is as good as it is in North Sydney then I can't see any sensible person paying for "mobile capped plans" or the rest of that dreary set of marketing lies for too much longer. Of course, 3G is not universal at the moment but, if you believe the public statements by the three main mobile network providers it will be pretty much everywhere in Australia pretty soon. So.....a true revolution in the pricing of mobile telephone calls is at hand? In my simple testing yesterday I used the Exetel VoIP service which has end user calls of 10 cents per call to any Australian land line and 30 cents per minute to any Australian mobile number. To those costs would have to be added the HSPA IP charges which, and this is a rough guess, amount to around 1.5 cents per minute at the most - but I have no firm figures as yet. So my three minute calls from a mobile to Australian land lines were costing me, at the most, 14.5 cents and my six minute mobile call cost me $1.89. By using 'fring' I could call another 'fring' enabled mobile at ZERO COST other than the approximately 1.5 cents per minute for the IP traffic. These costs are, of course, a fraction of the costs of ANY mobile carrier in Australia no matter how many "capped" options they offer. So this the end of mobile call high prices (at least for people with more than two brain cells). Or is it? I was reminded that, at least currently, the Apple iPhone couldn't be used to make mobile calls as it had been specifically requested to have this function 'barred' by the carriers and this was a condition of them distributing the product. Similarly there is talk that Nokia, Ericcson, Samsung etc are being pressured by the same major carriers to do the same on all 3G capable models they release in the future to protect their exorbitant pricing and therefore their exorbitant profits from mobile usage. I have absolutely no information that is the case but it is a very pervasive 'rumour'. So there is some doubt that the widespread ability to use VoIP over an HSPA/3G mobile network is in some doubt at the moment - but only because one or more mobile carriers will artificially make it impossible procedurally - apart from coverage in an area there is no doubt it can be done technically and operationally. It would need a consistent 'toeing the line' agreement by the four Australian network carriers to make that happen (otherwise they would be disadvantaged competitively) which, as far as I'm aware, is a go to gaol offence under corporations law in this country. What must be really terrifying carriers like Telstra and Optus is that their hyper lucrative business users would be able to halve or quarter their mobile telephone bills using free mobile to mobile facilities via 'fring' (or a similar service) let alone massively reducing the general costs of mobile calls. Oh - and then of course they can also use a service like Exetel's SMS via email on a mobile handset to eliminate that other 'money for nothing' mobile service called high priced SMS. I have little doubt that, lead by Telstra, there will be a great deal of 'obstruction' to using VoIP over HSPA in Australia (remember the 'rumours' in the US of carriers "de-prioritising" VoIP traffic on the IP networks to protect their voice call and line rental revenues?) - but - "I have seen the future of mobile calls and it's VOIP".
Thursday, September 4. 2008Why Can't a Woman Be More Like a Man?.....John Linton ......Why is thinking something women never do? And why is logic never even tried? Straightening up their hair is all they ever do. Why don't they straighten up the mess that's inside? (Alan Jay Lerner - 1964) I suppose you need to be Rex Harrison to enunciate those words in a way that won't cause you bodily harm these days. I was reminded of those lyrics while I read a blog on the lack of females in CEO positions in Australia earlier this morning: http://blogs.smh.com.au/business/executivestyle/innovator/archives/2008/09/men_or_women_is.html together with the cited "research." I am constantly surprised at such views as the reasons that females don't hold more top commercial jobs anywhere in the world is, and always has been blindingly obvious; that relatively few educated, able and talented females pursue a commercial career. I have no 'statistics' or 'research' but observationally EVERY female in those combined categories that I have ever met either ceases her 'professional' career completely or interrupts it for large amounts of time in the key period of all careers (late 20s through mid 30s) to have children and then find much greater satisfaction in being with her children than messing about in endless meetings and pointless 'excursions' in business life. So, every so often, some 'feminist' will cholerically declaim that "women aren't well regarded" or some other such nonsense and go on to make the same idiotic comments this article does citing spurious 'surveys' as if the points they were trying to make had some validity or importance. Given the choice of having a totally fulfilled life or slogging yourself towards early ill health and death (no comment ever appears in these sorts of articles about how females live much longer than males in all Western countries) the majority of intelligent females opt for the much better life of motherhood as a career rather than any commercial endeavour - clearly a much more enjoyable and fulfilling vocation. So, if you simpy consider that 90% (or whatever percentage you are personally happy with) of that talented part of femalehood does in fact do that it seems that the remainder are OVER REPRESENTED in terms of percentages. It could equally be said that its only because so many talented females choose not to bother working themselves to an early grave doing pointless things that so many extra males get to do that in their place. All that statistic means is that it's further proof that females are far smarter than males and choose to be "ladies of leisure" by marrying some poor dope who works himself to death providing for her every material need/whim while she has a great life with her children and her friends 24 x 7. I have always been bewildered by the 'feminists' (not the suffragettes as they had a valid point in some senses) but the 'equality demanding' versions I grew up with in the 1960s and 1970s. As the only insightful person on this subject at the time was quoted (I'm almost certainly not quoting correctly) as saying: "Why are these women demanding equality? Why would they wish to give up their position of superiority they've enjoyed since Adam delved and Eve span?" Females have never had to die fighting in overseas wars, mine collapses, formula one racing or any of the more mindless pursuits of males, not because they couldn't, but because they made very sure they used their superior intellects and manipulative skills to have themselves excluded from such pointless idiocies. Similarly, they have never involved themselves in the mindless pursuit of 'power' by proxy (becoming a workaholic executive) as they have always known they control the idiot who does that (ever heard of an unmarried CEO?) and meekly turns over the 'fruits of their labour' to the love of his life. Personally, after about 1975, I regarded the 'feminists' demand for 'equality as a cynical way of underlining just how dominant females were and a cynically manipulative exercise in deepening the 'guilt trips' of all males to ensure they never understood how they were and always had been the 'second rate' gender designed for the sole purpose of giving up their lives to provide for the female who had selected them for that task. Wednesday, September 3. 2008If Exetel Is So Efficient......John Linton .....Why Don't You Do A Lot Better? I spent some time yesterday re-calculating and checking through some of the financial assumptions for the the current and next financial years and providing some final information to our tax accountants for last years tax return. In the course of doing that I made and received a series of telephone calls replying to questions and seeking clarifications. One of the questions they asked me was what I used as the 'heading' of this post. They, as a standard end of year service, provide their take on the 'health' of the businesses they prepare tax returns for among which are the base ratios of various aspects of the company's operations. Some of the main ratios are: Number of employees to gross revenue (1:$A1.35 million) Number of employees to after tax profit (1: $A12,600) Acquisition/support employees to customers (1:4,200) Monthly gross payroll dollars to number of customers/services (1:0.4) Monthly gross expense dollars to number of customers/services (1:0.5) and their movement from year to year. They provide these figures for the current year and for the previous years and they also provide 'averages' and 'highs and lows' for comparable industry types. It's pleasing, for us, that our ratios have improved each year since we commenced in business. It's also pleasing that our ratios are well above the 'industry' averages used and in all but one ratio are above the 'top performing' level for 'our industry'. Except for one. The ratio of profit to number of employees is not only below the 'average' for our industry but it is at the bottom end of that spectrum - by a long way. This lead to their conclusion that Exetel doesn't charge enough for its services and that will continue to be a problem which will prevent the company investing in the infrastructures it will need to fund over the coming years. Their recommendation was to increase all prices by a minimum of 10% as soon as practically possible. That would be a very tempting thing to do and doubtless it will find favour in a number of 'quarters' within Exetel. I thought about the recommendation over night and considered the tyranny of numbers that lead to these sorts of scenarios. I have no quarrel with the fact that Exetel makes very little money compared to the investment in the business and the enormous efforts that are put into operating the business on a daily basis. However, looking round the available published data for companies in the Australian communications business very few, if any, companies made very much money in their first five years in business and many/most lost money (based on the information available). There are obviously exceptions and I may have the wrong ideas but I can only base my opinions on what I see published and reported. However, it is obviously an anomaly that we don't make more money, in a purely commercial sense, than we do - basically we are content not to make a loss after paying cash for all equipment needed to operate a constantly growing business. I explained to our accountants , one more time, that our reasons for doing that are based on our reason for being in business - to offer the lowest priced services available from any Australian provider. This is a concept that is so alien to them (as they said - "we've never come across a business that didn't want to make as much money as possible") that they have never grasped it even after having the same conversation every few months for the past almost five years. Fortunately, as I'm more than aware of their per six minute charging regime, I don't extend the 'non-core' conversations beyond the minimum time required by professional politeness - but I do sometimes think that providing services at charges below every other provider is more than an onerous burden on an increasing number of occasions. It was a timely reminder that, in setting future prices for current and new services, even more care has to be taken in ensuring that Exetel's costs are maintained on a constantly lowering basis both by 'negotiation' with suppliers and by more efficiently designing and implementing our processes and procedures. It's a pity all this incredibly hard and productive work doesn't get me the sorts of financial rewards other people receive for selling services at sky high prices and never delivering operational efficiencies even when they are paid $A15,000 a DAY - (more than I earn in a month!). http://www.australianit.news.com.au/story/0,24897,24278548-15306,00.html Oh well, I guess I continue to pay the price of continuing failure in my commercial life.
Tuesday, September 2. 2008The Sky Is Falling (ADSL Market Is Slowing).....John Linton ....or is it? I was puzzled by the statement from Internode a week or so back that the ADSL market in Australia was "plateauing" but put it down to Internode's very high prices and Telstra's aggressive targeting of other ISP's customers with incredibly low priced offers (or perhaps just some invented excuse for moving their management around). I read the Eftel 'annual ASX report' yesterday in which pretty much the same statement was made in an attempt to explain away their lack of growth (6% which is barely above the WA inflation rate and equates to no growth as they raised their prices during the reporting period which means that their net customer numbers almost certainly declined) over the previous 12 months: (statement in the middlish of the first page) Couple those statements with the comment by Futuris: http://business.smh.com.au/business/out-of-telecommunications----well-almost-20080901-4762.html Yesterday Futuris's departing boss, Les Wozniczka, again made clear So, if you just read those three comments in isolation to any other information available in the financial or communications media you would reach the conclusion that Telstra has made it untenable to be in the ADSL business in the long term and that even in the short term there is a decline in growth and "financial pressures depressing revenue". Sounds like it's past time to go and do something else......except I don't see any indication that the ADSL/Broadband market is "plateauing" or "under severe financial pressure" or that "there is no future in a longer term communications strategy". From what I can see, and I acknowledge my views are limited and based on what happens within Exetel's customer base and the quantities and sources of new orders for Exetel services, there is absolutely no 'slackening' in demand for broadband services - quite the reverse - I see a strong growth in ADSL2 with no associated diminishing of ADSL1 order intakes, a slight but consistent growth, and a very, very strong growth in HSPA service demand (I don't see that first hand but from statements by hardware suppliers to the mobile carriers and statements by the mobile carriers themselves). Eftel's lack of growth over the past 12 months (and based on the reported figures almost certainly an actual decline in customer numbers) is obviously caused by their price increases which make their offerings no longer competitive for a very small ISP. Internode's strange comment almost certainly reflects the fact that as, ADSL in particular, has become far more of a 'non-technical' service they are struggling to justify their 'premium pricing' (substantiated by their recent price lowering/download increasing at the same price) and their take up is therefore becoming restricted by that pricing in an increasingly 'commoditised' market. However there is a major disconnect between the broadband statement and their reported revenue growth (of 38.6% to $A116 million) and their employee growth (of 11.5% to 329) over the FY2008 year. (no "plateauing" evident in those figures). Futuris obviously has seen no return from its Amcom investments and saw no likelihood of return in the near/medium future and was happy to get its money back rather than seeing it continuing to decline and put that money into something that would make a return. Having dismissed the comments of those three companies as being far from any general truth, there are obvious signs that the big carriers are doing better in the broadband markets than at any time in the past and that is both reflected in their recently published financial results and their 'control' of the base infrastructures. Telstra has a 2 year head start (because of its own decisions and views) in the 3G HSPA marketplace that it dominates - not because it's a monopoly this time but because it was quicker 'off the mark' than either Optus or Vodafone. Telstra and Optus have invested in ADSL capabilities to a far larger extent than any other Australian companies and therefore have got a much larger share of that 'new' market which has, in large part, 'cannibalized' the 'old ' ADSL1 market and therefore has contributed to an increase in general ADSL market share. In those terms it is obvious that smaller companies (which include the three referenced above) will have lost some part of what they once had as a 'competitive advantage' and if, as their comments seem to indicate, they didn't 'move with the times' then perhaps, for them rather than the general supplier base, their 'markets' are "plateauing" or "under severe financial pressures". The one thing that remains a constant in the technology business is that it constantly changes, not just in terms of products and services and the ways they are delivered, but in the ways they are supported and the ways they are regarded by the buyers of those products and services. 40 years ago a mainframe computer was only understood by a tiny number of 'elite' professionals. Today, an average 8 year old Australian in third class understands more about how to get better value from a computer than any 'guru' in 1968 - and not only understands how to do that but actually does it unpaid and, largely, without study or instruction. It seems to me that these companies/managements who say that the market is "plateauing" are correct - the demand for the 'old fashioned' priced services they are trying to continue to offer hasn't just "plateau'ed' - its falling sharply. Broadband, delivered by any medium, is no longer a 'technology' service - it's a commodity in the hands of the advertising budgets of the major carriers (who also control the infrastructures). If you give it a moment's thought - nothing has ever changed - in that everything continues to change but some companies don't think change should continue once they've committed to a technology that remains the subject of continual change. Time to revise their ROI assumptions I would think. Monday, September 1. 2008Where Have All The Start Ups Gone?John Linton Over the weekend I received three more "are you interested in acquiring..." emails from 'brokers' acting on behalf of small (very small) communication companies/ISPs. Having been involved in 'start ups' several times in my commercial life I know how gut wrenching it is to reach a situation where you don't think you can continue and need a way out of the increasingly nightmarish situations start ups too often find themselves in and I take no pleasure from receiving these communications. I don't keep a 'record' of these sorts of communications but, since I returned from holidays in early August I'm sure I've received more than a dozen or so such enquiries - a sure indication that a combination of tougher financial times and Telstra's retail sales policies are making life even tougher than it has been in the past for every other provider of communications services in Australia. When I was involved in starting Swiftel in 2003 it seemed that there was a new 'ISP' coming to the market to offer services every few days of each week. The situation seemed to have barely changed when we started Exetel in January 2004. From just about the time we started Exetel the number of start ups in any given month seemed to decline at an ever faster rate to a point that I can't remember when I last became aware of a new ISP/Communications company making itself known in Australia. Of course there had always been a high 'mortality' rate among such start ups but, previously, that never seemed to discourage new people entering the market with fresh hopes and obviously what they believed were fresh ideas. Based on the annual ABS figures on Australian ISPs (which I can never understand as they appear to include resellers of other ISPs and even resellers of resellers) but the trend is clearly downward, and downward at a steepening rate, in terms of the number of ISPs the ABS includes in its survey.It is an inevitable aspect of most products/services in most markets that, over time, the number of supppliers decline, either by 'merger' or by ceasing operations as large becomes the only way of developing the economies of scale required for commercial returns on investments. I think the latest report from one of the ISP penny dreadfuls (Eftel) sums up the plight of small communications companies: Despite the 'enthusiasm' of the text the figures in the report (and bear in mind these are 'preliminary which means they are unaudited and only submitted because at the time of the submission deadline no auditor has agreed with them) show a massive deficiency of current assets (cash) over current liabilities. The text of the report also talks about the "slow down" in the ISP business (reflecting EFTels virtually zero growth) which, based on Telstra's/Optus'/Etc published figures doesn't affect other ISPs (it certainly didn't affect Exetel in the last 12 months). So perhaps, Australia will see no more 'start up' ISPs and will be left Why would such a scenario be inevitable? Well, if you listen to/read the assertions of the non carrier service providers you would form the view that there will be many thriving alternatives to the three ugly sisters of Australian residential communications and companies would take major umbrage at my casual dismissal of their likelihood of survival. A most obvious example of such an umbrage taker would be '3' whose owner has spent over $A3 billion building a completely unnecessary 4th mobile network in Australia. Even that huge expenditure isn't capable of matching the rival mobile networks and '3' has had to put themselves in the hands of Telstra for the 3G roll out and then has had to become a 'Telstra HSPA' reseller for the majority of the continent as it, even with it's huge financial resources, can't fund/justify the investment in what's required to actually offer the required 'Australia Wide' services. It remains to be seen, and I think it will be seen quite quickly what the next five years hold for Australian communications companies. I don't think many are going to like the reality once they get their heads out of the sand. |
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