Saturday, November 15. 2008Back To The Future - One More Time?John Linton One of Exetel's first suppliers was Powertel with whom we enjoyed the best relationship we had with any supplier until Powertel was bought out by AAPT/NZ Telecom. Subsequently all the 'Powertel' people we had built up a four year relationship with quickly left and the people who replaced them were, to be as kind as I can be, "unused to dealing with wholesale customers" as one of them once said to me. It's always a pity when good suppliers get taken over by much larger companies but it's a commercial reality so a sensible buyer attempts to build new relationships as best they can. We made every attempt to persevere with the relationship with the new people until, in our views in February of 2008 - not just mine as I had by that time ceased to have any dealings with any AAPT employee, were that we were doing increasing damage to our business as AAPTs "new" procurement and provisioning and fault resolution systems and the people employed to operate and manage them were hopelessly inadequate and were causing the customers we provided AAPT services to a significant number of problems that were taking weeks (some times more than a month) to resolve. So we ceased providing ADSL2 services from AAPT to new users, until they sorted out the remaining provisioning problems with the outstanding installations and gave them no more business until they had sorted out their issues in a demonstrable way. Our view, at that time, was that not only were the AAPT people and systems completely inadequate but that their decision to wholesale the iiNet DSLAMs was a major mistake and we could see it accounted for over 90% of the problems that we ended up causing our end users - if AAPT's processes and people were sub-standard trying to interpose those sub standard people and processes between us and the even more sub-standard iiNet wholesaling processes made the whole mess an irresoluable nightmare. So we politely advised Powertel/AAPT that we would wait until they had sorted out their problems and when they could demonstrate that was the case we would consider using their ADSL2 services again as we did like their SSS solution (when it was delivered from their own exchanges) because it was fast, reliable and gave the end user the option of maintaining their telephone line with the provider of their choice. It certainly cost us business and it cost us business at a time when it was not a good thing to happen - but to do anything else would have been very wrong. Of course, the first 'dead line' to provide a new working procurement process was missed as was the second and the third and then we stopped thinking about any sort of time frame and proceeded on the basis that we would not deal with them again. Yesterday (some 6 months later than the original "every thing will be resolved by date") Powertel came to meet with our head of provisioning and (just as importantly our head of regulatory as the TIO complaints from AAPT stuff ups accounted for over 50% of all TIO complaints yet the level of business was around 10% of new installs at the time) and after the latest demonstration they were of the opinion that Powertel might have resolved all of the problems with their systems - at least as they related to non-iiNet exchanges. So I had a pleasant chat to the new account manager and an 'old' Powertel manager, who left them when AAPT took over but has now returned, and we agreed to re-look at what they had to offer late next week but we couldn't consider ever using the iiNet DLSAM network. They said they had a better solution now which was 'mysterious' but I guess it will become clear next week. I may have misheard what was being said but I got the impression that AAPT wanted to provide us with not only their previous ADSL2 coverage but a much enhanced coverage (that, if I heard correctly, didn't involve iiNet's DSLAMs) but was much 'wider' - maybe I've missed something in the news over the past six months or maybe they've been very quiet about it. I would like to be able to offer an ADSL2 solution that allows the end user to use the wire line provider of their choice and I will be interested to see how AAPT can offer a wider ADSL2 network than Optus does - if in fact I heard that claim correctly. I'm not sure for how long the 'marketplace' will see an advantage of renting a wire line telephone service from a different provider to their Internet service but it still seems to be a preference for a sizable percentage of prospective customers. As we have now finalized the new ADSL1 'pre-paid plans' it would be useful to us if we could provide them via a non-Telstra Wholesale basis and if there is a viable choice then it would be good to stop giving Telstra not only our money but full details of each one of our ADSL1 customers. Mind you - I never get my hopes up before I read any possible offer in the draft contract. Friday, November 14. 2008Is It Too Late To Go To Truck Driver's School?.....John Linton .....seeing that so many customers and employees of other ISPs think I'm a total failure as a contributor to the management of a small communications company and clearly need a job more suitable to my few abilities. (yes, I stole the head line from Top Gun but I don't know the name of the script writer to whom I should ascribe the credit). Despite the tyranny, I often get some pleasure from writing these musings as I find it helpful at the start of a day to 'digest' the morning's business news and then contemplate what I should prioritize in terms of the next things I need to address. I get more pleasure from the questions, comments and most of all the suggestions I receive from people who sometimes read these meanderings and Exetel has become a better and more efficient company from implementing many helpful ideas and recommendations from people whom I've never met. Perhaps, in a perverse way, I get almost as much pleasure from the 'highly negative' communications I get impugning almost every aspect of my personal characteristics and the actions and services of and provided by Exetel. There appear to be no limits to my personal dishonesty and crass incompetence and these dishonesties and incompetencies ensure that Exetel is the very worst ISP that Australia has ever seen amongst the very worst of that long list of failures. I figure that these poor people must be really upset about Exetel's ongoing success to feel compelled to waste their time writing their hate missives to me - expressing their wish fulfillment? Why on Earth do they bother to keep reading what I write in the first place if it annoys them so much? As someone who has lived for more than 60 years and, while not acquiring much wisdom over that time, has developed a fairly insightful view of my own lack of talents and abilities I sometimes wonder what I can ever have done to provoke such extreme and devastating hatred (a strong word but in the cases I'm referring to I think it is the only word to use) from so many people that I have never heard of. While I usually simply skim read their hate missives and then delete them I sometimes 'investigate' the ones that appear to be written by the same person more than a few times. Apart from the TPG employee who was a certifiable lunatic in sending me daily (except Saturdays) vitriolic aspersions of every aspect of my personal character and Exetel's business practices and longevity over a period of almost five consecutive months there is a surprising set of common threads that link these hate mongers. I only comment on it now because the volume of 'hate mail' I have received since Friday of last week has risen to ten times the usual volume! Something I wouldn't have believed possible. So I looked in a little more detail than I normally do in an effort to try and understand why this sudden, and seemingly spontaneous, outburst of vitriolic abuse was occurring. I found some strange correlations among the 217 'hate mails' received over the past 7 days: 1) 42% were from InterNode IP addresses 2) 40% were from Eftel IP addresses 3) 12% were from TPG IP addresses 4) None were from Exetel IP addresses 5) One Internode IP address was the source of 17 separate hate mails using 11 different 'aliases' 6) 16 other IP addresses sent 2 or more hate mails 7) I could actually identify one person from TPG and two from Eftel by name based on (in the TPG person's case an email from the same IP address and in the case of one Eftel person their crazy syntax which exactly matched other written examples on the web where they identify themselves and in the case of the other aaNet/Eftel hate monger by the repetitive, and erroneous, claim he keeps making which I first saw him state in an email with his 'signature' I was 'copied on' some years ago). What actually caused this upsurge in pathetic abuse is, and is likely to remain, a mystery to me and I'm not gong to spend any further time on it as - for whatever reason, like someone turning off a tap, there have been no hate mails over the last 24 hours having been 17 the day before. But, for those people who, for whatever strange reason, spend their time reading my inconsequential thoughts for the sole purpose of then writing abusive emails to me, please note the following: a) For the 33 separate hate mongers who claim that I am sending Exetel broke "just like you did at One.Tel - As any record, book, court case or any other verifiable published record would show - I never held any position at One.Tel that vaguely influenced its operations or its financial or other decision making (I was a minor consutant among many consultants). For you silly and pathetic people to claim otherwise simply describes how uninformed and totally stupid you are. I held a consulting assignment that was focused on, firstly, securing regional PoPs for the internet services and then securing corporate customers - neither of which had any affect on the basic issues that OneTel subsequently experienced. b) For the 14 vitriolic abusers (some of them the same as the 23 in a) above) who claim I am sending Exetel broke "just like you did at Apple/iGreen - As any record, court case or other written record would show - I worked as a consultant on a specific project at Apple for 15 months and that project had absolutely nothing to do with the reason that Apple/iGreen was removed from its owners and directors by Optus in one of the shoddier pieces of commercial trickery I have seen in a relatively long business career. During my consulting assignment I had no access to, played any part in or was consulted about any aspects of the business that subsequently caused the problems (though I'd be the first to admit that I don't know any real details). c) For the 27 cloud cuckoo land dwellers (some of whom were the same as a) and b) above) who claim I sent Swiftel broke which resulted in it being sold to PeopleTelecom - As any record will show I did 12 months of consulting at the then Swiftel on a completely separate project which resulted in the creation from zero of a quite large and successful ADSL operation at that time which, in fact, was a principal attraction for the purchase of Swiftel - nothing I did could be remotely described as being detrimental to the company - completely the reverse. d) For the 68 incoherent libelers (some of whom are the same as in a), b) and c) above) who alleged that Exetel is on the brink of having receivers/liquidators/administrators appointed and had already sacked half its employees - Exetel has submitted tax returns for the last five tax years that showed small but growing profits with the 2008 tax year return reaching the dizzy heights of a profit after all expenses but before tax of a little over $A200,000. Exetel has made a miniscule profit for all but a handful of trading months over the past almost five years. For the record also - Exetel has NEVER sacked any permanent employee in the whole of its existence. It's quite true that I have continually made references to the fact that I do think times are already tough and are going to be a lot tougher - which is why I, as a part of Exetel's decision making, have decided to do all the conservative things of raising prices, freezing capital expenditure, not replacing personnel who leave and not hiring people in Australia (and if we were stupid enough to have HR, Marketing, Sales personnel or we spent money on advertising I would have cut those areas too but we don't so it wasn't necessary). This isn't "because we are going broke" it's because it's a sensibly conservative thing to do in very unpredictable times and (and when I come to think of it what has almost certainly caused this upsurge in hate mail) basically these actions will more than double Exetel's monthly trading profit if the bad things we are anticipating don't actually occur. Maybe the reason these morons suddenly got so upset was the realization that by adding the $3.00 account charge Exetel had actually protected itself from "going broke"? But, while I know this is going to severely disappoint all you crazy (and I mean that literally - to write the way you do so constantly means you are in real need of psychiatric assistance) ill wishers - Exetel continues to make modest profits each month and isn't "firing any staff" and is unlikely to not be around for the foreseeable future. Besides - I KNOW I'm far too old to drive a truck. There is no known cure for either paranoia or intrinsic stupidity which each of you "hate mailers" clearly exhibit. Thursday, November 13. 2008Tasmania - Drifting Closer To Australia?John Linton Time continues to pass by and there is no end in sight, at least as far as I can determine, as to when or still more probably if, Exetel will be able to recommence providing wire line based broadband services to Tasmanian users. I was cheered to read that the Tasmanian government had finally reached an agreement to provide access to the cable they spent so much time and money putting in place but the actual time frame for a small company like Exetel getting a working service operational using "Bass Link" is still in the unknown future - best guess somewhere this side of mid 2009. As it seems likely that by mid 2009 Exetel would still not be able to offer ADSL2 services in Tasmania except for Hobart and, possibly, Launceston I'm beginning to wonder whether it remains worth pursuing a wire line broadband solution in Tasmania at all. It seems possible to me that HSPA from Optus may well have developed to be able to deliver whatever the net result a 7.2 mbps HSPA service can sustain on an individual user basis so, for many Tasmanian users HSPA may well be able to provide a suitable speed for the vast majority of users. Should Optus' HSPA network then continue to the 21 mbps level it should be capable of delivering by early 2010 then even the arguments for ADSL2 in Tasmania (at least provided by Exetel) are not very compelling. The indicative pricing for IP from Hobart to Melbourne using Bass Link is far lower than has previously been available to Exetel but even at those possible greatly reduced costs the price we are being asked to pay is 4 times higher than we currently pay in all other Australian States and Territories and, to put that in perspective, is almost double what we pay for IP connectivity from Sydney to the West Coast of the USA. So the costs of connecting a Tasmanian user to the internet are still incredibly more expensive than connecting any other Australian user (including those in the Northern Territory, or the outer limits Northern Western Australia and far North Queensland). While I would expect the initial 'asking prices' for Bass Link transit to be 'negotiable', I somehow doubt that whatever 'final' price is eventually offered will make it possible for Exetel to offer realistically priced residential services in Tasmania - or, if that sounds too negative let me amend that comment to "prices as realistic as we are able to offer in all other parts of Australia". This is very disappointing to me personally and I think it's quite probably going to be even more disappointing to Tasmanian internet users - of any ISP's services. For once the high cost of communications can't be blamed on Telstra - at least not in any 'direct' way. As the Tasmanian Government should have been able to control the price of this essential service to its constituents only the Tasmanian Government should be held accountable for what it charges for this key service and it appears to have decided that it should punish all Tasmanians by not ensuring that they are able to use the same services as all other Australians at the same prices. Not having any knowledge of how this clearly State funded initiative has been allowed to degenerate from 'solving' the bandwidth cost issues to the current situation I can't make any further comment on my personal, on behalf of Exetel's current ADSL customers, disappointment and feeling of helplessness. As I don't know any of the facts I'm not in a position to really comment further. However, if we don't achieve a reasonable outcome we will ask some very straight questions of the current Tasmanian government in terms of: a) What their objectives were in their initial funding of the link? b) Why a project designed to give Tasmanians 'equality of access' to the Internet has failed so miserably in achieving that objective? My quick calculations indicate that we would need to put in place completely different pricing for ADSL1 services in Tasmania to those offered everywhere else in Australia. We would need to charge something like this: 512/128 ADSL1 connection for $30.00 per month 1500/256 ADSL1 connection for $37.50 per month 8192/384 ADSL1 connection for $57.50 per month plus $2.25 per gb downloaded in the 12 midday to 12 midnight period and 50 cents per gb downloaded in the 12 midnight to 12 midday period I have no 'final numbers' to actually put anything firmly in place but on current indications it would be pretty much along those lines. At those prices a low download user would be much better off using HSPA (where it's available in Tasmania) which raises some interesting questions about how Optus is handling back haul out of Tasmania on its current mobile network (or any of the other mobile carriers for that matter). I guess this means we have a great deal of 'hard talking' to do before we can make a decision on whether we can continue to offer wire line based broadband services in Tasmania - it makes you realise what a good deal Telstra offers in Tasmania. I suppose it also makes you wonder why ........ but that would be churlish. Wednesday, November 12. 2008Time To Join The Torch Light Parades.....John Linton ....and burn some books Mein Fuhrer. We, along with all other ISPs I assume, received the 'courtesy' email asking us to visit the Fourth Reich's official sub site where we could find the details of how to participate in Herr Krudd's and Obersturmfuhrer Conroy's scheme to purge the Fatherland of the filth emanating from the diseased brains of the untermenschen. I skim read it to the point that my understanding is that Herr Rudd's Schutz-Staffel has drawn up an initial list of the undesirable sites that he wishes consigned to the flames as a first pass and will add to the list as further sub human filth is discovered in the future - based on his own definition of such undesirable material. His objective is to cleanse the Reich of anything he designates as undesirable so that the kinder can safely be indoctrinated in the preferred ways that he deems any citizen of the Fatherland should think and act to enhance the chances of them becoming Labor voters when they are eventually given voting rights (should in fact anyone will have voting right in the future if they continue to wish to exercise their current rights of freedom of speech). Towards the end of one of the 'documents' I seemed to gain the impression that there was a shuttered and locked goods wagon with Exetel's name on it waiting at a disused railway station which, as almost all of Sydney's railway stations under der Fuhrer's Gauleiters Carr, Iemma and now Rees 'stewardships' are now disused, was hard to pin down exactly, but it was attached to a train leading to a recently renovated 'camp site' outside Wagga if we didn't do exactly "vot you are tolt". Not wishing to make the acquaintance of Dr Irmried Eberl (while not ideal - I would prefer my internal organs to remain arranged in their current ways) and having as much freedom in my daily work as I can currently cope with I'm inclined not to be as 'independent spirited' (and for the pedants - yes - I know I'm combining the commandant of one camp with the gate sign of another) as I would usually be when confronted with the sadistic madness of bully boys and psychotics. Following Fuhrer Krudd's recent invasions of ABC Learning and his breathtaking Anschluss of the four major banks it just seems one more step on the way of creating more leibensraum for der Fuhrer's grand vision for a greater Australia and according to a recent poll (which some people say is actually independent of der Fuhrer's personal supervision - though I'm not sure how that's possible as it seems to indicate that some people don't agree which is beyond an acceptable standard of conformity) that 63% of us are in total agreement with our glorious leader's visions - or maybe we just smoke the same weed? Enough of such disloyal thoughts - wait a minute - is that the sound of a heavy military truck screeching to a halt and the sound of jackboots on the drive? Bear with me while I carefully open the black out curtains a 'crack' - Whew - no thank goodness it's just the next door neighbour's kids quietly running out in their carefree way looking a picture of smartness in their Krudd Youth uniforms to get their lift to school in someone's recently fully armoured 4 x 4 - apparently the vehicle of choice on the rutted and flooded unpaved roads Mosman women are forced to navigate every day of their lives. So back to what can be done in these totalitarian times by a small company struggling for survival under the burdens imposed by the ever increasing interference by the State in every aspect of what used to be our lives. We appear to have two options - ignore the sheer stupidity of this latest piece of doctrinaire madness from the Labor Loonies and put up with whatever the outcome is as best we can? - attempt to participate in showing these morons that this is one castle in the air too far - even for total idiots? It seems the words 'proxy' and 'P2P' are incomprehensible to the brain dead stupid Stephen and the even loonier Krudd so the trick is to find a way of getting through to the wads of cotton wool that occupy the space between their ears where other people have a grey, jelly-like substance. Steve ('our' Steve - not Stupid Stephen) believes that a silver bullet like 'null routing' would demonstrate that (forgetting about proxies, P2P etc) der Fuhrer's dreams of invading and then controlling cyber space can become a reality with far less loss of men and tanks (oops, sorry, money) than his current wild ideas about super filter hardware and massive slow downs in transmission speeds. We will see if we can easily demonstrate this to them at no cost to us or our users in some vain hope that they will eventually grab at such a straw to save millions of useless deaths on the Russian front - I mean tens of millions of money wasted on slowing down every Australian's internet experience. Come to think of it maybe they aren't as stupid as I think they are - maybe they DO realise they can't stop the internet from giving us access to Radio Britain's subversion so they've moved to plan B - if you can't stop it completely then at least slow it down and 'garble' the signal? Now where did I put my swastika armband? PS: It occurs me if these people currently posing as a federal government are so catastrophically wrong about cut and dried things like an NBN and internet filtering (which I have enough basic knowledge about to see they are so wrong it defies understanding by a rational mind) just how insanely wrong are they about their other 'initiatives'?
Tuesday, November 11. 2008Mobile Phone FuturesJohn Linton I've been using my shiny new Nokia N96 for just on three weeks now and over that time I've only made half a dozen 'cellular calls' with all the other calls being made using Exetel's VoIP over HSPA. In fact the only time I've made a cellular call was to test the quality difference between VoIP and Cellular to the same number with the person I was calling unaware of the difference. I will try the Exetel developed SMS over HSPA later this week (hopefully) as the release status of that service is now well into its beta testing and see if a complete mobilephonephobe like me can easily use it - from the 'demonstrations' I've been given it's a piece of cake to download the application and activate it. I'm wondering what this will end up meaning in terms of what the major mobile carriers will do in the future. My mobile call costs are now a fraction of what they used to be and, if I used SMS which I don't, the same situation would apply to that service. My Australian mobile to wire line calls which on the previous three months bills averaged two and a half minutes now cost me 10 cents instead of 50 cents and my mobile to mobile calls which average one minute cost me 15 cents instead of 30 cents (I get preferential mobile rates of course - no minimum spend, no flag fall and per second charging). I'm not sure how long it will take to get the 'final' version of SMS over HSPA fully operational but it isn't far away. Once that has been done we'll work on getting FAX over HSPA integrated in to the add on application suite for Exetel HSPA mobile phone users and then two other applications that we have some hopes for being useful and, temporarily, "exclusive" offerings. Personally, I can't tell the difference in call quality but I can notice the slight delay - which I soon got used to and after three weeks have adjusted to allowing for it without a conscious effort. My usage has been confined to the Lower North Shore of Sydney so my personal experiences have no bearing on coverage - just on VoIP quality.When/if we persuade fring or some other third party to install servers in Sydney that slight delay will almost 'disappear'. If we can't get that to happen we will more seriously consider writing our own application- not the preferred way of going but if we have to do that then we will. In terms of coverage, and specifically 'rural' coverage - Steve has just finished his 'field testing' of the HSPA service in 'country areas' of South Western West Australia and his results have been very positive and he details them on his blog here: http://steve.blogs.exetel.com.au/ It's, of course very early days for our implementation of the HSPA services (and the recent media reports about the withdrawal of the Optus Retail and Optus Virgin HSPA services is concerning) and we have not yet sold 500 HSPA services in this 'testing' phase of how to effectively market the concept and actuality of HSPA. It is going to be inevitable that the service will become faster and the coverage will increase for Optus, and the other carriers, over the coming year and more people will own HSPA capable hand sets. So what will happen to 'conventional mobile calls when HSPA handsets become 'universal' and more and more VoIP providers and hand set manufacturers make it easy to use IP voice, data and SMS calls at 10 cents a call and 5 cents an SMS? Allowing for the inherent 'Ludditism' of carriers generally over the years (they will do everything in their power to delay effective implementation of IP over mobile for as long as possible but that's now going to be only a matter of when not if) how will the carriers charge for mobile services when they are no longer used for 'conventional' calls and therefore the tariffs that they have used since the first mobile service was made available? I doubt that too many people understand how their mobile calls are charged to them at the moment but use the comfort of "caps" to allow them to ignore any likely inconveniences of thinking. "Capped" plans will almost certainly be the answer with a mobile service being charged as a fixed cost based on some amount of data usage formula or formulae. All this strange and convoluted call calculation arithmetic will become usage included/excess based megabytes of data? Phones are already slowly replacing other devices (though perhaps it's more accurate to say that mobile phone hand sets are morphing in to other devices) with voice cals declining as a percentage of use and being replaced by email/messaging/photo transmission and of course video calling. VoIP and SMS over HSPA simply illustrate the massive cost shift in how call costs have already changed for the tiny minority of users but the "size of a man's hand" cloud (First Kings - 18.44 - amazing what you remember form attending chapel every day for 12 years) on the far horizon may well be in fact the earliest indication of the 'perfect storm' that will blow current mobile charging plans (and hence mobile hand set acquisition plans) out of the metaphorical water. I'm sure every mobile carrier on the planet has developed their various different plans to make the transition for per minute tariffing to something else and I'm sure it will happen sooner rather than later but I'm glad I don't have to manage that particular transition. (especially if I'd planned to replace my now rapidly declining wire line revenues with far more profitable mobile minute revenues). Doubtless the carriers will cope - they own the infrastructures and therefore remain essential components of any future solutions. I wonder how the wire line resellers will cope (smaller companies who rely on wire line revenues such as Macquarie Telecom and PeopleTelecom and, come to think of it - AAPT and iPrimus)? I have enough issues to deal with without thinking about other people's possible concerns. Is it really going to be an IP over HSPA future for mobile voice telephone, and related, services?
Monday, November 10. 2008How "Brave" Exetel Is......John Linton ...a total misconception - Exetel is quite the reverse. I had two phone calls and an email earlier this morning from business acquaintances congratulating me on Exetel's bravery in raising its prices "across the board" in "these difficult times" when they were being pressured by the managers of their sales operations to reduce their prices to allow them to meet their 'sales targets' and other associated 'numbers'. I was somewhat taken aback by the effusiveness of the language used and also very surprised that they had been made aware of the minor changes we had made in the latter part of last week - none of them are in the communications business and none of them, at least as far as I'm aware, use Exetel services in either their personal or business lives. Each of them wanted more details on how and why we came to the decisions to increase rather than reduce pricing and how and why we went about it in the ways that we did. I suppose it was all very flattering up to a point but as I explained as plainly as I could it wasn't a decision we had any choice about. It seems to me that so many people "just don't get it". "It" being that Exetel is a very small company that operates on razor thin margins and is totally financed by the money of its shareholders who are also its directors and managers. So I told them that I didn't have a clue as to how the next weeks, let alone months, will 'play out' but that I had no reason to believe that anything positive was going to happen so I did what every financial management text book recommends in such circumstances - I raised our prices and froze our capex and hiring - stock standard 'uncertainty mitigation' with no hint of "bravery" and every 'hint' of uncertainty, fear and cowardice - fiscally speaking. When asked what impacts I had seen so far on aspects of our business I had to admit that, apart from a rapidly escalating number of payment defaults and some small business bankruptcies, order intakes had been, and still are, running slightly ahead of the original forecasts. This puzzled all three 'enquirers' and I had no better explanation as to why we had taken the actions we had before we had experienced any 'downturn' clear signals other than my personal "fear" (a long way from bravery) that it would be too late to 'take evasive action' once a downturn did become obvious. As I said to each one of them - I would love to be responsible for a company with fat product margins and big advertising and promotional budgets and be able to 'manage' the business without the burden of knowing any decision I made might destroy the brittle financial future that Annette and I have spent our lifetimes trying to establish as well as causing operational and possibly financial inconvenience to our customers, employees and suppliers. It would be good to be a 'hands off CEO' with advisers and divisional and line managers to take the burden of decision making and the subsequent consequences of not making the agreed targets. I don't, by choice, have that 'luxury'. I found it helpful 'listening' to three different decision makers talk about how they were going about dealing with what version of the current financial conditions in their industry they were confronting. While none of them was optimistic I suppose the consensus was that they didn't know to what degree, if at all, they should be pessimistic and where they should go, outside their own company and their established advisers, to get a better understanding. I'm not sure they found anything I said was helpful but it reinforced for me that the burdens of having no 'support' in making the decisions a small company has to make is very much offset by not having a bunch of divisional and line managers all aggressively pushing their own 'career' self interests rather than taking other aspects of the company's operational needs (not to mention the share holder's and customers and employees of other parts of the company) in to account. There are some, obviously significant, advantages of having all decisions made by a small group of people who have an intimate knowledge of all the factors involved in the decision making - and, of course, no-one to blame if the decisions are incorrect. It's an extremely uncomfortable scenario in difficult times such as these because you get to keep saying the words "I don't know what is happening" and "I don't know what will happen" and have to cope with the fact that the people you are working with look at you expecting you to then go on from that point - which a sensible person can't do. As the oldest of my acquaintances of this morning said when I mentioned this - "at least being told you don't know what is happening or what to do beats being told by someone they know exactly what to do and knowing they actually don't". We agreed that if the CEO of BMW could say he was in no position to provide even an estimate of BMW's 2009 revenue or profit less than 7 weeks before the start of that reporting period we were kidding ourselves if we thought we could do it for our respective companies (we were both mildly interested in the new 8 series due in 2010 which has just had its development canceled in the same press conference as the reference to the 2009 year we were both watching at the time) It was nice catching up with people I haven't talked to for a while and it was some comfort (like the interviews in Saturday's AFR) to get a first hand glimpse in to how other people are dealing, or perhaps more correctly - not dealing, with the current uncertainties in their different areas of the Australian marketplaces. I know I couldn't add anything to their knowledge and, unlike Exetel, they are, and have to be, reliant on input from people they don't think are advising them correctly but are still required to make decisions based on the arguments and 'facts' with which they are confronted. My guess is that their "marketing people" will prevail over their "financial people" and they will lower their prices and take the hit to their bottom line rather than take the harder, for them, decision of not allowing that to happen. I'm glad, in a way, that we didn't have any 'fat' in our pricing to allow us to have a choice.
Sunday, November 9. 2008How Do You Know What Your 'Use Buy Date' Is?John Linton I have often wondered at what stage of Exetel's 'life' it would be possible for me, personally, to stop managing in micro detail the operations of the company and the ways it was performing in the marketplaces in which it operates and work less hours and remove myself entirely from any of the day to day management of the various aspects and activities in which Exetel is involved. My 'guess' when we started Exetel in January 2004 was that it would take two, at the most three, years to establish the company solidly enough for me to play no part in the day to day decision making or indeed, depending how things developed, in any decision making at all and become merely a shareholder or, at worst, some sort of general 'consultant' to the business with an input into future direction and future planning. Obviously things haven't worked out that way. I'm also not complaining about that - just regretful. What is crossing my mind, more often than in the past, is at what time in a commercial 'career' (or in a long life generally for that matter) does experience and knowledge become too 'old' in itself to overcome the lessening of intellectual skills as copious amounts of fine wine, single malts and vermouthless martinis accelerate the brain's loss of essential reserves of "little grey cells" and consequently the ability to correctly analyse data and scenarios and then make the best decisions to the benefit of the business. I just can't get any sort of understanding of what will happen in the Australian economy and therefore have no idea of how the uncertain future will affect Exetel and our various ambitions and endeavours. I have never been in this position before and I have no idea what to do in terms of working out a base/bases for actually formulating new plans - having been forced to effectively 'tear up' the plans on which we started this financial year. I feel quite lost and, beyond taking the 'text book' action prescribed for such times (increasing prices - by way of adding a $3.00 charge per customer which in theory doubles our theoretical wafer thin monthly profits and freezing hiring) I am uncertain about what to do. I was, briefly, encouraged to read in yesterday's AFR (pages 16 -17) a series of 'interviews' with various CEOs of large/very large and well known Australian companies who all 'confessed' that they had absolutely no idea what was going to happen in 2009 and their planning beyond December 31st was "fluid". It gave me some comfort to know that people managing very large companies with many personnel resources available to them as well as copious amounts of expensive outside advice feel equally at a loss in terms of forming some basis for making decisions moving forward into the next calendar year. However the reality is that I still have no understanding as to what to do in any of the key aspects of our business - and that's not a good way to feel - even if a lot of other people in decision making positions feel the same. Apart from Steve and me, the current 'managers' in Exetel are in their mid twenties and, for many of them, Exetel is their first 'real' job let alone their first management job. So we are very thin in terms of management experience generally and our managers have almost no operational experience (outside what is in place at Exetel) and absolutely no tactical let alone strategic planning knowledge or experience. As almost all decision making managers in this country, and perhaps many other countries, appear to be equally lacking in being able to forecast the future and therefore plan for it this may not be as bad a situation as it could be - but it is becoming a concern and I'm beginning to think it might be more of a concern than it has been for other companies in the past. I've tried getting some advice from one 'specialist' - but I got absolutely no value from it. I've been offered advice from other "specialists" but I doubt we'll take up their offer. The problems with 'business advisers is that they can never have any real understanding of a particular business and their generic advice is usually something you can pick up by reading the daily business press. I'm not at all well informed in any detailed sense but I find myself, more often than not, with a better general knowledge, and often quite specific knowledge of a topic than an alleged 'expert'. I've investigated, as far as the information is available to an 'outsider' permits, what our competitors are doing in terms of new initiatives, changes in direction or 'consolidation' and I have formed the view that, at least from what's on the public record or available through reasonably trustworthy 'inside' information, that none of them have any significant new ideas or directions and are pretty much locked in to 'defensive' modes of survival rather than anything else - I stress the information available to form such a view is relatively limited. I guess we'll do what the CEOs reported in yesterday's AFR are doing - wait till the end of the year and see what can be seen then. Not something I'm ever inclined to do but it appears that there is little choice. (Perhaps I can take comfort from the fact that I currently fit the description of this quote from a GW Bush impersonator: "uncertain times call for uncertain leadership") Saturday, November 8. 2008I Didn't Know Whether To Laugh Or Cry....John Linton ......when I read this in the early hours of this morning: http://apcmag.com/virgin_broadband_pulled_from_retail_sale.htm We are less than two months in to basing a significant future strategy on HSPA, and currently that in turn is based on Layer 2 HSPA services from Optus, and reading about Optus Retail's problems leading to the withdrawal of their "Fusion" offerings and now the withdrawal by their wholly owned Virgin offshoot of their major HSPA offering isn't something I needed in the early hours of today. It makes the whole Optus HSPA service look bad which Exetel's testing and over 400 Exetel 'live users' don't find to be the case. - at least at this early stage. I had my 'dummy spit' a few days ago about Optus losing $A44 million on their Apple iPhone/HSPA promotion (while they adamantly insisted they couldn't afford to sell at a few tenths of a cent lower to Exetel in our start up phase) and this kind of just adds insult to injury. I, personally, don't care how any company chooses to piss away its profits letting some dweebs in "marketing" indulge their uninformed fantasies and paranoid delusions but when they completely screw it up to the point where they have to, very publicly, get slammed in the media leading to what appear to be totally damning admissions that their base network just can't deliver what is being promised it IS something that VERY MUCH concerns me. So let me add my two cents worth to what both Optus Retail and Virgin Retail has done based on what I know to be true about the actual costs of delivering HSPA in the UK where the take up is 100+ times higher than it is on the Optus Australian network and, in terms of kilometers of backhaul cable and microwave, probably at least ten times more. The HSPA services in the large UK cities are pretty near full speed based on my personal experience and the technical reports in the UK journals. The HSPA network I used claimed to have close to a million subscribers and even in the middle of Scotland the signal strength was adequate to keep my connection usable on mountains and moorlands. So coverage was fine but more importantly I only noticed congestion issues for short periods of time and only in remoter areas of England and Scotland. For Virgin/Optus Retail users to claim they experience congestion/unusability in Australia's capital cities is quite puzzling. It's particularly puzzling because we actually have customers who have a Virgin/Optus HSPA service who also now have an 'Exetel/Optus' HSPA service - and they report a very puzzling 'anomaly'. They say, and I've actually observed this on two occasions, that they can sit the two services side by side on the same type of hand set and get two markedly different download speeds at any time of day. When the "Virgin/Optus" service is virtually unusable the "Exetel/Optus" service works at almost full speed. Personally I find that incapable of explanation in terms of poor Optus network coverage because both devices should have performed identically. So there would need to be another explanation. The most obvious explanation, and the one that would occur to anyone who has any slight experience of running a network, would be that the "Virgin" network is constraining the speed achieved 'artificially' either deliberately or by incompetence in under provisioning the bandwidth on the 'hand offs'. Under provisioning hand off bandwidth would be very unlikely in the face of a decision to be totally humiliated by withdrawing the service. There may be other explanations but I don't have the engineering knowledge to think of one. While I was in the UK, and subsequently on returning to Australia, I have been given pricing based on very low volume forecasts but from a company with huge volume discounts of their own they are prepared to pass on to us. Their pricing, to us, is one fifth of a penny per mbyte which at today's exchange rate is about half an Australian cent. As they aren't the carrier you have to assume that the carrier's cost is less than that - at least I would make that assumption. Exetel pays more than that to Optus but, again we assume, that their internal charges to their retail operations (including Virgin) are probably around the UK volume buyer cost of half a cent per megabyte - I really don't know and could be quite wrong - in either direction. It's unlikely that Optus Retail are very efficient (and the waste of money on the iPhone promotion seems to support that assumption). Presumably Virgin is more efficient than the Optus brand retail operation but follows a similar high advertising expenditure 'go to market' practice. Both give away hardware/sims/delivery charges etc and both have heavy advertising and end user support costs - though not very effective support from what appears in the media and a quick check of calling their support numbers. For Virgin to offer 5 gigabytes of downloads for $A40.00 ($A8.00 per gb) they would have to either plan to deliver less than half that volume or buy at a lot better, not just a bit better, than half a cent a megabyte. My view, based on no actual knowledge, is that they don't get better pricing than half a cent a megabyte and they do provision (via strangulaton) their network capacity to less than half what they appear to be offering to the end users. Perhaps they just got the provisioning wrong on the Virgin tunnels? That would explain why I can't seem to ever have any trouble with my Optus HSPA service yet in the same locations (within a meter) a Virgin/Optus service is virtually unusable. Maybe Exetel is just fortunate that we are somehow getting preferential treatment - and that may well be the case - not because we are somehow 'special' or 'favoured' but because we have a Layer 2 connection which means, at least I've been told, that we get discrete tunnels across the Optus network. I will be interested to see what explanation Optus now gives, in the event that they do, as to why there are such issues with the Optus Retail and Virgin offerings that they had to be withdrawn. I'm sure it will turn out to be something less devastating than anything bad I can imagine. ....and I thought I had problems....a "federal investigation" would waste an awful lot of time. (I wonder how those Optus marketing genii who pissed away the 44 mill will be treated now the plans they wasted all that money promoting have been withdrawn?) Friday, November 7. 2008The Older I Get......John Linton ......the better I was. Maybe there was actually a time when I could deal with any issue/problem/question after a few seconds consideration (if that) and with the total confidence that the decision I was making or the advice I was giving was absolutely correct and couldn't be bettered. There are times when that's the way I remember it and it now really worries me that I have become so indecisive and so timorous in making decisions over the last year or so.....perhaps I now realise that I get so many decisions wrong and give bad advice on so many occasions? Whatever the truth really is it is becoming very obvious to me that the many decisions that Exetel now has to make on a weekly basis are far too complex for me to even begin to understand the bases on which they should be considered let alone the criteria that should be used to make them. It seems to me that I've become like all those 'senior executives' I've always despised - someone who holds a position that they don't have the knowledge or ability to realistically carry out the responsibilities required of it. Or, maybe, like J G Ballards "Jim" character I can be accused of "thinking too much". Or then again...... None of this helps in today's scenario of difficult financial times that are more likely than not to get more difficult and more rapid changes to technology than are easily dealt with or all the rest of the situations small companies have always faced in such situations and, it has to be admitted, so few survive. Recessions always cause pain to a wide variety of individuals and organisations and the most vulnerable organisations are always the small and those that have too much debt. While Exetel has no debt at all it definitely is small and by definition vulnerable to the 'convulsions' that recessions bring....and irrespective what those d***heads in the ACT currently claim.....if it causes an increasing number of large and small companies to be put into receivership, house prices to fall sharply, job losses and the stock market to crash then it's a recession - stupid. It's difficult to live in times where the largest car manufacturer in the world, General Motors, is on the brink of financial collapse and not become aware that there are events occurring that are extremely threatening to a very wide range of people and entities. You can shrug off the demise or Air Italia with a politically incorrect "what do you expect from Italians" and the effective bankruptcy of a tiny country like Iceland the same way. But if the worlds largest car maker for the past 60 years, a sovereign country and a State funded major airline (let alone almost every major airline in the US) cannot find a way through today's financial problems then you have to think very seriously about why you, personally, are capable of doing any better. Allco (who cares about greedy financiers who didn't think a bull market would never end), Babcock and Brown (what happens when you borrow too much), ABC Learning (he probably was OK as a milkman) all spectacularly collapsing into receivership or versions of it are dismissable as the price of hubris in commerce. Pity about the employees and the creditors and the damage to everyone associated with them (including your super fund and mine). .....and bear in mind this is all happening, according to Whine and Krudd , while there is no recession. I wonder what will happen if things ever do get bad in this country then? I lie awake almost every night tossing and turning about decisions that I think have to be made to protect Exetel and its customers and I reach no conclusions. When I eventually give up on trying to sleep and start the day by reading the Australian, US and UK business papers and all I see is increasing concern and more dire forecasts. Are they all wrong? Far too early to have a few Scotches and try and forget. Not the ideal frame of mind to try to address the issues of the day. Now, if only I could have as few problems as this company, alone among all the companies in Australia, who can report increasing margins and strong revenue growth: http://www.theaustralian.news.com.au/business/story/0,28124,24611593-36418,00.html How do you increase margins in a year such as this? Easy - be a monopoly. Thursday, November 6. 2008Almost Time To "Jump".......John Linton .....or is it? I spent most of yesterday working on the last details of Exetel's business plan for the 18 month period commencing 1st January 2009 which has become necessary as the initial assumptions on which the 12 month plan for FY 2009 were based (in terms of financial and general economic outlooks in Australia) have turned out to be even worse than we had initially taken in to account. I don't have any knowledge about this scenario but the US, UK and Australian media are pretty much in agreement and in summary this opinion in today's SMH summarises it for us 'beginners': Strangely, if you want to think about it in such terms, there has been no indication in the first four months of Exetel's monthly results that anything is actually amiss with our original planning with strong, slightly above target, growth being achieved each month. With the exception of the large number of initial payment defaults in the November bill run there are no signs at all that there is anything either wrong with our key assumptions or any direct impact of the current uncertainties and overseas 'problems' caused by the GFC. Of course there's Whine Swan (Just how uneducated is this stupid man? During a radio interview on the ABC this afternoon he said that one of the topics Australia had raised for his forthcoming overseas junket was the reNuMeration of CEOs!!! He sounded like a real d***head) now scaremongering with his statement of the GFC "blowing a $A40 billion hole in the budget surplus" (what a great excuse for canceling all Labor's election spending promises) - but then he and Krudd were saying only a week or so ago that "the GFC would not materially affect Australia's strong economy" - so its pretty clear nothing that man says can be taken for anything except stupidity based on total ignorance. There obviously will be negative affects coming 'into play' in 2009 and they will have some, unquantifiable at least by me, negative affects on our small business specifically and Australian business generally. I've discounted to zero any particular affect from the 'NBN Tender' in that period which, as I wrote in these musings some twelve months ago - it would never happen except as a means by which Telstra would disrupt infrastructure build out by other communications companies and it's already so, predictably, delayed it can have no affect whatsoever until sometime in 2012 in the event any 'tender' actually is awarded - which remains unlikely in any meaningful time frame. Maybe I'm wrong about that - it wouldn't be the first time. My main concerns are Telstra's short term strategies and how the various 'independent' ISPs will react to them. We have stopped losing ADSL1 customers to Telstra over the last two weeks which I suppose means that Telstra have stopped their direct marketing campaigns while they use a different 'marketing campaign' to try and convince ISPs to sign up to wholesale their ADSL2 services - but doubtless when that 'marketing campaign' ends with whatever ISPs they manage to sign up they will re-commence their 'attacks' on other ISP's ADSL1 customers. Our main loss of ADSL1 customers is still to TPG's ADSL2 offerings but, at least in this uncertain market that is only of marginal 'harm' to us as the customers who leave us to go to TPG are the least profitable of our users and it results in a net plus to us in operational cash flow terms. I will be interested in TPG's next progress report to the ASX (which I would have thought would have been due by now) to hear how closely they are to meeting their stated $A8 million profit per month as their shares continue to move inexorably closer to penny dreadful territory. (which just makes absolutely no sense at all given that their stated projected annual profit continues to exceed the value of the company on the ASX). It's obvious, despite the strong net new ADSL1 customer 'inflow' over the first four months of the current planning period, that ADSL1 will continue a net decline over the coming 18 months to some unknown much lower share of the Australian broadband marketplace as Telstra continues to pursue its current policies and whatever the future versions of those policies are. How much affect that will have on Exetel is unclear to me and also to the people who I talk with about it who are also in this strange business but my assumption is that we will continue to lose ADSL1 'market share'. This isn't a problem in itself - we've had good returns from ADSL1 for the almost five years of Exetel's current life and nothing lasts forever and it also has a positive aspect in that it reduces our 'dependence' on Telstra Wholesale which can only be seen as a very positive 'event' in our short commercial history. Over the next few days I will complete the rest of the detail and next week the Exetel directors will have to make some decisions of which, if any, of the recommendations we should put in to place - or should we continue to 'wait and see' based on so few signs of actual impact on the various aspects of our business at the moment. I really don't like making tough decisions and always have grave concerns about how they will affect our business generally and some of our customers. I guess doing nothing is always a preferred option....but I actually don't think it's an option for very much longer. Wednesday, November 5. 2008If I Had $A44 Million To Spare......John Linton ....I wouldn't let a marketing department throw it away on selling (giving away) Apple iphones...... which today's SMH (page 23) reports that Optus did in the last three months and have noted it as a charge to their quarterly results. It just seems unbelievable to me that Optus, or any large company - such idiocies aren't confined to Optus, can throw away such huge (to me) sums of money - more than Exetel's total revenue for a year - on providing tens of thousands of total wankers with a free toy. If the information reported is correct it seems that Optus has spent around $2,500 per HSPA customer it obtained from this promotion - an incredibly stupid amount to pay for to acquire a mobile user under any circumstances. When I think of the haggling, intransigence and moaning (on the part of Optus) when we try and get a tenth of a cent or so off the cost of HSPA minutes and then read that - I get really and seriously annoyed. What's the point of working yourself to near death to try and do the right thing by your supplier(s) and your customers when a bunch of idiots are throwing away that sort of money because they're too stupid and too bone idle to actually work out how to introduce a new service without wrecking their quarterly figures? It's enough to make you just give up. I will be very interested to be told, yet again, by Optus that their margins on HSPA are so thin they can't accommodate any of Exetel's reasonable requests to actually provide the base service at a more reasonable cost than they currently do. I continue to find it really, really strange that we can get better pricing, by 70%, in the UK from people we've never dealt with than we can from a supplier we've dealt with for almost 5 years and from whom we have had to put with so much grief. They can lose $A44 million on giving away iphones, they can retail 5 gigabytes of HSPA data for half what they wholesale it to Exetel for, they can charge double what any other mobile provider charges us for mobile minutes over HSPA but Exetel is so stupid (and unimportant) that they can't find any way of making their HSPA pricing sensible enough for us to provide a service that it should be possible to provide (except by making a loss for 12 months). Reading such lunacy first thing in the morning (lucky it was after a night's sleep rather at the end of a tiring day after a Scotch or two) makes you aware of why communications services are so expensive to wholesale customers from some Australian suppliers - they lose so much money on their retail promotions they try and recoup a bit of it by over charging small wholesale customers who in turn have to pass on those costs to their own end users. A closed circle doomed to failure sooner rather than later. Why on Earth do these carriers even bother with a wholesale operation if they aren't going to operate it as a benefit to themselves by reducing their cost of sales and support and therefore offering a true wholesale price that reflects real savings? I understand in Telstra's case the legislation requires them to at least pretend to have a wholesale operation but no other carrier is similarly constrained. It's only when you get the occasional 'jolt' from reading such things every few months or so that you are, once again, reminded that there really is no point in being a small communications company in Australia who relies on large carriers to provide base services. I can't remember now when it ever was - those scenarios are lost in the mists of time and too much alcohol over the years - but I suppose it must have been at some distant past period of my life. Maybe it wasn't ever a sensible thing to do? It certainly isn't now. As far as I remember an organisation that operates a retail and wholesale business does so because a wholesale customer delivers an identical profit to the business and reduces the costs to the business as well as providing increased sales. Apparently that isn't the case in Australian communications and it is long past time for Exetel to get out of attempting to add value to the services it buys from Telstra and Optus - it is so well past the time that I must be out of my mind to still be attempting to build a future business based on these stupid assumptions. I've never thought of myself as a person given to thinking malevolent thoughts about individuals or groups of human beings or even getting depressed for more than a few minutes at a time when confronted with some of the more bizarre inanities perpetrated by members of my species. I've always shrugged my metaphorical shoulders and moved on - with the occasional rant about the idiocy of some people/organisations - life is too short to do anything else. However there seem to be an awful lot of things happening over the past 12 to 18 months that have made me doubt my fitness to remain dealing with supplier companies and people, and it must be said even some of our own customers, as it more and more often seems to me that I have absolutely no ability to comprehend why they do and say the things they say and do which, more often than not these days, seem to be either outright lies or actions intended to cause criminal damage. Not nice thoughts to be crossing what's left of my mind so early in such a pleasant day - or, come to think of it, at any time of any day. PS: Fortunately for us, I didn't get around to selling our bank shares in time yesterday so my hopelessly incorrect picks in the cup didn't complete the annihilation of what remains of our super fund. At least one bright spot to ameliorate the day. Tuesday, November 4. 2008I Really Want To Believe There Will Be No Problem...John Linton ....in Australia because of the GFC but, each morning, I get to read things like this: http://online.wsj.com/article/SB122573166905093595.html which, in Australia, begin to show the impact as this: http://business.smh.com.au/business/iron-ore-goes-from-boom-to-bust-20081103-5h22.html and this: http://smallbusiness.smh.com.au/starting/finance/fall-in-ads-as-employers-hold-off-910810785.html Not the best way to start a day and, no matter what 'internal optimism' I attempt to generate I can't help but remember the two previous times the then incumbent prime minister mouthed platitudes about "Australia won't be affected" - everyone in Australia was - and more than a few people were affected very severely. With export prices falling sharply and total exports also falling in 2009 together with employment falling and both the EU and the USA already in recessions that are now predicted to be deep and long lasting there is absolutely NO way that Australian business is not going to be negatively affected - no matter what politicians or 'knowledgeable commentators' say - its all about the, verifiable, statistics - stupid. We processed our monthly recurrent billing run yesterday and it showed a record level, by a long way, of defaulted payments - almost 50% greater than two months ago. It's yet another sign that times are getting tougher financially for an increasing number of people. Doubtless the RBA will reduce the cash rate today, at least they will according to all of the 'financial commentators' but who knows what, if anything that will do - certainly not me (but I'm pretty sure that the RBA wouldn't be reducing its rate if it didn't think things were looking worse than they did last month - 0.25% = worse, 0.5 = much worse, 0.75% = very much worse, 1.0% = buy a gun and head for the hills). Much as I would like to continue to believe that nothing is really wrong and there will just be a few 'bumps' over the coming months before everything recovers to 'normal' - I just can't convince myself that will be the case (despite our personal superannuation shareholdings returning to a 'profit' yesterday). As every 'managing a commercial enterprise for beginners' book or kindergarten topic teaches - "when business looks bad prepare for the worst before it happens; if it turns out it doesn't happen all you've lost is a little momentum but you haven't lost your company". Very hard to ignore that advice when every indicator, and as far as I can see that really means EVERY indicator, is 'insisting' that the financial aspects of business are going to get much tougher than they are today and, today, they are tougher than they have been for quite a while for many people and businesses. In such circumstances the most common recommendations for sensible businesses are always the same: 1) Freeze hiring and don't replace people who leave - consider retrenchment of a given number/percentage of current personnel 2) Freeze all travel 3) Cancel all 'events', conventions and outside training 4) Freeze all capital expenditure 5) Increase prices In my, now quite lengthy, working experience those are the actions implemented by every commercial organization with which I have been associated or had any knowledge of. Most of my business acquaintances have already put many of those actions in to place and at least two of them, who run very large companies, did so more than a few months ago. No-one that I know, including me, likes taking tough decisions which is probably why so many decisions are taken later than they should have been. I will put off any tough recommendations today, because of course no-one really does any work on Melbourne Cup day even if you don't live in Victoria, but I doubt there's too many more days I can find to ignore what is obviously happening to Australia's economy and therefore to the ability of an increasing number people to pay for Exetel's services. No matter how much it goes against every aspect of my nature/fibre of my being etc, etc - it seems inevitable to me that Exetel needs to change its current business plan from the accelerating growth we had planned (and have achieved for the first four months of FY2009) to one of little or no growth in customer numbers or even a reduction in the number of customers we currently have. The extremely tough (brave/foolish?) thing to do when faced with tough times is to increase your prices because not only does it sound counter-intuitive it's always assumed that it will not only slow, halt or reverse the acquisition of new customers but it undoubtedly leads to losing some percentage of current customers. Just how much growth is slowed and/or what percentage of customers is lost is never predictable even within fairly wide limits. Not a nice scenario to contemplate, but it is something that's going to have to be done. Anyway, enough of tough and depressing observations - the real decision that needs to be taken is what to back in the trifecta in the cup? Having checked the track reports, and the weather forecast and consulted with my 'expert' friends it looks as though its time to sell off the super fund's bank shares as soon as the market opens and put all the money on a four horse trifecta of: Septimus, Mad Rush, Supreme Beauty and Barbaricus. Those four horses seem to offer a much better prospect of an excellent financial return than buying more ESRs and core routers. Monday, November 3. 2008....and some males think females are illogical.John Linton It seems to me that no matter how much work I put in to the various aspects of Exetel's operations the list of things that require immediate attention never reduces and only doesn't increase because of my habit encrusted in decades of use is to never allow any 'list' to go beyond ten items. I think my current decision making schedule is greater than it has ever been with not only more decisions needing to be made in the very near future but each of the decisions is more 'dangerous' than previous decisions in terms of potential negative impacts on the business and expense to recover from if such action has to be taken. Apart from playing my part in finalising a new class of ADSL plans this week, I have to participate in resolving some issues with the 'shaped' option for ADSL plans, make a decision on advising what we do with the UK HSPA opportunity, decide on a future modem provider, finalize a new aspect of HSPA services, put in place new telephony pricing across our range of telephony services, review and set new target dates for the next phase of our personnel management system, 'sign off' on the new management plan for our business plan for the Australian operations and finalize the business plan for the Sri Lankan operations, determine how the Sri Lankan operation is to be managed in 2009 and, assuming there's enough time - deal with the day to day issues of running a small private company that somehow are always more 'urgent' than commonsense would suggest they should be. Not that I'm complaining - I chose to do this job and I have no problems putting in the hours that are required. Occasionally, obviously like this morning, I am honest enough about my abilities and knowledge to question whether I'm the right person to continue to carry these responsibilities. Right now I think the answer to that question is - "no". However at the moment, and in each time I have contemplated this in the past, I have no idea of how to find someone to replace me and therefore the solutions always seem to be to simplify the Exetel business so the amount, and quality, of decision making and knowledge acquisition is reduced and therefore more time can be spent making better decisions. That rationale and the decision to implement it, at least in the past, usually lasts less than a few days before we decide to actually expand what we do in some initially minor way but then continue to add new and different aspects to the services we offer or the ways in which we operate that actually makes the business more rather than less complicated. Somehow I can't even make a half-hearted promise to myself this morning to attempt to simplify the business. So I haven't done that. Some of my more sensible acquaintances point out to me that it is my own failing in not employing people who are capable of replacing me which is an essential requirement of any sensibly run company. I do understand such 'motherhood' statements but I just don't know how to go about finding one person, let alone more than one, who would actually want the responsibilities for the money we could afford to pay - always assuming they had the peculiar set of abilities required in the position. Perhaps the whole concept of providing services to some of the Australian marketplaces at the lowest cost of any supplier just can't be made to work for a small company that has to gradually develop its buying power and developing really good automated processes and systems to reduce operating costs, in the end, will never be enough to offset the huge advantages much larger companies have in buying the basic building blocks of Australian communications services. I haven't considered this before but perhaps it is getting to the time where it has to be considered. I'm very tempted to spend some time in the UK seeing if, via a 'partnership' that eliminates the need for us to invest much money, we can make the ideas we have in mind for HSPA work in that much bigger market and I'm encouraged that at least one UK company is willing to offer that opportunity to us. However I'm very conscious of the time and distance issues that would pose to us at this stage of deploying our very stretched resources. I'm also very conscious of the considerable burden that's involved in keeping an operation running after the adrenaline powered start up phases drain that vital 'kicker' and the day to day grind for the infinite future is the only 'horizon' you can see. So I will have a bet both ways and suggest a start up plan for mid January 2009 and see how that plays out as it is a key 'back up' option if our current plans with Optus don't work out as we both hope they will in terms of numbers of connections (on our part) and the abilities to sustain the delivery of faster services in more areas (on their part). So I suppose its the usual contradictory situation/action plan - bitch about a lack of time and too many demands and then decide to add even more demands in even more complicated ways to the daily work load - Never mind - today is billing day for our recurrent services and it is a new record with a very sizable 'jump' from October so, at least briefly, all is well with the world. Sunday, November 2. 2008Exetel Isn't A "Commercial Organisation" Whose Only Objectives.....John Linton .......are making profits for its shareholders....as is so often stated by people who know nothing about Exetel or its owners. I was asked to attend a meeting last Friday afternoon with a representative of a largish company that provides “employee benefits” to a range of Australian corporates who contract this company to ‘package’ a range of essential services the average person might need and provide the services at lower prices than are available by the end user going direct to the various suppliers. For some reason either he or his manager had made Exetel one of the three ISPs they would consider as a replacement to their current recommended ISP. He was a nice and businesslike person who, strangely I thought in the circumstances, visited us rather than asking us to visit his offices to 'present our case' (perhaps he wanted to 'check out' our premises). He asked a few standard questions about our company and then invited us to give him some reasons why Exetel would be a better choice than "the large and well known ISPs" and what type of discounts and special benefits we could offer his large corporate customers. We asked him what he expected in terms of pricing advantages and he said that the current deal he had in place was, and take a deep breath: The first three months free 20% off advertised retail monthly charges Free activation Free modem Soooooo....this ISP has so much profit in its pricing that it can happily reduce its monthly charges by 32.5% (20% + 12.5 % for the 3 months free on a 24 month contract) and it can also afford to give away whatever their cost is for the activation and modem. We quickly explained that we couldn't begin to offer such incentives because our company wasn't "a standard commercial organisation" (he used the phrase - or something very like it with the same meaning) We explained that our average GROSS profit on our broadband plans was around 15%, less than half the discount being offered by his current provider, and that our objectives of being in business was to provide our customers with the lowest possible broadband prices (for any speed or download plan) but deliver a service quality equal to or better than the highest available from any other provider. We suggested he calcuate the cost over 24 months for his current plans and then compare them to the costings we gave him of or current 'corporate personnel plans'. We then 'stepped him through' our MRTG reports and explained how much bandwidth was provided to each PoP and how he could see there was no contention on our parts of the network. We also showed him the support call answer statistics over the past six months and fault repair times and some of our other metrics on service performance, fault resolution and the user help functions which (his words) were "very impressive" - which they are - very, very impressive. When he asked about our 'size' we made the point that in ADSL terms we were certainly in the top 15 (by size of customer base) and quite likely closer to the top ten. He asked about how we generated our business and he was very surprised when we told him that it was all word of mouth and we did no advertising or other promotion but, using our audited accounts BDO/BRW confirmed (we showed him the 30th October BRW Issue) that our growth averaged 50% over the past three years in an industry where organic growth (according to the most recent ABS figures) averaged less than 12% over the past year. His last question was why we didn't make more money as a commercial enterprise. Our explanation that our objectives were set out on our web site and could be summarised as: 1) Helping all Human Australians by providing communications services at the lowest possible costs 2) Helping Australia's threatened flora and fauna survive by donating one half of the small profits we make and contributing to enough tree planting to cover our carbon emissions 3) Helping people in the 'third world' by spending our time and using our abilities to generate real additional employment at real remuneration Our visitor didn't know how to respond. I explained that if Exetel were a "typical commercial organisation" our prices would be 30% higher and we would spend 5% of our gross revenue on advertising not on donating to Australian fauna and flora protection and to offsetting carbon emissions and we would be in a position to give him the sort of ridiculous discounts his current provider was giving from their ripoff list pricing. I don't expect to be selected as the recommended ISP for this organisation as our company is just too different to what people expect to see. We are very different people to those who own or operate other Australian communications companies - and are very happy to be that different. Saturday, November 1. 2008Dealing With Change/Facing Reality (?)John Linton While I was away from Australia in late October I gave a lot of thought to Exetel's immediate and short term future activities and what could be done to ensure that all of the incredibly hard work and spine tingling dangers we had faced and overcome over the past, almost, five years would not be wasted but would in fact become the platform for realizing at least some of the aims we had when we started the company in January 2004. How sad that even someone who been burned so many times still continues to allow hope to triumph over experience. I think I expressed one of the conclusions I came to as not doing business with suppliers who regarded us as either "a parasite" or a source of sales leads for their retail operations. That isn't the easiest thing to accomplish given the current state of the Australian communications industry but, irrespective of how hard something might be, if you analyse a situation correctly and reach inescapable conclusions then you have to be really stupid not to understand that you have to do something about the conclusions you have reached. I don't think I'm really stupid (though I may be wrong in that belief) so it becomes inevitable that Exetel has to take different directions to the ones we have followed for the past almost five years if we are to actually get anywhere in the coming years. The first minor step has been taken in that we have stopped selling new 256/64 ADSL1 connections and have replaced that offering with a recommendation for a prospective customer to use an HSPA service (at sub 2 gb of downloads its cheaper, faster and doesn't require a telephone line so it was a pretty easy decision). Yesterday we started removing the 8192/384 ADSL1 offerings for new users by reducing the number of plans from five to three. Our rationale for doing this is that we buy 8192/384 ADSL1 ports from Telstra Wholesale at a price that is more than two and a half times what we pay for an ADSL2 port from Optus and we find that our 8192/384 customers are prime targets for BigPond (and others) to approach with either a 8192/384 or ADSL2 service at half the price we buy the wholesale service for. I, personally, have no problem with any company using whatever methods it deems appropriate and 'legal' to attempt to sell its services - that is simple commercial reality. In this particular case it's obvious that Exetel can't offer a better or lower cost service than Telstra so its against the primary objective of the company for us to do so - (Exetels whole raison d'etre is to offer services that are lower cost than any other realistic provider at an equivalent or better quality than the best provider in the Australian market). We will remove the remainder of the 8193/384 plans at some later stage but will continue to provide all of the current 8192/384 plans to our current customers for as long as they wish to use them. As HSPA continues to develop, and can reliably sustain higher speeds, we will put in place plans that will offer lower download users on our 512 and then 1500 ADSL1 plans to be given a 'compelling' choice to move away from a wire line broadband service to an HSPA or LTE service when/if that becomes available. We would expect, especially if we do face tougher financial times in Australia in 2009, that the 'promotions' run by large communications companies will intensify and offer even lower pricing to customers than was the case in 2007 and again in 2008. Our challenge is to develop a better alternative to 'cut price' ADSL services to ensure we can offer our current ADSL1 customers a more than attractive alternative to the targeted discounting programs of large competitors. We will also 'fight a comprehensive rear guard action' by completely changing the basis on which we offer wire line based broadband services to directly address the vulnerabilities we see in the larger competitors user bases. From sometime next week we will introduce ADSL1 and ADSL2 plans based on a hybrid PAYU service of a monthly access charge and a low cost, pre paid, download charge. These plans will be along the lines of a monthly access charge of: 512/128 - $35.00 per month (phone line rental with customer's choice) 1500/256 - $42.50 per month (phone line rental with customer's choice) 18000/900 - $25.00 per month (plus $25.00 for phone line rental with Exetel/Optus) with the ability for the customer to pre-pay for 5 gb or 10 gb of downloads and top up when they run low). We haven't finalised the price of the download blocks but are thinking in terms of $1.00 for 12 noon to 12 midnight and $0.25 for 12 midnight to 12 noon - our indecision is based on the $A likely exchange rate over the next year and these initially planned charges may well have to be higher. We will leave our current ADSL1 and ADSL2 plans in place for the time being while we try to get this concept exactly right. Our objective is, in the future, only to buy 'base building block' communications services where there is a choice of supplier so that we don't make the same mistakes in the coming years we made in the first five. Not an easy thing to do - but essential - and therefore we have to do it even it means having to 'throw away' five years of extreme effort and start again. |
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