Tuesday, December 16. 2008"Local" Call Centres Are Better Than Overseas Call Centres?John Linton A colleague sent me this last night: http://abcnews.go.com/GMA/story?id=6458598 which I found interesting. It is of course not much an article and is trivially referenced and badly written so as a set of facts it's fairly useless but it's two alleged main points are interesting: 1) Dell thinks it's possible to charge $US12.95 PER MONTH for a customer to call a US located call centre rather than their call centres in India. Apart from the excessive cost Dell puts on a 'local' call answering service I would probably agree that Dell's call centres in India are a disaster based on our family's two experiences of calling them for service on a Dell laptop. However that had nothing to do with the quality of the people or their command of English. It related to the fact that the actual procedures for handling the call were so inadequate it took the best part of a day being on hold while being transferred between people who simply couldn't answer a non-technical question (the question was when would a promised replacement lap top arrive as the on line advised shipping arrival date had passed) and the quality of the telephone VoIP service made it impossible to actually hear what was being said (again nothing to do with the accent or command of English). 2) "We really believe that our customer satisfaction saves us more money in the long term than off shoring," said Jitterbug CEO David Inns. It's not clear that this small company: ever had overseas call centres to be able to make a statement like that but, reading their web site, you see that their target market is the archly conservative 'US senior citizen' demographic which is notoriously xenophobic. So the article itself is not of any real use but the views it highlights are relevant to us as we have decided that all of our back end processes (including technical support) will be provided from Sri Lanka - not as an outsourced call centre but as a company owned and managed by the same people who own and manage Exetel in Australia. We did look, briefly, at 'out sourcing' but based on our personal Dell experience and many other aspects of that scenario never seriously considered it. Personally, I think that it's very difficult to outsource key aspects of any growing commercial company but that is, probably like the CEO of Jitterbug's view, one that I actually have no direct experience of. I do know several companies, including large Australian carriers, that have tried and failed in doing that. So, for us, the question became did it make any difference whether your employees were in our North Sydney office, their own homes in Perth, Canberra, the Central Coast of NSW or a different suburb of Sydney? The answer has always been - no - there is no difference in using a 'remote' location - the only difference is whether you hire the right person and have the 'management' processes required for both the company and the 'remote employee' to operate as effectively as if they were in the same location. We currently have personnel in all of those different locations and using VoIP and VPN they have the same facilities as every other person who works for Exetel. Our experiences of hiring graduate engineers in Colombo over what is now almost three years is that Exetel is able to deliver a better service than if we hired only people based on their ability to work from our North Sydney office. We do things very differently from using an "out sourced call centre" and maybe that is why we haven't, to date at least, experienced the problems and issues you see from time to time reported in the Australian media. We currently have ten engineers working in Colombo who handle 100% of all support calls for our ten different services and we will be sending our provisioning manager to Colombo in early January to transfer our provisioning processes. Once that happens we will have one third of our total personnel located in Colombo and plan for that percentage to further increase over 2009 to slightly over 50% as we transfer further aspects of Exetel's back office processes from North Sydney to Colombo. Unlike the situation reported about Dell we have no doubt whatsoever that the Colombo based personnel will deliver an equal level of service to any personnel we have ever hired in Australia at the equivalent length of time with Exetel and we expect that will continue. As for their command of English and 'accents' - personally speaking - I think they are both better than mine. One thing is for certain - we wouldn't be able to deliver as good a level of customer service to our continually growing customer base if we hadn't begun the process three years ago of developing the systems and management skills to operate some aspects of our business outside Australia. In providing the lowest cost services to end users there is no getting round the issue that there are a lot better qualified people in other countries who are more than happy to work for double or treble their 'local' salaries (which are still one third of the salaries expected in Australia) which allow far more services to be provided to Australian users than if Australian salaries had to be paid. Continue reading ""Local" Call Centres Are Better Than Overseas Call Centres?"Monday, December 15. 2008Telstra Has Already Moved To NBN Plan B...John Linton ...as their 'bluff' failed and they are excluded from the NBN RFP. (or perhaps they succeeded brilliantly in the latest move in the 'chess game'). Telstra had already appeared to have accepted that their bluff was failing and had moved to the Plan B as I posited here last Tuesday: NBN "Already Not Necessary For Rural Australia" According To Telstra... I doubt that I was the only one who had 'heard the whispers' out of Canberra that the two favoured bids were from Axia and Optus (though at a meeting with Optus I had last Wednesday they didn't seem to know) and that Telstra's bluff and bluster had gone too far for Krudd to 'stomach' in challenging his view that, irrespective of his total lack of knowledge on any subject, ONLY he knows what is the right thing to do. So - Telstra had already started to 'prove' that HSPA will deliver better than NBN to rural Australia before today's announcement and that their 900 plus ADSL2 exchanges are sufficient for the rest and, "hey - see you in court if you want any access to our pits and channels" will ensure that any time frame for any selected company building a fibre network will take a very, very long time. So a combination of HSPA in the country and roping in as many 'independent ISPS' as possible onto its ADSL2 network plus using the courts to delay any build as much as possible is the go - "An NBN is unnecessary" phase will now be entered plus a challenge to Telstra's exclusion in whatever court Telstra selects. So as I, and many other people said, some twelve months ago the NBN will continue to go nowhere fast while Telstra uses its dominance to make as much money as it can as quickly as it can - in its shareholder's interests of course. Nothing's changed so "nothing to see here - move along". It's also obvious that Telstra's lawyers probably played a major part in developing the strategy of submitting a 'bid' that was effectively an 'invitation to reject' and has based a subsequent strategy on the rejection of the bid. It should be equally obvious that the Federal AG and the Federal SG advised on the wording of the rejection in that knowledge. It will be interesting to see how far Telstra's shares fall today? The good thing, at least from Exetel's point of view is that Telstra will now increase its efforts to demonstrate that HSPA is the ONLY viable way of providing broadband to rural Australia and to many parts of 'country' Australia and will accelerate (if that isn't already the case) their ability to deliver 21 mbps+ services over HSPA which will push Optus and Vodafone to do the same. The more 'solid' HSPA becomes in delivering broadband to rural Australia the less 'need' there will be for running fibre to those areas - mind you - I made that point over a year ago and I wasn't the only one. If Exetel can't get the right 'deal' from Optus on HSPA over the coming months then we will have to consider just how we can base a future residential business on HSPA. If that proves not to be possible in Australia with our obviously currently small volumes then we will have to consider how we could use a UK HSPA operation to overcome that disadvantage. In the mean time we will try and get our 'rural' HSPA solution to 'market' in late January and will continue to push for better pricing that will allow for a greater, and faster, market place coverage.It seems to me, and it has for almost ten years, that there will almost never be a time that fibre to remote areas of Australia will ever be economical and that wireless was the only way to go (because the physics of satellite could never be overcome) - maybe this decade it will happen? So, on balance, Telstra's possible mis-reading of their position vis-a-vis the past and current government's 'flexibility' towards their black mail and just plain arrogant disregard for the real issues involved in providing 21st century communications in Australia in the realistic future simply, once again, underlines the MAJOR PROBLEM THAT JUST ISN'T GOING TO GO AWAY - which is of course - using hindsight - the decision to privatise Telstra in the current way it's been done will ensure that all Australians will never get the communications network that is needed. The way it stands at the moment is that a commercial company, in the interests of several hundred thousand shareholders (probably more correctly a handful of short term visiting opportunity seekers and their Australian sycophants) constantly wages war on 20 million other Australians pushing the cost of sub-standard communications to the highest possible levels. It is simply is, and always has been, an untenable situation. Scipio the elder put it succinctly some 2,200 years go when pointing out (about a similarly ongoing intransigent problem) that, no matter how anyone tried to twist and turn, there was only one solution. Telstra Delenda Est Sunday, December 14. 2008Maybe The Answer Is To Vote For No-One.....John Linton ....as the Page 9 'informal poll' of Sydney' Sun Herald reported today: When asked who they would vote for in the next NSW State election the results were: 15% for the current premier 31% for the current leader of the opposition 54% who would vote for neither For those of you who don't live in NSW this pretty much sums up why NSW has had four successive Labor State Governments who have not only charged far more than any other State for the taxes they are allowed to impose, bankrupted the State in the process and delivered Australia's worst Health, Transport, Police and Education services. The track record of those governments is so obviously truly awful that in any other democracy that had electors with IQs larger than their shoe sizes they wouldn't have lasted past the first term before they were elected out or, if they also rigged the State Elections like they rig everything else around NSW, then the few thinking people left would have burned down parliament house and tarred and feathered its inhabitants long ago. The vote for Barry O'Farrell sums up how NSW voters have regarded the successive alternatives to the Labor riff raff who have "served the people of NSW" for the last 12 years - "served" may actually be the appropriate word using the common colloquial usage. This piece of nonsense in today's paper reminded me that Krudd's approval rating is now reported as being higher than at any time since he was electd - it was reported last week but I don't have the source to hand. I thought that was an interesting comment on the Australian electorate (assuming the Australian polls are meaningful). As far as I can recollect Krudd has done absolutely nothing in 12 months since Labor replaced the coalition apart from absent himself from the country while it slid from the peak of prosperity in to a progressively more concerning economic situation. Of course Krudd has: 1) Said "sorry" to some people on behalf of some other people (I actually never could work out who was apologising to who for what and why). 2) Signed the "Kyoto Protocols" and then one day later stated that he wouldn't be going any further than the status quo (which was what the previous administration had actually already accomplished without grandstanding about it and p**ing off the US). 3) Spent a fortune running an "ideas summit" which produced nothing/nada/zippo except wasting a lot of money and making a lot of very foolish people look even more foolish - chief foolish looking person = Krudd. 4) Promised to censor the internet and now backing down from yet another foolish election sound bite. 5) Promised to 'revolutionise' data communications in Australia and made a travesty of the promise by releasing a tender document that was sheer nonsense. 6) But why go on?.....the list of foolishnesses is almost endless but absolutely pales in to irrelevance compared to Australia's financial situation for which Krudd blythely dismesses with a rotation of one liners that include: "Not my fault" - "It's the GFC" - "It's all Howards fault" - "Nothing can be done" I've heard him say all of those things. OK - maybe they're all true? Maybe there's nothing Labor/Krudd could have done/can do? Then - three things come to mind: 1) How do you get to be more 'popular' when everything you control, preside over and are responsible for is much worse than when you took over? 2) If you keep insisting that there's nothing you can do why not resign and let someone who believes there is something they can do make some different decisions? 3) What's he going to do when he runs out the surpluses built up by the previous 11 years of coalition saving? Bear in mind Krudd won the "unloseable" election and the 'pundits' of the time were all saying it was a "three term win". Heaven help Australia if the Kruddster (total d***head of a magnitude not even approached by Whitlam) gets ten years to do to Australia what Labor has done to NSW over the past ten years while the NSW electorate agreed that the result was a shambles but "what's the alternative?" Where's the drover's dog when you really need her? PS: Don't you just sometimes wish when you see the results of the last three NSW elections that people like Mill (the younger) and Jeremy Bentham were strangled at birth? Saturday, December 13. 2008Compliments Of The Promotion SeasonJohn Linton Maybe, like LSL, I'm looking in all the wrong places but I don't seem to be seeing the usual rash of "Christmas" promotions from the mobile and ISP companies so far and it's well past the usual start dates for such events. I can't make up my mind between the two extremes of: 1) Business is so good there are no needs for promotions 2) Business is so bad there is no money for promotions With the last 'working week' of 2008 almost upon us I still see no affects from the GFC on our small business. The last week was business as usual in terms of orders for the ten different Exetel services remaining on target with a pleasing well above target intake of business orders for our SHDSL and Ethernet services maintaining the pace of a record November for business services. So the first half of this financial year will finish around 8% ahead of the quite aggressive target increases we set in May and I'm now in the process of re-revising upwards the targets for the next six months having previously spent the last 3 months agonising over how far to reduce them - and I realise that statement makes me appear to be someone who shouldn't be involved in any sort of planning process. Perhaps it is now well past the time that I should consider that I have some sort of realistic idea about what's going on in the marketplaces that Exetel currently addresses? Over the past 4 'Decembers' that Exetel has been in business order intakes slighty increase for the first two weeks before falling quite sharply day by day from mid December to the first few days of January before then steeply increasing. This is relatively easy to understand (people start going away for their Christmas holidays/businesses cease making decisions/etc and then start returning after New Year's Day and catching up on all the things they put on hold for the previous three weeks). I'm not sure what effects Krudd's $A10 billion hither and yon scattering of early Christmas presents will have on mundane things like buying/upgrading Internet services but I'm assuming it will have some, however small. Some of our suppliers, for whatever reasons, are being quite generous at the moment in terms of 'promotional assistance' which will allow us to offer both Powertel/AAPT and Optus ADSL2 services at zero activation costs for a limited time between now and mid January and it will be interesting to see if that 'flattens' the three week dip in incoming ADSL2 orders that would normally be predicted. We will start that tomorrow and watch the results closely. We will also start the long process of moving our ADSL1 customers away from the Telstra network and onto the ADSL2 networks of AAPT/Powertel and put more effort in to convincing the remaining ADSL1 customers who are not covered by the AAPT/Powertel exchanges to move to Optus ADSL2 services and realize that renting a telephone line from Telstra/whoever isn't really such a good idea in 2009 - in the event it ever was. With some good planning and more than our share of good fortune we should be able to provide some ten thousand of our ADSL1 customers with a Christmas/New Year present of ADSL2 speeds at their current ADSL1 prices without them suffering any downtime at all - at least that's the plan. It will be interesting to see if the 256/64 users notice much difference? The only issue will be those customers who have very old modems that can't sync at ADSL2 speeds or some sort of Cisco based set up that is 'hard wired' to non ADSL2 speed parameters. It will also be an 'acid' test as to whether AAPT have actually resolved all of the problems that forced us to stop offering their ADSL2 network as a solution for our customers. Powertel were the second supplier to Exetel and we have enjoyed a very good relationship with them up to the time of the AAPT takeover. Since the takeover our relationship deteriorated alarmingly with provisionng and fault resolution processes becoming unusable. Now that one of our long term managers has returned to AAPT (and replaced what, in a tough contest, was the worst "account manager" ever to be given that title in the history of commercial relationships) the problems have been gradually resolved over the past few months and we are relatively convinced that our issues have now been resolved. Let's hope that's the case.- we will carefully monitor the situation. We will also burn up some 'promotional dollars' with "an offer you can't refuse" to our Unwired customers who use less than 2 gb of data a month to move to the Exetel/Optus HSPA service. With the roll out of the 7.2 mbps upgrades an HSPA service could be delivering 4 - 12 times the Unwired speeds at 25% less monthly cost. Again something that surprisingly, at least to me, needs considerable 'selling' based on past efforts. We will reach the end of our Unwired, 5 year, contract, in August 2009 and will need to find a suitable solution before then. So not the wildest of promotional programs even by Exetel's hyper modest standards but more than we have ever done in the past - even though, courtesy of our suppliers, we aren't using our money. Friday, December 12. 2008Counter - Intuitive....John Linton ......or just plain stupid? I had a call earlier this morning from my UK (actually USA but now based in the UK) previous work colleague from antedeluvian times with whom I have been exploring the possibilities of selling HSPA services in the UK and, perhaps, other EU markets. Since I first raised the possibility of starting some sort of joint venture in the UK I have personally, and Exetel has as a company, learned a lot more about what we might and might not be able to do in terms of HSPA - at least in Australia and therefore have some more factual understanding of what may be possible for us to do somewhere else. The picture painted of the current conditions in the UK during this morning's conversation were not very 'pretty' and, as I said to my friend, not the sort of conditions that I, or anyone else I know, would see as the ideal time to risk money and time in a start up venture. His view was diametrically opposite. He made the point that every type of business in the UK was struggling at the moment and the unemployment rates were rising very quickly putting enormous pressures on domestic spending and resulting in more people than ever looking for ways to reduce their expenditures - even their 'essential' expenditures (particularly in job hunting circumstances) like internet and mobile telephony. My view that HSPA hardly qualified as "low cost internet" was met with a deluge of data relating to the current actual cost of internet in the UK where almost every "cheap" internet offer is so tied up with other telephony services that the "cheap" price of each service turns out to be not so cheap after all - a concept that I grasp quite well - and his point was that there was a rapidly growing percentage of total users who were finding their 'bundled services' option something they couldn't afford when they were living on their redundancy pay or in fear of having to in the not too distant future. There was a lot more information/speculation in the same vein and a lot of enthusiasm for the "Five Pound Internet/VoIP" bundle I had initially discussed with him in July. With both his company's sales and those of other HSPA providers 'falling off a cliff' over the past three months he is faced with, as are his carrier suppliers, a lot of contracted capacity that isn't being used and a warehouse full of HSPA hardware (with more on the way) that there are 'no homes for'. I doubt that I was particularly high up on his list of people to call very late on a UK winter's evening where he was still at the office so the possible magnitude of his difficulties was probably greater than I had appreciated. We ended up discussing various possibilities for some 30 - 40 minutes - which is an extraordinarily long conversation for me (and from what I remember for my friend too) and we left it that I would think about what he had said and call him on the weekend. I will continue to think about it if for no other reason than it makes basic sense and there are obviously going to be few more advantageous times to buy both HSPA minutes and hardware than right now in the UK. The original concept of getting Layer 2 access to an established HSPA network throughout much of the EU is also a 'once in a lifetime' opportunity which, together with the extraordinarily low base 'building block' prices and very generous finance terms make a very tempting scenario. Having said that the financial commitment and the risk remain very large and there is absolutely no 'guarantee' that the concepts that appear so logical now can actually be made to work. However it is very tempting to consider how much the Australian operation of HSPA would be helped if we could cut the cost of the base 'hardware' by 75% in 2009 and how much better leverage we would have in Australia if we could combine some much larger UK/EU HSPA minute quantities with Australia's much smaller quantities. I'm not either stupid or egotistical enough to think that I can make something work in a completely unknown market in a foreign country that people who are already intimately familiar with both the markets and the methods of approaching the markets haven't done/can't do - which is my only reason for hesitation. Why don't they use the internet to market their services and why don't they more 'creatively' price and deliver VoIP over HSPA? Also why are they so apparently 'wedded' to their two main price points? The original concept was five - ten pounds a month including something like 50 unlimited VoIP calls, very low mobile call rates and 1 gb of data with prepayment and top ups on line. HSPA sim and USB 'stick for 50 pounds up front (we expected most subscribers to already have HSPA capabilities). There were many permutations of this basic bundle but money could be made and there was no credit risk (everything pre-paid). If the offer could attract the desired numbers of subscribers with no conventional advertising and everything done on line via a web site (with all other support done in Sri Lanka) it could generate very respectable profits without any of the risks (and therefore 'cheating') that was/is an endemic part of most/all of the EU services offering large HSPA downloads at the 29.99 and 19.99 pound price points. I can think of many reasons why we would be 'crazy' to devote scarce money and even scarcer time to some high risk venture 20,000 kilometers away from 'home' - all of them compelling and inescapably correct. But then.......... ....there are very few "once in a lifetime" opportunities of the magnitude that this appears to be and there is, at least with me, the irrational desire to try something impossible just because.....well....just because it appears impossible. I can probably 'rationalize' away all of the sensible reasons I can develop for not taking this risky opportunity - like most people I'm easily persuadable by myself when I want to be persuaded. However, I do realise these days that its long past the time to act responsibly and conservatively and that I no longer "wear a younger man's clothes" (thank you piano man). One last throw of the dice?....very tempting. Thursday, December 11. 2008Is Having No Morals, Ethics Or Basic Commmercial Knowledge....John Linton ....a pre-requisite for running a West Australian ISP? Based on this 'release': http://www.itnews.com.au/News/90844,waia-blames-movie-industry-for-illegal-downloads.aspx that seems to be an inescapable conclusion. Either that or a couple of 13 year olds have expressed their larcenous views on their 'rights' to steal other people's property because it suits them to do so and managed to con some media outlet that it's actually the well considered views of mature and responsible adults. As the views expressed in the referenced article are almost certainly those of the people it claims to be what an incredible insight it gives into the lack of all decent characteristics present in the people who run the internet 'industry' in West Australia. I couldn't believe that any mature person could make this totally unbelievable statement: “The movie industry significantly contributes to the cause of unauthorised downloads,” How can anyone with a grain of moral upbringing make such a ridiculous assertion that it is the property owner who is to blame for their property being stolen??????????????????????? How dare those people who invest over $US200 million in the latest Bond movie complain that their property is stolen before they have even received one cent in return and try and restrict the morality bereft 13 year olds of the world simply helping themselves to a free copy of Quantum of Solace? The people who run WA ISPs have apparently said its perfectly understandable and they believe there is nothing wrong in such theft taking place because it's all the fault of the people who own the property which is why they refuse to assist the owners in their attempts to stop the theft. Or this tired, stupid and just plain dumb old chestnut of the people who have under gone surgery to remove their vestigial ethics genes: “The essence of what the movie industry argues is that the ISP should be judge, jury and executioner." Apparently apart from having their ethics genes surgically removed the WA ISP managers also failed to go to school while they were in their infancy and adolescence and subsequently failed to acquaint themselves with the laws of the society in which they live. This statement - which owes it's origin (in the context of copyright theft - it was obviously stolen from previous usage in other more correct contexts) to the wankers in the AIIA - is just stupid. Even mangled in comprehension as the WA ISPs want to use it, it is a nonsense. Apart from no-one losing their life (no executioner) there is no 'judgment' (and therefore no place for a 'Judge') and clearly no consideration of any evidence is being asked to be carried out (therefore no 'Jury' could be described as being part of the process). Using a phrase such as "judge, jury and executioner" (in an attempt to wildly exaggerate what you are being asked to do) would be laughable in a debate between 10 year olds (both for its pretentiousness and its lack of applicability) - but being used by apparent adults it's just plain stupid. What are these pretentious idiots attempting to relate that phrase to?1) A communication from the authorised agent of the owner of the property being stolen - no abiility to doubt that is completely factual - the communication can't be 'judged' to be coming from some entity that doesn't have the right to make the claim it does 2) The content of the claim is particularised in detail with more information than any reasonable person could prima face doubt is highly likely to be correct - no need to empower a panel of jurors to substantiate the high probability of the accuracy of the information (no reasonable person over the legal age with basic literacy skills could begin to doubt the authenticity of the information provided). 3) The action required of the WA ISPs concerned in issuing the referenced risible nonsense is not to end the life of their contract holder but pass on the accusation and seek a denial/admission that the allegation is true/false. THAT'S IT Does anyone see any request to do anything else - let alone things involving Judges, juries and life ending personnel? NO - because there isn't/aren't any. Does complying with the reasonable requests of a reasonable commercial entity involve the WA ISP's publishing their nonsense involve them in any cost or even the slightest efforts? NO - other than writing a few lines of code, once, there isn't any. So what can ANY ISP (WA or otherwise) object to or take issue with? ABOLUTELY NOTHING "Given just an unproven allegation of unauthorised copying the ISP should disconnect a consumers Internet and phone." From what I've seen of copyright breach notices there is ABSOLUTELY NO mention of a request to cut off a TELEPHONE SERVICE. In fact there is no request to cut off anything - the only request is to advise the end user that they have breached copyright and to cease doing that. Where do these wankers et alia manage to interpret words that don't exist in to a 'request' to cut off a telephone line? Simple answer - there is none and this part of the ethicless 'defence' is a spurious lie. This statement sums up the dishonesty of the persons who have allowed their names to be associated with the referred to statements: "The movie industry is arguing that ISPs should take a bigger role in stopping piracy. It says that when movie studios provide ISPs with the IP addresses of people pirating movies, the ISPs should immediately shut them down." This is just an OUTRIGHT LIE What the "Movie Industry" has requested is for the ISP to pass on the notice of copyright infringement to the HOLDER OF THE CONTRACT FOR THE SUPPLY OF INTERNET SERVICES. What the issuer of the copyright notice would ALSO LIKE TO HAPPEN but for which there is some doubt in current Australian law (which the current legal action by AFACT against iinet is designed to resolve) is that if an end user doesn't deny the copyright allegation if three copyright allegations have been issued and not denied is that the ISP should suspend/cancel the internet service on the basis there is prima face evidence of copyright breach and no denial from the end user accused of breaching copyright. Someone with ethics would probably view this situation as completely reasonable. They would, of course, need to protect themselves from any subsequent legal ramifications by getting an indemnity from the entity alleging copyright breach in the case that the end user was 'innocent' and took legal action against the ISP. I doubt that obvious request would not be agreed to. This, I am guessing, is the crux of the problem. The WA ISPs, and the ISPs that belong to the AIIA, know very well what their options are and choose to ignore them for reasons known only to themselves. Every statement made by the issuer of the WAIA media release (as reported) is either a straight out lie or a ridiculously stupid misrepresentation of current facts. You would have to wonder what sort of person(s) thought it was sensible to issue it? Presumably the lawyers engaged by iinet to represent them in the AFACT law suit weren't consulted before the referenced statement was issued. Wednesday, December 10. 2008Some Financial Black Clouds Have Silver Linings......John Linton ....one or two 'clouds' may even have golden linings. We keep working on the finer details of our next 24 months and beyond financial and business plan. This has involved more than usual contact with our major current and prospective suppliers and a great deal of work on trying to come to grips with new technologies and new, to us, hardware and software. We have also been reviewing our implementations of the new technologies we have introduced over the past two years, at a great deal of financial and operational pain. One good thing that has come out of our 'pioneering' P2P controlling and caching solutions has been the slow but now marked changes in the user profiles of our ADSL1 and ADSL2 customers and the significant cost benefits that have been achieved over the past two years in terms of the costs we incur per customer in providing the access to to the sources they require.While I always regret losing any long term customer (I look at the number of 'first thousand' customers who are still with us almost daily - and am still very grateful that so many of those 'early adopters' are still Exetel customers and am always sad when one of them shows up on the churn away list) Exetel's customer profiles have changed markedly over the last 18 months. Average usage per customer that was inexorably rising over the first four and a half years of our existence 'peaked' in May of this year and over the past 6 months has gradually, and very slowly, been declining month on month.This is not only reflected in our usage:customer ratios but in the churn away reports which show an ongoing flow of our heaviest 'down loaders' leaving Exetel to, overwhelmingly, go to TPG. While TPG remains the second most common 'churn to' Exetel source (BigPond remains the largest) the plans selected by TPG churners to Exetel are seldom our highest download plans but are overwhelmingly the low and low/medium usage plans. In general terms this is a very positive 'sea change'. The other major change we can see since implementing P2P controls and P2P caching is the ongoing flattening of the usage across the 12 hour "off peak" period that is generating an efficiency increase of almost 20% since we commenced those implementations as well as now generating over 700 mbps from the cache at peak usage times - bearing in mind we are still operating quite heavy restrictions on P2P traffic but now the cache is more than compensating for those restrictions by delivering more than we are restricting at and delivering it at higher speeds an increasing amount of the time. When the Pipe and Akamai contributions are added to the PeerApp it now quite common for the three caching services to deliver well over 1 gbps of customer traffic in peak usage periods. So we are encouraged, despite the great pain we endured, that our 'pioneering' of those two technologies has in fact been more than worthwhile in both financial and operational terms and we will continue down those 'paths' over the coming 12 months. We will plan to add the third of those 'enhancements' in the immediate future to complete the processes we thought would be very useful more than two years ago. 2008 has just 'zipped by' and we have begun to look at our IP costs and needs moving forward. Although our contracts for IP don't expire until the middle of 2009 we always begin the 'discussions' early to allow our suppliers to overcome their internal 'just too late' inertia of not understanding that Exetel always has and will continue to ask for quotes and then make a decision based on the quotes received with no 'negotiation'. People often question/criticize my method of buying but, over more than three decades I've applied it in my personal life to buying and selling houses and cars and other major domestic acquisitions and in commercial life to buying everything. It works for me in that if I get a price I'm happy with I don't agonise over the fact that I could have got a better one and it does save a lot of time. A couple of potential suppliers of IP have tried on the "well, with the decline of the dollar..." and "well, as you know Pipe won't be able to...." to which my response is always "SX recently achieved a fourfold decrease in its bandwidth costs and I expect to see those savings reflected in your next pricing quote to Exetel or don't bother wasting your time". I expect that we'll get lower pricing for IP when the current contracts are renewed or that we will change providers to one that will provide lower prices than we currently pay. Similarly we would expect the cost of ADSL2 services to fall at least 15% over the coming year, one way or another, and we will have find ways of making that happen with the relatively restricted options we have for those services. I'm encouraged by recently resolving the problems with AAPT which will allow us to offer around 10,000 of our current ADSL1 customers a 'no brainer' move from ADSL1 to ADSL2 with no downtime and no increase in monthly cost but much faster speeds while meeting their needs of keeping their telephone line rental with their current supplier (something I personally don't understand but is obviously very real). It will allow us to reduce our spend with Telstra by 25% or so in 'one fell swoop' which meets a part of that major 2009 objective. Similarly our mobile costs will reduce by around the same amount, 15%, either from our current provider or from a new provider in early 2009 and we will 'share' those reduction 50/50 with our mobile customers. The same quantum of reduction will also be likely on both VoIP and PSTN call charges and similar reductions are being 'volunteered' by many of our smaller suppliers. Our main issue will be getting SPA rates that allow us to offer sensibly priced services to Australian customers - particularly to rural customers. We will continue to work with Optus to achieve those objectives but we do have at least one other real option. It almost feels like Christmas with all of these cost reductions being 'offered'. Of course the reality is that business is getting tougher for our suppliers as well as for us with more than one supplier bemoaning the 'going out of business' impacts on both their revenue targets and the P and Ls to date. I take no pleasure in such happenings but the 'ill winds' do blow some good and the 'dark clouds' do occasionally have a silver lining. PS: I'm on the edge of my seat, breathlessly awaiting, Krudd's report on the net result of the "Ideas Summit" he p***ed away more money on earlier this year than he just stripped from supporting fauna and flora. What a wonderful thing it will be to completely transform Australia using the insightful and brilliant thinking those total wankers who attended that "summit" and whose costs then murdered so many Australian endangered species to construct their wankerish concepts that will never be considered beyond that total waste of money. Tuesday, December 9. 2008NBN "Already Not Necessary For Rural Australia" According To Telstra...John Linton ...because "we" can deliver high speed broadband to remote rural Australia within "weeks" using HSPA: http://www.itwire.com/content/view/22155/127/ ....or maybe not.....I'm not sure what is actually being said. So....what I read in to this is that Telstra have somehow finally got the message that they have erred in their "Only Telstra can build an NBN" anti-government/anti-Optus/anti-Axia/anti-the tooth fairy/ anti- uncle Tom Cobley and all campaigns and are now on Plan B - "It isn't necessary to build out the NBN to rural areas because HSPA is just fine for those users and "we" can deliver it tomorrow. The 'flip side' of this being: "so give us the monopoly of building the NBN in the capital cities and a few regional centres just as we have always wanted to do to obsolete all the competitors DLSAM builds and force them to also use our HSPA in the country and, well, then we will have got you idiots to pay for us re-establishing our monopoly - because you're really dumb and only Telstra is really smart". "In the mean time we've been good little corporate citizens because we have persuaded the dumber of the 'independent' ISPs to use our ADSL2 network (at exorbitantly high cost to both them and the end users) so you can see that everyone but Stupid Stephen agrees that only Telstra should be allowed to build anything and then charge everyone else sky high prices to use whatever "WE" decide is best for everyone and what makes "a sensible return for our shareholders". Or have I mis-read Telstra's volte face(s) over the past three months as it became increasingly more obvious that their bullying/blustering/threatening attitudes were not working out quite as they had planned them? It must be my intransigent anti-Telstra attitudes because it all can't be this transparently blatant - can it? I had previously read this: http://www.smarthouse.com.au/Wireless_And_Networking/Broadband/S4S2S7J4 where Telstra have simply taken the 'guts' of the Opel bid to provide broadband to rural Australia and then asked the government to fund it via the Australian Broadband Guarantee scheme!! Now, as someone who pointed out a year ago that HSPA could be delivering broadband to rural Australia before the Labor Morons even got around to even writing their NBN 'tender', with four way competition already in place to keep the prices down, a key 'strategy' for Exetel in developing an HSPA service was to do exactly what the Opel bid proposed and Telstra is now claiming as their own initiative. We also (and claim no authorship other than understanding some common sense opportunities) planned to offer HSPA via Yaggi (or similar) antennae in the new year and have even got as far as planning the ad campaign based on a better version of the picture Steve published on his Blog of his friend's pre-fab residence in the remote South of WA a few weeks back: "The first stop for the day was my friends block at Napier - a small With a Car Antenna on the shed roof, coverage is possible from the Napier farm block. ..together with a google maps reference to pin point its location and isolation. Of course we weren't planning for the Federal Government to fund this project - we were going to find a way of financing it ourselves or persuade Optus to kick in either via their own ABG certification or simply financing the equipment and installation. It shouldn't be that hard to provide a 1 mbps+/384 HSPA to many rural areas now for $30 to $40 less than Telstra will almost certainly charge. Depending on Optus' implementation time frames the speeds should continue to increase throughout 2009 and 2010 so, as Telstra quite rightly now suggests, broadband for the bush can be a reality within a 'few weeks' and without the Federal Morons having to pony up one red cent of their 'scarce financial resources' or alternatively they now have another $A5 million for Krudd to fritter away on his next grandstanding piece of nonsense. Our initial costings were that we could provide a 1 mbps/384 kbps service to a rural user (where there was Optus coverage) for around $65.00 a month including 3 gb of data. This would include the rental of the antenna and the router but not installation if that was required. We were thinking of a two year contract but we have yet to finalise the financing. We hadn't considered getting Federal Funding via the ABG but if that were to be available then it could all be done at a lower cost to the end user. I will be interested to see what 'final' figure Telstra comes up with for a rural HSPA service including router and antenna - my current bet is it is unlikely to be less than their favourite $A99.99. Having maintained for over twelve months (before we actually had our own HSPA contract so there was no self serving motivation in our views) that the best, easiest and lowest cost way of providing 'broadband' to 'rural' Australia was via HSPA (and I realise that many other companies have been using various wireless implementations for many years already) I'm delighted that Telstra now endorses this view (or do they only endorse it if they get ABG funding?) which means that a fully commercialized rural wireless broadband service can now be 'rolled out' without the need to spend one cent of the ABG funds or the NBN 'tender' money or impossibly long delivery times. Perhaps the Federal Morons can now restore the $A10 million to the fauna/flora support they have just axed (refer to yesterday's 'rant') and scrap the ABG because, according to Telstra, it is no longer necessary. There you go Whine - an immediate saving of $A227 million from your future budget's ever growing black holes and you can put your $A4.7 billion back in your pocket as well. Geez - maybe I should run for PM - solving these budget blow outs is a piece of cake and doesn't require $A100,000 a month in air travel. PS: While explaining to La Gillard the sensible and widely accepted way of pronouncing "education" perhaps you could also explain that Australia has a Federal Government (three syllables per word) not a two syllables per word "Fedrawl Gummant".
Monday, December 8. 2008Krudd P***es Away $A10 Billion On A Woefully Misguided Whim.......John Linton .....but consigns Australia's wildlife to oblivion by withdrawing a lousy $A10 million of 'small grant money'. According to this morning's news some one million "pensioners and carers" around Australia will open their letter boxes this morning and find cheques for an average of a thousand Australian dollars from the Australian taxpayer scattered around like confetti at a bush wedding courtesy of Krudd's ideas of command economics (last popular in various Eastern European Bloc countries during the 'cold war' but now restricted to North Korean understandings of economic rationality). Krudd has taken your, and my, taxes and sent the money to around a million people telling them to go and fritter it away on alcohol and cigarettes and anything else that takes their fancy. A new high in even his amazingly high standard of complete stupidity and one more step in his panem et circenses method of government in his Hell bent race to see how fast he can return Australia to the level of debt bequeathed by the last Labor governments to the Australian people as a reward for being so stupid to elect them. It took Witless Whitlam less than three years to bankrupt Australia and Hawke ("no Australian child will live in poverty") and Keating ("the recession YOU had to have - but I'm fine and will just slip out and buy another $A100,000 French Empire clock") less than 10 years to rack up $A100 billion in federal debt (and that was when a billion actually bought something more than a one hour 'pensioner' splurge at the local liquor store). Krudd's current run rate indicates he's on track to beat Whitlam's record. Meanwhile, starting late last week some 1,500 charitable institutions whose individuals have given enormous amounts of their own time free for many years to work within their local communities to encourage by example as many members of those communities as possible to give up some of their time to rescue their local fauna and flora from extinction will also be receiving mail from the same Krudd...only their correspondence will contain no cheques; just a churlishly written piece of cr** telling them to go stuff their and their local community efforts up their a**** as don't they understand these are tough economic times demanding that their elected government act frugally and responsibly and therefore their pitifully small support grant (that they have been receiving for many years to pay for a part of their regeneration program) will not be continued. I didn't think it was possible for me to despise that otiose piece of sh** any more than I did already but Krudd has reached new levels of grandstanding unreality that even I didn't think the pathetic moron of being capable. Just how incredibly stupid, forget about uncaring, do you have to be to remove small grants from charities that have long track records of needing, and spending wisely, small amounts of tax payer money in their local community's economies to give endangered native fauna and flora some better hope of survival? Is it because these greedy and stupid people p***away the small amount of grant money on booze, cigarettes and fast foods? Of course they don't - they spend it on seedlings (grown in local nurseries), local fencing contractors, small ads in local newspapers, petrol in local service stations etc, etc .......in other words if Krudd is so enamoured of wanting money to be passed around to be quickly spent in local communities then: what f***ing better way is there to do it than to continue to provide grants to real people in real communities around Australia who have a long track record of spending every cent very carefully in their local communities doing really good things? Are liquor stores, tobacco counters at supermarkets and trashy present boutiques more deserving of having money showered on them that these: http://www.exetel.com.au/fauna_feat/ and tens of thousands of other similarly endangered species???? How is it possible for these morons, posing as a government of Australia, to actually cut off less than $A10,000,000 worth of annual grants to 1,500 small, predominantly local community based, charities pretending that they don't have the money to continue the support when they have just p***ed away $10 BILLION on fags and booze and one off Christmas trash (presents) to "quickly put money into the economy"!! I can't write any more today - I'm too angry. PS: If someone runs into the Gillard over Christmas would they try and persuade her that education isn't either spelled or pronounced "ejjerkayshun" - it's an embarrassment for the Minister Of Education to pronounce her portfolio in such a, well let's be frank Julia, manner indicating a lack of education. Sunday, December 7. 2008"But, We're A Major International Financial Colossus....John Linton .....surely you would LOVE to do business with us?" I have a number of acquaintances who work in the finance sector in Sydney with whom I keep in contact on a sporadic basis - almost always when they want a favour in getting a deal on some service Exetel sells for a member of their family or when they want cost information about high end communications lines to get better deals from their large carrier providers (they, of course, could never consider buying the identical services from Exetel although it's the same infrastructure and often the same 'line'!) so I give them our buy prices so that they can see just how badly they are being screwed by the carriers. Anyone who takes even a cursory interest in the business media would know that many financial institutions are laying off quite a lot of personnel and look likely to lay off even more in the first half of next year. Sad for the people involved but then presumably they saw the financial problems coming before the rest of us and took appropriate measures to provide for their immediate futures. One thing that has begun to happen is that 2 of the people I know in very conservative financial institutions, who apparently have survived the recent cuts, called me on Friday and for the first time were interested in semi-seriously talking, perhaps, about looking at Exetel to replace their current carriers/service providers for some of their "less vital" circuits. This is such a major departure from their previous attitudes that I didn't know how to respond but the further explanation was that along with the manpower cuts they had been forced to carry out the operational budgets had also been severely cut for the balance of FY2009 with the high probability that the cuts would be even more savage for FY2010. It would seem that these high and mighty MOTU are beginning to be capable of believing that if Exetel use the same fibre as their current carrier to link their various offices it maybe isn't the brightest of ideas to pay, literally, 6 times more per month to 'rent the same cable'. The two companies combined spends, currently, on their base communications services exceeds $A3 million a year for which a provider, such as Exetel, would have to do bu**** all to earn a 50% margin at a fifth of that price. So both of them were surprised when I said that while I appreciated the opportunity to 'bid' for their business we wouldn't be doing that. I explained my reasons as being that irrespective of the 'gigantic' cost saving we could achieve for them they would never buy from us because, irrespective of how hard times became there would still be someone in the upper levels of their hierarchy who would veto using an unknown and very small company and would simply use our pricing to get an almost as good deal from their current provider (or their current provider's largest competitor) and we would just be wasting our scarce resources helping them get a discount they were too lazy to get for themselves. My advice was for both of them to simply call their providers and tell them if they didn't get an 80% discount from January 1st 2009 on their services they would be accepting an offer from another "major" provider to replace all their services. It would save us time and save them time and everyone would be ahead. Despite how my precis wording of much longer conversations above may read - the conversations were both amiable and very helpful. I have never understood (and this is throughout my career not just recently) why large companies insist on wasting huge amounts of money paying for services from other large and totally inefficient companies because of the 'peace of mind' that comes from buying "key services" from companies best able to address their needs in an emergency. Exetel spends more money on communications services per month with "large carriers" than all but the very largest companies in Australia and, as I've told various of my acquaintances when this subject is raised, a tiny company like Exetel has more engineering competence and infinitely more dedication than I have ever seen exhibited by any "major" supplier we deal with. However - our engineering and fault resolution capabilities are always regarded as inferior to those of the large carriers and I stopped trying to persuade such people differently a long time ago. So its interesting; now the Crystal has stopped flowing, at least for most of the employees in the large companies that are suddenly, and belatedly in many cases, realizing that they needn't be as large as they were last month perhaps "small companies" like Exetel will be given the 'privilege' of supplying the identical services these companies currently use at a fraction of the price that is currently being charged without doing too much damage to their "vital" operations. But we won't be bidding for the sort of 'opportunities' that were offered to me late last week - we're already too busy dealing with the huge surge of large SHDSL and Ethernet business service orders we received in October and November and which we expect to keep coming as far more realistic (and certainly not as large and 'prestigious') companies seem to be able to find our web site and compare our published pricing with what they are currently paying and simply order their "vital and key" services on line without, in many cases, even talking to us let alone expecting us to grovel for the privilege of being allowed to waste our time providing a "full and comprehensive" proposal. One of the two mentioned a full "Powerpoint" presentation FGS!!! "Jeez".....as Dennis once (in his particular circumstances - mistakenly as it turned out) said -"No wonder you're extinct!" The 'cold winds' are chillier these days it seems. - at least in the financial district of the Sydney CBD. ....and just for the record Peter....."yes, we really don't accept 90 day payment terms - especially from an organisation in as much financial trouble as yours appears to be". PS: If anyone runs into Whine Swan - would you mind asking him where the "inflation genie" is at the moment and has he found the "bottle" he apparently mislaid at 2008 budget time? Saturday, December 6. 2008First Of The Penny Dreadfuls Bites The Dust........John Linton ...first sign of 'final solution' of too many ISPs....or just coincidental last rites for companies long on their corporate "death beds"? I read about PeopleTelecom's agreed sale to M2 late last week which was hardly unexpected: http://www.itwire.com/content/view/22112/127/ It has always seemed to me that if a management team can't make a profit out of a company for five successive years at revenues that at one stage topped $A100 million then there was no reason to believe that they would ever make a profit - some business fundamentals are well and truly wrong in such a scenario. The apparent selling price of $A17 million was around two and a half times the share price before news of the deal 'leaked out' so a good result for the major shareholders (at today's prices) and the end of a pointless involvement in an archaic business model with, at best, indifferent calibre management and personnel. As the major part of the consideration appears to be M2 shares, themselves not exactly stellar performers in today's markets, the completion of the deal that for some reason has to await until the next PeopleTelecom AGM on March 31st next year can't be regarded as certain in such economic times as we are currently living through. In these times, more than usually, you get to hear all sorts of rumours and innuendos more often than not based on absolutely nothing other than some viciously minded moron's desire to make trouble. I hear my share although I seldom take any notice of them. The Pipe financing difficulties and the rumoured PacNet takeover of AAPT seems to have 'sparked' a noted increase in the number of speculative statements being made about all sorts of communications companies - large and small. Macquarie Telecom is a larger version of the archaic business model of PeopleTelecom - large portion of revenues coming from fixed line reselling and mobiles to a corporate sector that itself is declining in terms of spending and 'loyalty' to over priced sevices. Like PeopleTelecom, Macquarie can't seem to make a profit even though its revenues are more than twice PTs - around $A225 million last time I looked having been as high as over $A250 million based on my failing memory. There seems to be some strange attraction in the Australian communications industry for people to set up and buy up entities that lose money year after year until the then current shareholders eventually lose patience and get rid of the entity in the best way available to them at the time - mostly receivership with the occasional fire sale to a bottom feeder like M2 - whose business model seems to be to take over the Optus resellers who have trouble paying their Optus bills and Optus induces them to 'sell out' to M2 via some compelling debt forgiveness. I suppose in the PeopleTelecom/M2 transaction Optus will 'persuade' M2 to re-change PeopleTelecom one more time from Telstra to Optus as its major supplier. PT, in terms of internet customers, would have been around the same size as Exetel I would have thought and it adds some emphasis to the question as to whether small communications companies have any reason to exist in the Australian communications marketplaces at all. In the 1990s there was the start up phase of internet, and its associated services, in Australia and it was a good time to start up an ISP and all of today's real ISPs did start at that time along with several thousand other start ups from then until now. Almost none of them survived for very long and with a few exceptions (Telstra, Optus, TPG and Internode spring to mind) no other ISP exists today from the 15 or so year 'history' of Australian ISPs. ABS reports some 200 or so organisations described as ISPs but the reality is that there are almost certainly no more than 20 or 30 (probably not that many) that have much hope of existence beyond 2009 and the top two (Telstra and Optus) account for over 65% of the total market - or some figure close to that. It seems inevitable that AAPT will be sold off to some other entity within the foreseeable future and I can't see any reason for iPrimus to exist at all. If this were to happen then there would be 3 or 4 'specialist' ISPs desperately looking for a longer term raison d'etre and the two large carriers together with whatever Vodafone and 3 evolve into via mobile data carriage. All of this could happen in less than a year with the current spur of the GFC and its antipodean consequences biting deeply into the 'flanks' of more than one falteringly managed operation. I don't know what 'future' Exetel has other than I have no doubt that we will continue to survive and probably continue to grow incrementally (in our very small ways) but we are a completely different company in our objectives than any other company with which we compete. We continue to improve our operating efficiencies to levels that most commercial entities can only dream about. This isn't because we are uniquely brilliant or insightful but because we operate a business model that was constructed from the first day on maintaining the lowest operational costs in our 'industry' and we have maintained that 'philosophy' in everything we do up to and beyond today. We may get exhausted from overwork but we are unlikely get into financial difficulties by taking unjustifiable risks or not working on improving the efficiency of every single aspect of our business - no matter how tiny. It will be interesting to see what different strategies some of the current marginally surviving communications companies put in place over the coming weeks. Friday, December 5. 2008HSPA Progress Towards 100mbps And BeyondJohn Linton We continue to see a continuing increase in the number of Exetel/Optus HSPA customers who are reporting faster than expected speeds on their HSPA service - which is very encouraging following the spiteful deluge of exaggerated negativity from the persistently anti-Optus 'plants' in the Australian technology press a few months ago. My personal experience, and the experiences of all of the users I know personally, is uniformly good and recent reports show that Optus announced program of constant and rapid network upgrades is delivering results in an increasing number of areas that far exceeds the conservative 'cautions' we publish on our web site. Many of the customers that report back with the speeds they are achieving say how happy they are with getting speeds at least double those we set out as being likely on the web site. One very surprising result of the Optus' HSPA upgrade program that I was shown yesterday was a download speed of over 4.5 mbps and an upload speed of over 1 mbps using a Cisco 881 (dual Ethernet/HSPA) router testing from our North Sydney office. We were doing this to provide an auto fail over back up circuit for our SHDSL/Ethernet business customers who currently need 'instant' back up in the case their main circuit fails. We were testing it on our own office circuits (we currently have three major connections from our office to our two Sydney PoPs which we want to reduce to two). Optus confirmed that they were now upgrading their HSPA network to 7.2 mbps (down) and while our contact didn't have a roll out map it was obvious that the North Sydney area was one of the areas that had already been done. Prior to that we had been able to consistently get in excess of 2.5 mbps. These speeds make it a 'no brainer' to implement a $5.00 a month back up high speed back up circuit replacing two 2mbps/2mbps circuits whose commercial cost is over $A400 a month each. So the higher speeds are good for business users for this particular application for who would be almost irresponsible not to implement such a cost/effective redundancy process. Such a solution would also be of interest to 'home users/small business users who use broadband for 'up time critical' applications from their homes. A great step forward for such users. As the cost of the dual Ethernet/HSPA hardware falls (the Cisco 881 is currently over $A1,000) I would be pretty sure that more of the 'serious' home users will use this back up option as they can also use it in their lap top when they 'travel'. Of course, as the cost of HSPA data falls the need for a wire line broadband service will continue to decline for a wide range of Australian broadband users. It also is very heartening to see that the current Optus network (and presumably all other carrier's HSPA networks) are tracking quite closely to the original predictions that came out of Europe some three years ago now that 10 mbps+ would be in place by late 2008 moving to 40 mbps+ by late 2009 with 100 mbps (LTE) services available by the end of 2010). Looking at this article: http://www.pcpro.co.uk/news/240672/mobile-broadband-to-hit-42mbsec-in-2009.html it seems to be still a realistic expectation, at least in Europe, and there is no reason why similar speeds/time frames shouldn't be achieved in Australia. It's still very early days of course and there remain many unknowns but I am pretty happy that the almost three years long, arduous and constantly disappointing slog to put in place a viable HSPA service for Exetel's Australian customers has got off to a relatively positive start and, in some respects, is performing better than we had expected. Of course, cost is still a major issue but if we can't either address that issue (or Optus addresses that issue on our behalf) then there are now more options than there used to be. We still have the option of providing HSPA services in the UK (and other parts of the EU) and that would, if it were to be successful, provide us with an economy of scale in both hard ware purchase and transit data than we could ever do in Australia alone. On balance I'm still of the opinion that it was better, for Exetel, to pursue (even when it looked hopeless) an HSPA future solution than accept the easier path of installing DSLAMs and remaining bound to a copper wire solution. Though it would have been cheaper to go the DSLAM path I still think it was a short term solution with no future benefits - though now the interest rates have fallen the revised DSLAM build offers have become even more attractive - if they go any lower we would be able to put in 250 DSLAMs at no capital cost and delayed payment terms beyond this decade! We have recently been offered capital prices at less than 50% of what we were considering in January of this year and 'finance terms' that require no payment for 24 months. Hard to resist such offers from a purely financial view point. It is an exciting prospect to see how far and how fast HSPA will develop in Australia over the next 12 months - 24 mbps in most of Australia by Christmas 2009? Who needs an NBN delivering 12 mbps to a bit of Australia by Christmas 2012? Thursday, December 4. 2008Pipe Cable Initiative 'Hiccup' RamificationsJohn Linton I have to say that I have been surprised, for the second time, by the implications behind the announcement from Pipe that it was uncertain about the future of its cable laying venture: http://business.smh.com.au/business/cash-shortfall-leaves-crossing-a-pipe-dream-20081202-6pr3.html (the first time I was surprised was when Pipe announced that it was actually going to invest in laying cable for international IP transit). I have read other reports than the one I cited as well as the ASX announcement and I'm not sure that I actually understand what Pipe is trying to say. Is it saying that there is a temporary glitch with finalizing the funding?.......or is it saying that there is a major change that may result in no funding being available? As far as I can see the meaning of the ASX documents and the subsequent quotes from the Pipe CEO are very far from being clear. My 'second surprise' is that a major venture such as the laying of trans-ocean cable can get to such a late point and then run into financing difficulties. I have noticed that there have been some financial difficulties around the world over the last few months but I don't see how those issues would affect a solidly approved 'business case' put in place two years ago that has now reached this point in its implementation time frame. Unless my memory fails me (more than a possibility) I thought I remembered reading a press tour of the Sydney cable termination point/data centre where more than one 'foundation user' of the cable had installed its termination equipment and was "testing"? I could have sworn that I more recently read that the actual 7,000 kms of cable had been manufactured and was 'sitting on the dock' awaiting pick up by the cable laying ship? I know Exetel has been approached more than once about buying transit on the cable which, again if my memory isn't totally screwed, was originally scheduled to go 'live' before this? Perhaps these approaches were ill considered but they were a factor in Exetel considering its future IP needs. Now, some time after the service was meant to be operational, the ASX is advised of some doubt on financing which may, if it isn't resolved, result in a material change to the financial well being of Pipe moving forward - which is 'spin speak' for "we're going to have to write off mega money which will result in a major loss and severe damage to our balance sheet/share price." Apart from any personal financial impacts on Pipe employees and shareholders, there are wider implications for a lot of Australian broadband users. All of this, if it turns out for the worse, is bad news for everyone. It's mainly bad news for the future of brave initiatives in Australian communications because this was a very brave initiative in terms of a small company making a huge financial investment that may have benefited all Australia's broadband uses by increasing the competition in, and therefore lowering the costs of, trans-Pacific IP transit. If Pipe do abandon their current plans then, together with the recent fall in the $A (not to mention the predicted levels that some currency analysts are predicting the $A to fall to) the steady fall in trans-Pacific transit over the past five plus years may be affected. It was very good to see that an Australian company would restrict the flow of currency being exported to overseas entities as Australia's use of the internet continued to increase in terms of traffic to and from other countries and, presumably, entities in other countries would pay Pipe to use the service therefore increasing Australia's 'exports'. However it's also bad news because any possible future major write off in the cable venture will almost certainly have some effect on Pipe's current major business of intra-city and inter-city fibre connections which are moving in to the multi gbps levels that even small ISPs such as Exetel are beginning to need. Pipe isn't a big supplier to Exetel (less than $A50,000 a month) mainly for Sydney - Melbourne and Sydney - Brisbane connectivity and a number of inter-city cross connects for peering and other purposes but we wouldn't like to see these services disrupted by either a price increase or delays in making the higher speed services available. Pipe have done a very good job to date of providing low cost transits to and from an increasing number of locations around Australia and it would be highly detrimental for the costs of these valuable services to be increased by any problems caused by any mishaps in the cable venture. Pipe made some 'brave' decisions to establish its business and the services it has provided to date have been very beneficial to a great many broadband end users - who would never be aware that whatever pricing they are getting is lower than it would be if Pipe hadn't had the courage and understanding of the Australian network market they have displayed to date. It would be a great pity if that was to be affected in any way by whatever difficulties they are now experiencing in attempting to increase the advantages they currently provide. Obviously the 'bad news' may well not happen which would be nice to see. If it does turn out badly then I suppose this will be seen as the first, very tangible, negative affect on broadband services in Australia resulting from the GFC. Wednesday, December 3. 2008Will The Copyright Pirates Now 'Kill' The Whole Internet?........John Linton ............or will BitTorrent commit commercial suicide by ending copyright theft in one fell swoop by doing what AFACT and all the other copyright owner's agencies and all National Governments have failed to do by making all P2P piracy the number one criminal act on all ISPs/Carriers prohibit lists? It will be interesting to see if the Australian ISPs now reverse their attitude to forwarding copyright infringement notices and, Heaven forbid, even start discontinuing P2P pirates who will be destroying their networks - or at least destroying their cost models for traffic. ......Another Night - Another Problem From Left Field Managing a small business means you work for almost as many hours as you are awake on most days and so I was alerted to this article by my lap top 'beeping' with an email from one of Exetel's volunteer forum admins as I was finishing off a pleasant bottle of red and half watching something or other on Fox: http://www.theregister.co.uk/2008/12/01/richard_bennett_utorrent_udp/ I read the article and immediately sent it to Steve who replied a couple of hours later confirming the article writer's view that if BitTorrent did switch to using UDP instead of TCP then there would be serious ramifications including bringing legitimate use of the internet to a halt. His reply to me, in part, was:
So, it remains to be seen whether or not BT et alia will switch to using UDP and if that does happen what the actual impact on the global internet is. If it is anything like what the article's author describes and what Steve's first pass view describes then one of four things will happen: 1) The internet will collapse under the 'weight' of a bunch of unethical people's activities. 2) P2P (UDP or not) will be banned on every network that has the capability of doing that - which means every commercial network. 3) Some new method of switching data will be 'invented' that will allow legitimate traffic to be processed without delay. 4) The cost of internet services will increase and be purely based on pay per megabyte downloaded and uploaded (no "included download" plans) I think that 4) above, which is pretty much the way Telstra, and some others, currently charges retail customers will become the standard method of providing internet services so every current user can thank the copyright pirates for their future higher internet pricing - should that be the case. By luck or good judgment (take your pick) Exetel have spent over two years taking the pain and grief of managing a long and large volume 'free period', understanding P2P controlling, understanding P2P caching and, more recently, basing plans on PAYU as well as, in the case of HSPA, charging for uploads as well as downloads. Whatever experience we have gained from these very painful learning curves may well be more useful in the future than it appeared when we began to understand how we might need to manage a large network at some future point in time. Sometimes planning pays off - even if it turns out not to be quite what you were planning for. Tuesday, December 2. 2008Maybe Australia Would Be Better Off Without All The "Parasites"John Linton It seems to me that business is slowing rapidly in Sydney judging by the strangely quiet and empty feeling that pervaded the CBD yesterday when I went to a meeting in the early afternoon there. At this time of year it is usually very busy and noticeably so but yesterday there were very few people and when I bought a magazine on the way back the vendor said it had been very, very quiet for several weeks - so much so he said he closed his booth now just after lunch instead of staying open till 6 pm. His 'regulars' had stopped buying and he didn't see many of them any more. It would appear that the problems with the majority of the financial institutions and the resultant lay offs has had a significant effect on the actual number of people working in the city and therefore spending money in the CBD. Which was pretty much in line with the discussion I had with a long term acquaintance and small supplier to Exetel who was in Sydney for a few days attempting to recover what he could from two of his largest customers who had recently 'closed their doors' owing him a considerable amount of money that he said might well cause his own business to fail. We had a depressing conversation over coffee (in a practically deserted coffee bar that is usually all hustle and bustle) and I could do nothing but sympathize as there was nothing I could do to help. I picked up from the conversation that there were many problems in his type of business (buying from a major carrier and wholesaling to a large number of small 'distributors') and his view was that at least two other 'aggregators' were experiencing similarly serious problems to his own. As I drove back to the office it occurred to me that there was a lot to be said from not wholesaling which is perhaps why Telstra under the Trujillo regime used the words 'parasites' when they first arrived in Australia to describe their wholesale customers. I suppose I've never really thought about it before but listening to the sad situation that my long term acquaintance finds himself in puts 'wholesale', at least in the Australian communications industry in this decade, in a different perspective as far as I'm concerned. I never considered Exetel as a 'parasite' but I suppose we are as far as the carriers who provide us access to services are concerned. I know that shouldn't be the case and a combined retail/wholesale distribution 'model' has been in existence for almost as long as there has been a commerce element in human society. So how did this happen? Car makers seem to be quite happy to be solely a manufacturer and have 100% of their product sold through independent dealers in whom they have little or no money directly invested. The same for most other 'stand alone' consumer goods. Most services (gas, electricity, water, roads, bridges, etc) have no 'wholesale' element because of the requirement of 'delivering and maintaining' some sort of end to end connectivity between the source and the end user. Is there any other service in Australia, other than communications, that actually has a dog's breakfast of retail/wholesale/regulation that provides similarly essential services from a 'source' to an end user? Maybe my brain continues its headlong race to senility but I can't think of one, or such a comparable mess. In my simplistic understanding of the rationale for an organization to distribute its products via both a retail and wholesale 'model' is that the organization uses it wholesalers to sell the product in geographic areas or to discrete market segments where, via its value adding, it can do a more effective (cost and coverage) than the 'manufacturer' can do with a retail sales operation. Such companies use their retail sales operations in other areas and don't compete with their wholesalers as that is pointlessly wasteful. So how do we get to the "parasite" situation in Australian communications? I don't know. I do know I'm glad that the old AAP knocked on my door (literally) back in the early 1990s and asked if I would like to reduce my overseas telephone call bill by 75% by simply allowing them to install a 'black box' attached to our PABX. So perhaps they were the first parasites because they forced the then Telecom Australia to gradually reduce their overseas call charges - but that did take years and even today Telstra's overseas call charges are still 4 times more expensive than those of any other sensible alternative so perhaps nothing has actually changed? Similarly having three, or four, mobile carriers has very obviously driven the cost of mobile call services down from the sky high call costs that existed in the early days when the only mobile service available was from Telecom Australia. But, again, in reality is it the competition that has driven the cost down or is it just time and technology advances? Does it really benefit Australia to import 4 times the amount of 'foreign' hardware to build the mobile networks (and I know that isn't the way it scales but it illustrates the point) and pay four times more locally to install antennae all over the country rather than just building one super network and having the prices regulated by the relevant authority? It made me think, in the brief time available in driving the couple of kilometers back to the office, that the sell off of Telecom Australia was a major mistake and everyone would be better off if it had never happened. The national accounts would be better off by reducing the import bill by more than the amounts that the treasury received from the T1 and T2 sales and the overall efficiency and end user pricing would be at around what they are now based purely on regulation. There would be a lot less lawyers wasting everyone's money on endless communications litigation and we would have had a much better national data network long before this. By the time I'd found a parking space in North Sydney I'd pretty much reached the conclusion that the worst government decision of the last 25 years was the decision to 'de-regulate' the Australian communications industry. I think that today we would have much better services at pretty much the same pricing today if that had not been done. There would be no "parasites" and no rolling bankruptcies of a succession of small and not so small companies who lacked the knowledge and skills either technically and/or financially to operate in a business that clearly can't exist using a wholesale and retail 'model'. My conclusion - the Federal Government should buy back Telstra on a compulsory 'nationalization' basis and operate it as the sole shareholder that requires no dividend. After the current job loss problem 'goes away' the 100% owner would dismantle Telstra's retail operation and expand its wholesale operation or, if that is not preferred, it should close the wholesale operation and increase the retail operation. It should, if it kept the wholesale operation, prohibit wholesalers from wholesaling.
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