Friday, January 16. 2009Land Line (ADSL2) Prices To Treble By Mid 2009?John Linton Every once in a while I think that I've completely lost any ability to comprehend what is happening in the Australian telecommunications industry and that I should have gone on to something I had a better chance of understanding decades ago. This usually coincides with a 'Telstra Visit' to some Exetel employee or some report in the press of Telstra's views of some aspect of communications in Australia. These incidents have been increasing in frequency since El Sol and the creepy McGaughie have been making their pronouncements on how things should operate in this benighted and backward country to ensure that a bunch of Telstra executives and board members can gouge exorbitant amounts of personal payments out of the monopoly that none of them contributed a single thing to create. The latest bout of mind numbing dizziness struck me while reading this: http://www.itwire.com/content/view/22678/127/ earlier this morning and I waited until after 'breakfast' to attempt to get my head around just how demented a senior executive or legal counsel of a giant corporation would have to be to allow the views contained in that article (and I'm assuming the article is factual which it may not be of course because it is so far fetched) to see the light of day. Unless I'm reading the article incorrectly it seems to be saying that Telstra believe that the correct price to rent a copper pair between a subscriber's home and their closest exchange should increase from the current cost of around $16.00 to $30.00 immediately and then, some time later in 2009, to $48.00: "Telstra wants to increase the $30 to $48 later this year." Now my knowledge of Telstra's various retail pricing is by no means complete - I seldom bother to look into it as Exetel doesn't 're-bill' telephone land lines - but I'm aware that Telstra RETAILS land line services for between around $21 to low $30s with an exception for pensioners at sub $20.00. I'm also aware that Telstra makes North of $A4 billion profit a year so it would appear that it's current retail pricing isn't exactly sending it broke - but I do understand that I have absolutely no understanding of how much profit Telstra makes from land line rental in its total business - though I very much doubt that it makes a standalone 'loss' which, I would have thought, would be the only justification of ANY price increase let alone a price increase of 200%. What I do understand is that new investment in/maintenance of the copper network is extremely unlikely to add very much in terms of cost to the overall copper network maintenance and wear and tear replacement and therefore it's very hard to see how the copper network is becoming so much MORE EXPENSIVE to operate moving forward than it is today - it MUST be less expensive unless the usual rules of depreciation have ceased to apply to aspects of Telstra's business compared to every other commercial entity's in Australia and the rest of the Western world. Be that as it may - El Sol's recent presentations in the USA contained a statement that Wholesale revenue amounted to less than 4% of Telstra's total revenue - hardly a bottom line impacting percentage irrespective of the business mix that makes up that figure. So what does it all mean? Only one thing springs to mind. El Sol and mealy mouthed McGaughie want to ensure that the current competitor's ADSL2 deployments are strangled to financial death before they can grow widespread enough to provide any semblance of ongoing competition to the Telstra monopoly. This would only be part of the concept of course. The real reason would be to demonstrate that the cost of the 'old' copper network (which only incidentally is being used by all Telstra's competitors) is so expensive that Telstra will be able to move all of its own customers onto its cable networks, those that exist now and those it is preparing to build, thus stranding all competitors on hyper-expensive lines that both make a huge amount of money for Telstra and, double whammy, make all 'competitors' unable to compete. Now there's why this country needs a telecommunications monopoly like a dose of the black death. It's interesting to remember that shortly before the 'de-regulation' of the Australian telecommunications industry a residential land line cost $A9.95 a month and here we are 20 years later facing the possibility that Telstra believes a reasonable WHOLESALE monthly cost for that same line should be $48.00 a month - and I thought I lived in Australia and not in Mugabe's hyper inflated country. But in those days, of course, the head of Telecom didn't get paid $A15+ million a year nor did he have a bunch of 'advisors' who averaged being paid more than $A5 million each. I guess someone has to pay for these genii (and their hundreds of lawyers) who are doing so much for Australian telecommunications. Who better to do that than people who have no choice but to pay through the nose or get cut off? I guess if El Sol's machinations mean that all ADSL2 competitors have to pay an additional $30.00 a month for their broad band it will begin to make BigPond's "list" prices look very attractive. Thursday, January 15. 2009Even The Telecommunications Industry Is Not Immune.....John Linton ....to the current financial/credit problems affecting business worldwide. I read this earlier this morning: http://online.wsj.com/article/SB123193994047481129.html and while I've lost track of the 'pecking order' in the giant communications equipment manufacturers - Nortel used to be right up their with Alcatel, Ericsson, NEC etc. I have known of and bought products from Nortel for as long as I've been associated with communications services and it's a sad day when such a company passes it's use by date. So, perhaps one more sign of the times that even the telecommunications industry has stopped buying major equipment or maybe just that a 30 year track record of designing and supplying innovative communications solutions is not sufficient to survive in these interesting times. Size and previous reputation seem to count for nothing in today's financial 'maelstroms' based on this and other major company closures/'re-structures' over the past 90 days. I also read this: http://www.commsday.com/node/305 with a degree of bewilderment that after so many dozens (hundreds?) of failed attempts to offer "unlimited" broadband download services by so many different 'start ups' in so many different parts of Australia here is yet another one subscribing to the 'triumph of hope over experience' school of business management. Now, I'm not saying it isn't possible - just that no-one who has attempted it in Australia (or anywhere else in the world as far as I know) has ever succeeded. I do understand that if you actually have control of your user - ISP connectivity bandwidth you are in a better position to provide an 'unlimited' service than if you are paying $50 - $60 per mbps to a carrier for such links but, unless I totally misunderstand the current status of back hauls in Australia there is still a cost and it isn't trivial. Currently ISPs such as TPG are taking advantage of the much lower costs of customer back haul available by leasing your own dark fibre from companies such as Powertel and NextGen to offer huge 'off peak' allowances (though they seem to fairly heavily constrain the times when these are available). The cost of an ISP's own back haul is a fraction of the cost that, say, Optus charge Exetel - around $5.00 per mbps compared to around $50.00 per mbps (but this costing is heavily dependent on the 'arithmetic' used by ISPs such as TPG to depreciate the rest of the infrastructure necessary to carry the data - Black Diamonds, or even reverse engineered copies of Black Diamonds, aren't exactly 'free'). The 'cost' of a gigabyte of data is based on the cost of the customer connectivity plus the cost of sourcing the data externally or from cache plus a 'notional' cost for the amortisation of the rest of the network hardware and rental of floor space at exchanges and hubs. The cost of a megabyte of a gigabyte of data assuming optimal deployment (a fully utilized DSLAM chassis, 10 gbps back hauls that are well loaded and a high proportion of cached data is going to be somewhere between 40 cents per gb and 55 cents per gb (Exetel's costs are much higher than that). So an 'unlimited' broad band plan run over a very efficient ISP's own infrastructure simply isn't going to make any financial sense if the AVERAGE user downloads over 120 gb in any month. My personal experience is that most 'unlimited' users downloaded more than double that number. (I also doubt that this new offer is being run over such an efficient infrastructure but I have absolutely no idea what it is going to be run over). So, another start up is going to offer unlimited broad band for $80.00 - and is going to "shake up the market". It will be interesting to see how long this lasts and if, with some new thinking and clever 'negotiation', it is going to be possible to accomplish. I think two things always mitigate against such offers. The first is that only a relatively very small percentage of users wish to/are able to spend $80.00 a month on a broad band service and those that can ALWAYS astonish you with what they actually down load in any given period of time. My relatively long experience of being closely associated with broad band provision over the past 5 - 6 years indicates that NO amount of monthly charge by an ISP is actually enough to provide sufficient bandwidth to meet the needs of 'unlimited down loaders'. So a strange start to the day - one of the famous names in communications files for bankruptcy while an Australian complete 'unknown' announces it will succeed in doing the impossible where every other entity that has tried it has failed. Two very different views of where the world's and Australia's business outlook is at today. Wednesday, January 14. 2009A Change In Broad Band Demographics......John Linton ......at least it appears that way for Exetel. We have many excellent automated systems at Exetel which allow the company to pretty much run with only minimal 'management' involvement and virtually no interference with the day to day operations. One of the things I still do, probably out of long habit rather than any real need or even any useful purpose, is to look at the application listings of people signing up for the various services. I have noticed a quite significant change in broad band sign ups lately. The change is in the 'surnames' of people applying for new or 'churn' Exetel broad band services. Throughout the five years we have been providing ADSL a significant proportion of our customers have been people of Asian origin - at least this appears to have been the case in terms of the names on the application forms. This has meant that for five years now between 30% and 40% (I have no precise analysis) of Exetel's broad band customer base was Asian compared to the ABS statistics that show a general percentage of the Australian population as being less than 10% of Asian origin. If I was to take the sign ups from January 1st 2009 as indicative of sign ups by area of origin that number has fallen, 'dramatically'', from close to 40% to less than 10% (in line with the ABS statistics but almost 75% less than only a short time ago). While I have no idea what this might mean, if anything, it is so sudden and so noticeable it is worth considering.I have looked at samples of sign ups going back twelve months and there is no indication that this is a 'progressive' thing and in looking at January 2008 the contrast is quite marked. My first thoughts were that Exetel no longer has the high download plans that were particularly favoured by Asian students of which there are a disproportionately high percentage at NSW's universities and NSW still accounts for close to 70% of our total user base. So I had a look at the actual names of the churn aways to other ISPs over the last 3 months and sure enough almost 80% of customers churning away from Exetel had names of Asian origin and the majority of them churned to TPG. It's anecdotal and far from precise information but it seems to say that Exetel is no longer appealing to a demographic that it once did (and only very recently) and that TPG is the 'destination' of choice for people looking for high download plans at reasonable prices that Exetel once served. If that's the case then it is interesting in a number of ways. Firstly our overall daily sign ups (number of applications x monthly ASDL plan value - excluding telephone component) are running well ahead of last year and, if this trend continues we will have a record January by a fair margin. The actual number of sign ups isn't being affected by the 'desertion' of a previously very important 'demographic' which means that another 'demographic' has replaced/more than replaced what looks like the Asian student who used to find Exetel very attractive. A second noticeable thing is that bandwidth usage in the NSW connections has dropped although the actual number of users has continued to increase. This isn't true in the other States where bandwidth usage has increased in line both with increased numbers of customers and the time of year (January is usually quite heavy with the effect of the long school holidays). Thirdly the percentage of Sydney based new customers has noticeably dropped as a percentage in favour of other NSW areas. I find this very surprising as I would have expected that with TW opening up ADSL2 exchanges to other ISPs there would be less interest in our ADSL1 services in country areas of NSW (or any other State). In fact our NSW sales continue to grow faster than those in all other States which has continued to surprise me for quite a while now. The only reason I can think of is that we have very strong agents throughout regional NSW and the number of towns in which we have agents continues to increase. I suppose, though not directly related to the first three, is the fact that 'Naked' ADSL2 applications now exceed the aggregate of both other ADSL2 applications by a factor of 2:1. This ratio continues to increase with more and more ADSL2 customers becoming happier to get rid of their PSTN line and rely on either VoIP or their mobile(s) for telephone calls. However I don't know whether this fits in to the pattern by TPG having more ADSL2 exchanges that offer naked ADSL2 - I thought it was the reverse. So, I don't know what to make of this information and even if I can actually come to some conclusions I'm not sure I could then use the conclusions to do anything abut it - so maybe I'm just wasting my time looking in to it (and your time reading about my lack of understanding). However, any obvious change has to have an explanation and it's really important for any small business to at least try and find out the reasons that some, and perhaps some quite significant, change has occurred to its 'attraction' to the different market demographics. I guess the best thing to do is to monitor the changes in 'sign ups' and 'churn aways' more closely in terms of looking at the demographics rather than just the raw numbers. Tuesday, January 13. 2009
NBN (Via Wireless) Much Nearer.......... Posted by John Linton
at
08:17
Comments (12) Trackbacks (0) NBN (Via Wireless) Much Nearer..........John Linton ....and of course at a much lower cost and much faster than Stupid Stephen's nonsensical/election sound bite 'project'. Getting on for three years ago now I became interested in delivering data over the current mobile networks (long before the Australian carriers began to roll out their versions of their various implementations). I became interested because we had begun to consider our own ADSL2 DSLAM roll out, conceptually, and I wanted to get an idea of alternatives and also some general direction of where data communications might be going in the future. I knew, just as everybody else who had been associated with communications in Australia for more than five minutes, that any future solution that was dependent on 'land lines' of any sort would have the cost controlled by Telstra and therefore literally ANY OTHER solution would be more viable for a tiny company like Exetel. Now, I would be the first person to unequivocally state that my engineering and technical knowledge is at best conceptual and mostly pretty useless. However faced with a major, to us, investment I had no option but to try and work out what were the best, in financial terms, options for a tiny company with only it's director's personal money available to it and no 'business track record' to make it easy to get a substantial lease. The provision by Optus and Powertel (as it then was) of residential ADSL2 services shortly after I started looking eased the immediacy of the decision which we gratefully deferred but I continued to investigate wireless via the various European web sites and news letters that were devoted to its progress. I became aware that 3G and its successor 4G/LTE was going to play a very significant part in data communications before the end of the 'noughties' and this article today shows that the improbable scenarios being 'painted' back in 2006 are now not only becoming a reality but becoming a reality ahead of what looked like, then, unrealistic schedules: http://www.itwire.com/content/view/22608/127/ It will be interesting to see just where the Scandinavians, Germans, Japanese and Verizon deploy 100 mbps data over mobile and what they do with it in the initial stages. So far, it's very impressive the ways in which these developments have continued, mainly in the EU, not only on the projected schedules but continually ahead of the original estimated schedules. I'm not beginning to say that LTE is the be all and end all of data communications (I have only a very limited understanding of what spectrum costs and availability might be at these speeds) but you have to wonder why Stupid Stephen and the equally stupid Krudd (who admittedly both know damn all about any aspect of communications technology) are still pursuing an "NBN" when it must be perfectly obvious to people of even their limited intellects that the obvious 'way forward' is to 'allow' the major cities and regional centres to continue with the development of the copper/fibre networks already in place and use GSM/LTE to provide high speed access in the rural and remoter regional areas. Even they, completely knowledge bereft as they continually demonstrate themselves to be, must have noticed reports such as this: http://www.itwire.com/content/view/22620/127/ which give some indication of how data over HSPA is growing around Australia. As I said well over a year ago now - providing 'assistance' to FOUR commercial GSM carriers to upgrade their data over mobile commercial roll outs in rural areas (oh wait - that was the OPEL concept wasn't it?) is going to provide true competition with no need for new regulation (and the concomitant legal issues) and it will be an 'immediate' solution. Obviously far too simple and obvious for the current bunch of morons in Canberra to figure out - maybe they haven't got a proverbial "back of a bus ticket and a blunt pencil"? Now that Exetel is an 'expert' on data over mobile (having activated a huge 1,000 HSPA users!!) I can unequivocally state that our obvious thinking from three years ago about how to provide high speed broad band to rural Australia by 2009 at the same, or very similar prices that it's supplied to Sydney and Melbourne users, has turned out to be absolutely correct with a Yagi antenna proving itself very useful in adding significantly to the range of the current 3G mobile networks. I, obviously, don't know what the current mobile carrier's plans (and budgets) are to continue to boost the speed and true coverage of their mobile networks. However it must be stunningly obvious, even to SS and Krudd, that if the current proposed "NBN funding" was used as a long term LOAN (or in the current 'new Labor' concept - providing Federal AAA rated borrowing guarantees to the carriers who then get the loans themselves - even cheaper for the tax payer) to the current mobile carriers on some tender basis then rural high speed broadband would be a reality practically 'over night' at NO cost to the Australian tax payer and they would avoid the extended 'litigation' and pointless delays that their current course of action will involve. The Federal Government would, as a matter of policy, license the spectrum at no charge to the mobile carriers in rural areas to ensure the widest possible deployment at the lowest possible cost - wouldn't they? - of course they would. Hey - and Australia would get true, and true ongoing, competition in the provision of high speed data communications throughout Australia without 'touching' Telstra and new low pricing would be a permanent reality!! Why on Earth didn't I get to be Minister Of Communications in Australia - it isn't rocket surgery? Monday, January 12. 2009Curiouser And Curiouser.......John Linton .....and I realise that, like Alice, my English is not always perfect and I do, hopefully not that often, 'talk' "nonsense". I finished reading todays financial and communications media a little earlier this morning and didn't see anything that added any new 'insights' into what is likely to affect the Australian communications industry over the coming year other than a continuing consolidation of views that things in the EU and the USA are likely to be worse than they are currently and will remain that way for an unknown length of time. What prompted my borrowing of Carroll's quote was the number of 'hate mails' I found when I checked my email a few minutes ago. For the last few months there has been a noticable reduction in the number of 'negative' responses to this blog I receive on a weekly basis - averaging less than one a day for some time now - but this morning there were 15! in one 8 hour period (when I cleared my email inbox last night at around 11 pm there were none). From what I could see there were no 'duplicates' and the 'responses' were from 8 different posts and seemed to be written in distinctively different styles (I can usually tell when the same person is trying to 'disguise their writing). All impugned my personal character and business acumen and all 'suggested' that Exetel was close to the 'end of its commercial life'. It is obvious, at least it is to me, that based on the narrow time band in which these 'missives' were sent and the commonality of their two 'themes' (together with the identical 'collateral evidence' referenced) that these 15 people (in the event that there were15 individuals) decided they would collectively write their poisonous comments in some sort of co-ordinated effort the purpose of which is unclear to me. So how very curious that 15 people should co-ordinate their efforts between 12.45 am and 3.15 am this morning to waste their time sending their pointless excoriations to someone whom they don't know and have no knowledge of and who, quite correctly as it turned out, all ended their hate messages with words to the effect "I bet you don't have the guts to not delete this" - to quote one of the less colourful ending imprecations. I can only continue to wonder what sort of 'club' or 'grouping' could exist to bring so many people with a common hatred of one unknown individual together at such a time of the day, I suppose 1 am is in fact day, and then join them together in acting out a common purpose aimed at an individual?....and what on Earth did they expect to achieve? The 'immortality' of now being anonymously mentioned in an obscure blog site? I have no idea. Perhaps in this computer/communication based age we now live in there is the capacity to form any type of 'groupng' though I find it almost impossible to believe that there can be a grouping formed for the purpose of sharing a mutual 'hatred' of an individual so I can only wonder what sort of other 'shared experience' can result in the incidental vitriolically poisonous dislike of an unrelated individual? Apart from meaning the individual people concerned have some sort of common mental health issues I can't imagine the scenario that produced such a grouping at such a time with such a 'purpose'. Oh well....and there I was thinking that the last 20 years of my working life has been spent attempting to do only beneficial things for Australian IT and communications users. Maybe LC knew more about the human psyche than I thought and we all do really inhabit our individual versions of "Wonderland" and our shaving (and perhaps make up) mirrors are our own personal portals to our alternate realities. Sunday, January 11. 2009Will People Contnue To Obviously Waste Money In 2009?John Linton It's a very pleasant sunny, perhaps a little too windy to be described as perfect, summer Sunday morning in Sydney which amost certainly shouldn't be spent gazing at a computer screen but then that is one of the joys of being part of a small business - there is never a time that can't be spent productively addressing some aspect of the business you are involved with. My sister headed back to the UK yesterday to deal with the ongoing pressures of her job as the bursar of a private school that is being progressively badly affected by the results of the UK's very real recession which, unsurprisingly, results in a rapidly growing number of parents being unable to meet their school fee payments. While in Australia the 'wealthy' first seem to dispose of the remains of their share portfolio followed by the 'holiday house' and the motor cruiser then the second merc before pulling the plug on private education (possibly because they can't face telling their children how much of a financial mess they are in) they seem to do it in reverse in the UK - possibly English parents still put their children well down their prioriity lists. As we were driving back from the airport it occurred to me that while there has been a lot of 'talk' in the Australian media for many months now there are, as yet, very few negative events occurring anywhere around the country that indicate that real people (not overpaid share brokers and merchant bankers) are losing their jobs as their employers shut down as is happening all over the UK and the EU. Sure there's indications that the WA miners arent employing cleaners at $1,000 a day any more and aren't proceeding wth the opening of new mine sites in WA or in QLD but they were always 'bonus jobs' that were/are very much regarded almost like 'seasonal work' (fruit picking/potato digging etc). Two of my friends who run big companies with many hundreds of contractors are certainly scaling back their activities but contractors come and go either in Australia or move to other parts of the world and are used to periods of no work - which is why they charge so much per hour when they do work I suppose. So other than some major contracting companies (dependent of government contracts) and many of the financial institutions there doesn't seem to be too many obvious signs of financial discomfort that I can see. Certainly the roads to and from the airport were as crowded as ever with the usual range of cars across the price spectrum of Sydney's affluence and the airport was as chaotically crowded as ever with people clearly going on holidays or returning from holidays. So it will be interesting to see what happens over the coming months. Exetel is doing its 'bit' by loking to hire 6 to 10 graduate trainees over the next month and we will also contract out the program development work for our own version of the 'fring' and 'nimbuzz' applications that we have been successfully using to promote the use of VoIP over HSPA via multiple manufcturers hand set impementations. Not that we have any probems with fring and nimbuzz but we would like to have local servers and haven't been able to get that to happen (despite a promising start). So Exetel will add some 25% more employees in the first quarter of this year rather than laying off 'excess' personnel as the media constanty talks about. This is not the sort of action that indicates a recession but then I understand that we are acting 'counter-cyclically' to address 'opportunities' that are new to us while they are 'old hat' (and over staffed) for many of our 'competitors'. I just have to believe that if we offer the same SHDSL service for $400.00 a month while our competitors offer the identical service for between $800.00 and $2,200.00 a month there HAVE to be opportunities in what many companies are seeing as difficult financial times. Surely some sort of percentage of commercial entities won't see 2009 as a time for wantonly wasting twice to five times as much money as they need to paying for a simple communications line? .....though I guess they have seen no problem is p***ing away their shareholder's money in that wasteful way to date. Saturday, January 10. 2009First Week Of The New Year "Gone In A Flash".....John Linton .....just as it was only a few days ago that we were all saying "what happened to 2008?" Christmas is already forgotten and New Year's day in Auckland is an almost faded memory as the demands of making the first of many changes to Exetel's operations more than took up the time available for them over the past nine days. I see that the first of the 'ISP gone in to administration' media reports has occurred (admittedly a very tiny and irrelevent one) and the Telstra CEO flew with his "top executives" to Las Vegas to continue to plot how to overthrow the Australian Government to be able to continue to rape and loot all Australian communications users in perpetuity. Maybe it's just my peculiar sense of humour in thinking how appropriate it is that a temporary resident CEO of Telstra should consider Las Vegas the appropriate place for the Telstra decision makers to fritter away some their exhorbitant 2008 bonuses they received by gouging exhorbitant charges from struggling Australian residential and corporate customers. The busy week 'back at work' had some encouraging highlights including: The 1,000th HSPA customer Very strong ADSL2 growth 'Live' implementation of our fully automated personnel management system Progress in our search for the 'perfect HSPA router' (from an unusual source) New 'indicative' pricing for two key elements of our main costs when contracts are renewed The completion of the 'test' phase of moving 500 ADSL1 users to ADSL2 with almost no problems (and all but 8 of the 500+ customers not realising there had been a change until they saw their speeds significantly increase) .........and many smaller but nevertheless significant aspects of our increasingly complex business - mainly in terms of 'tweaking' (some less than kind people might say "completing") a number of different new and old automation processes. And so it's Saturday morning and while the global economic news I've just finished reading is as negative as ever with more bad things hapening almost everywhere I actually feel more confident about what can be achieved in 2009 that I did at any time over the past few months. Strange how that happens some time. There's never any real basis for how differently things appear to be at different times - at least not in my experience - but sometimes you 'can feel the Force' and believe you can actually make things happen the way you want them to happen.....and it's far too early in the day for that to be the result of chemical changes wrought on your body and mind by the contents of bottles from Scotland. I still have major concerns about what will happen to Australians when the effects of the problems in the major countries around the world finally have whatever effect they are going to have on the Australian economy. However, and possibly quite wrongly, I am prepared to concede for the first time that the 'classic' commercial analyses might work in Exetel's favour should the financial situation deteriorate further (that in 'bad' financial times the lowest cost 'producer' does better than in 'good' times). I'm not, or at least I don't think so, basing this quite dramatic change of view on the recent upsurge of interest (denoted by the doubling of "sales enquiries" we have received over the past week) but more by what I hear from some our suppliers about what they see is happening with their businesses and the 'quality' of enquiries we are now receiving from medium and large companies wich would be unusual in any early January period and especially unsual in this one. It seems to me that there are far more company decision makers than I have ever seen in the past looking to reduce their IT and communications costs both in terms of their own systems and the services they make avaialble to their employees. Of course, a few enquireis, irrespective of their 'quality', don't translate to immediate business gains but I am very much getting the feeling that Exetel has passed some unseen 'mile stone' and is now, for the first time, being considered as a suitable supplier for companies who would never have considered us before. I may well be wrong but sometimes 'the Force' does manifest itself in 'concrete' ways. So I'm going to take my visiting sister out to lunch and then take her to the airport and forget about Exetel for a few hours on the assumption that it can look after itself for a while. Friday, January 9. 2009Is Business Getting Busier?........John Linton ......not more productive but just busier? A peculiar situation has arisen over the last few days - we are receiving far more telephone calls with 'sales enquiries' than we did at this time last year. This has reached the point where the physical number of telephone lines we use for incoming sales and support and account queries has reached saturation point on several occasions on each day and call wait times have shot up from an average of three minutes to an average of over 15 minutes since the start of 2009. This is, of course, a very bad situation for the people calling (and the people answering the calls) and one we have never faced before. We are putting in a 'crash' program to address this current issue but this time of year is not the best period to get additional telephone lines installed in a hurry nor to to do anything else as most of our suppliers are still at 'holiday staffing levels' and it takes a very long time to do anything. I don't know what has suddenly caused a 50% increase in our inbound call volumes at a time of year when they have dropped by 60% in each of the past four years. The vastly increased number of telephone calls are for sales type enquiries and while our actual volume of orders for all types of services have increased noticeably from this time last year they certainly haven't increased enough to explain the 'massive' increase in inbound 'sales' calls. Compounding this problem of a large increase in the number of calls is the increase in 'talk time' per call. I have no information on the content of the calls other than anecdotally but it must indicate that the callers are seeking more complex information or are less technically aware than in the past or a combination of both plus all sorts of other factors. Whatever it is it seems to point, at least in this particular 'flurry', to a different type of prospective customer contacting Exetel which is quite worrying in some respects. My assumption has always been that as ADSL becomes more widely used the 'technical' competence of the average user becomes better and therefore requires less 'question asking' and 'hand holding'. My assumption therefore was that as tie passed the number of "what modem do I need" and "how do I set up my email" level of sales calls would rapidly disappear and, as far as I can determine, it has done exactly that over the past five years. In my estimations this would have lead to the majority of customers for ADSL services already having an ADSL set up and already being familiar with how their modem/routers operate and how ADSL operates generally. For almost five years the call volumes received by telephone have tracked these assumptions pretty much as expected. Howeverthe huge increase over the past 10 days has no rational explanation that I can see. THis is proving to be the case with a majority of new Exetel customers coming from other ISPs via the ADSL1 or ADSL2 'churn' processes. However this should have resulted in less sales calls rather than the steep increase we have seen since the beginning of the year which when I now look back was becoming evident over the last quarter of 2008. I initally, and probably still, ascribed the 2008 increase in sales calls to the interest in the HSPA services which would be 'new' to even more experienced broad band users but I can't explain the surge over the past few days to interest in HSPA. Perhaps it's just that people are on holidays with more time on their hands and have decided to do some 'research' on a possible new ADSL provider if things get worse financially and they need to reduce their broad band costs? I suppose that could be a contributing factor but, like every other 'sudden' scenario it will turn out to be a combination of many different factors including a gradual increase that has gone unnoticed. I could do without yet another issue to resolve at the moment but it seems to be a complex combination of many issues that will need sensible examination before a decision is made on what should be done. The only worrying issue, to me, is whether this 'surge' will continue in terms of sales calls. Exetel has pursued a policy, for want of a more appropriate word, of not having 'residential' sales telephone answering to the point that, some two years ago, we didn't have an IVR option to talk to sales if you called Exetel. I'm seriously considering returning to that set up and will discuss it with the various people concerned over the week end. Perhaps, as I've become too busy over the past year or so, I've neglected to improve/simplify/clarify the information on the web site as much as I used to do and it has become less clear than in the past. Clearly there are far more services and options now which is inevitable but also obviously creates less clarity. I don't want the costs and problems of setting up a dedicated residential sales team at this late stage of Exetel's life - it goes against everything we have tried to do. We will need to find a better solution if the current call volume continues. Thursday, January 8. 2009Too Much Information - My Brain Can't CopeJohn Linton Maybe I am trying to digest too much information or maybe I just can't follow the methods of information disclosure that are now used in the main stream and communications media. I have no idea what to make of this when I read it earlier this morning: Perhaps, more than a possibility, I don't understand how different spectra can be used for different applications and Telstra sees this band as being more useful than their current HSPA roll out capabilities - but, while I know there is no limit to my technical ignorance, I just can't come to grips with how that could be the case and what justification there would be to fund a second wireless network of any real size. So why is Telstra spending some amount of 'real' money to buy a spectrum that it has previously shown no interest in and which has attracted very few users (admittedly being promoted and serviced by tiny companies with strictly limited promotion budgets)? What is it that this spectrum can do that Telstra's current HSPA can't already provide? I haven't got a clue. I have trouble with the "bought on a dog in the manger" basis as that makes less than no sense in any way I look at it. While we were attempting to find an HSPA solution over the past almost three years we looked at several wireless solutions using different spectra and came quite close on two occasions to actually investing some money in trialling them. While the money (around $150,000) for the trial wasn't particularly onerous in terms of capex at the times we got close to these decisions it was enough to tilt the balance to the negative when we considered what a second and subsequent 'step' might be. The problem for Exetel (as I'm sure the problem was for this spectrum's previous owners) would have been the complexity and cost of setting up a realistic network that would generate enough payback to be able to fund the financing costs. While Telstra wouldn't have any such problem it's very difficult to see on what basis they could use it for an end user service. I also can't see how it can be used as a microwave link replacement but that may just be my total technical ignorance. So one more 'dark cloud the size of a man's fist' on the far horizon of Exetel's HSPA plans? I have no idea. We will begin our 'three pronged attack' on the HSPA markets we will target over the next three months today offering portable data services via laptops/notebooks to 15,000 medium/large and large commercial organisations. I understand that Telstra, Optus, Optus/Virgin, Vodafone and 3 have already 'done this market to death' but we only need 10,000 units sold in this marketplace over the next nine months and believe we have enough 'exclusives' to make our offer much better than what I have seen of those made by the carriers themselves and their resellers. I think the fixed IP, a minimum monthly spend of $5.00 per service and the low per mb usage cost plus the ability to send and receive 5 cent SMS and to send and receive 3 cent faxes is a far more complete business offering than the carriers with their multi-gigabytes for $40.00 - a portable data service used in business doesn't get anywhere near 2 gigabytes at the outside - based on my own and people I know in business who use portable data services. The use of VoIP is an added bonus depending on the various issues I maundered on about a couple of days ago. We will know pretty soon whether we have been able to construct an attractive enough 'package' for a business user and, if not, then we'll move to our second strategy. We actually don't have an alternate sales 'strategy' as we have building the current one for over two years now in the hope that we would eventually find a suitable HSPA Layer 2 service that would make all our development work worthwhile. Over the weekend we will start the program of approaching our 256/64 users to point out some advantages of them considering using HSPA with the aim of interesting as many as possible in moving using some sort of free HSPA modem and activation offer. This will be much more difficult, operationally, logistically and in overcoming the 'differentness' of the concept of HSPA versus wire line. However it is a really key part of our 'move forward' plans for 2009 so we willhave to find the ways to make it happen. By the end of next week we will address a different 10,000 small/medium commercial entities with a VoIP over HSPA telephone service that should have a lot of appeal. We haven't been able to solve our fring issues of getting them to set up servers here and we have yet to get Nimbuzz fully functional but everything else seems ready to go.I think we will have to accept rality and write our own version of the fring/nimbuzz switching which will take a bit of time but shouldn't be that hard. So I don't know what to make of Telstra's buying up more spectrum but I'm sure someone much brighter than me will provide the reasoning in the not too distant future - in the mean time we have a lot of tough targets to meet and can't afford more speculation time. Wednesday, January 7. 2009Is it Really The End Of Civilisation As We Have Known It?John Linton I'm not given to 'philosophical' views of the world I have lived in nor on any other aspect of 'life' but I can't help but be forced to consider whether the much promised "recovery" from the 'GFC' will in fact happen or whether the world I have known and the worlds that everyone else has known do in fact continue to exist or have they, unnoticed by each one of us, slipped away over the past few months and been replaced by something very different. I read this earlier this morning: http://online.wsj.com/article/SB123125518158857415.html and wondered just how large a disaster it would have to be for one of the richest men in the EU to take his own life? Surely he would have been able to 'squirrel away' a few bill for a 'rainy day'? Over the last few days I have read some truly surprising articles about how gigantic companies such as Woolworths in the UK that after being in business for 100 years just ran out of money owing over a billion pounds and just 'disappeared closing 800 stores and putting 27,000 people out of work on one day. http://www.ausfoodnews.com.au/2008/12/24/woolworths-uk-closes.html Their receivers just couldn't find anyone to pay anything for that huge business or any part of it. Waterford in Ireland (whose products cram our glassware cupboards) celebrated its 250th anniversary of being in business and the declared itself unable to service its 850 million Euro debt and called in receivers with every likelihood that their 15,000 employees worldwide will lose their jobs before the end of February. http://www.guardian.co.uk/business/2009/jan/05/waterford-crystal-ireland In this brief article: http://online.wsj.com/article/SB123127612164858503.html Alcoa announced that it was retrenching 15,000 employees on top of the 8,000 employees it had 'let go' over the previous six months. Those four references are just a tiny fraction of the articles that appear every day naming more and more giant lay offs or total collapses of companies in virtually every part of the world. If you just take the smallest reference, to Waterford, what sort of effect is going to have on the entire town of Waterford and the surrounding district if Waterford Crystal ceases to exist after 250 years of employing local people? Will their 'world' now be changed beyond recognition? It's hard to see why/how that wouldn't be the case. Obviously similar effects will occur when any large local employer closes down and the media has dozens of references every day to such situations. Its all very well to read about the 'bail outs' of the US or UK banking industry or more vitally the US automotive industry. But what does it mean when entire industries in some of the richest and most highly developed countries on the planet are so badly run that they actually reach a point where they can no longer exist? The UK Woolworths example of a company trading for 100 years and employing so many people reaching a point where it was so hopelessly operated it wasn't worth anything is only an example of what the US auto and banking industry is - a hugely impacting part of a huge economy on which hundreds of millions of people are dependent threatening the end of all of those people's lives (economically at least and then how many 'steps' before throwing the rest of the life in front of a train - assuming they are still running). Apart from not being, in any sense of the word, a 'philosopher' neither am I an alarmist - apart from anything else I don't have the time. However I do read quite widely as part of the information gathering required to operate a small business and over the past 15 months it seems to me that more and more articles are being written, often by eminent and thoughtful commentators, that the 'civilised world's' "governments" have absolutely no qualifications, whatsoever, to be making the decisions they have made since the early 1950s. Not only that but as the world's population has trebled over that time the people making decisions on behalf of their various country's populations have become less and less qualified to make the sorts of decisions that grew ever more complex and required ever more base knowledge of an ever increasing range of issues. I know how little I know about the ever changing circumstances required to run a small business in an industry I have been involved with all of my working life. I fully understand my inadequacies to hold the 'position' I currently hold and to make the decisions I am required to make every hour of every day.......and, in general terms, I am more qualified and knowledgeable than most people in my position because, apart from having a realistic level of education and intellectual abilities I also have long and detailed experience in the basics of the tiny part of commercial life I am involved in. Have a look at the 'life time' qualifications of the current Federal Government decision makers and, irrespective of how you may have voted in the last election, consider, one by one, whether you believe that you are comfortable that any one of them should be making decisions on the responsibilities they have been given. Then realise that the same scenario would most likely exist in every other country on the planet. No wonder everything is in such a highly dangerous mess. The vote is a precious gift - it should be used more wisely in the future than in the past.
Tuesday, January 6. 2009
VoIP Provoking Mobile Carriers In To ... Posted by John Linton
at
08:02
Comments (10) Trackbacks (0) VoIP Provoking Mobile Carriers In To IrrationalityJohn Linton When Exetel first began to look for an HSPA service we always considered that VoIP would be an essential 'data service' just as it is with wire line broad band. I would have thought that there would be NO person on the face of the planet who wouldn't think exactly the same. VoIP became an important usage of a data network over two years ago and today more than half (and continuing to grow) customers signing up for an Exetel broad band service also sign up for an Exetel VoIP service. Clearly some people signing up for an Exetel broad band service already have a VoIP service with another provider making the 'total' vip users muchcloser to 75%. Exetel, like many commercial companies and an increasing number of government departments, only uses VoIP in its offices and from its directors homes and, more recently, from many of its directors and employees mobile telephones. With over 50% of new Exetel customers also choosing to use VoIP it would appear to me to be self evident that most Australians (I don't think Exetel users are any different to other ISP's users) now use VoIP as their standard telephone 'technology'. So I was amazed to receive an email from an Exetel 'associate' that pointed out to me that Optus had recently changed its mobile SFOA to include the following: 5.14 Voice over Internet Protocol or VOIP service calls We will charge you for calls made using the service on our 3G network to make voice calls over the Internet or any other Internet Protocol (IP) based network, including proprietary peer-to-peer internet telephony networks. Voice Over Internet Protocol (VOIP) services (other than PTT) will be charged at 1.5c per kilobyte of usage, capped at $9.90 per month until you reach 2 megabytes of usage in that month, after which you will be charged at 0.3c per kilobyte of usage for the remainder of that month. Of course, Optus can change the conditions under which it supplies its mobile services to meet its own requirements and doubtless there are clauses in its SFOA that allow those changes to be made at any time. I also understand that the convoluted, and incredibly obfuscatory methods of 'plan setting' used by all mobile companies have reached a level of such obscure complexity that 'changes' in technology may take time to penetrate the thinking of the 'marketing personnel' responsible for thinking up ever more complex ways of 'hiding the truth' from prospective buyers. However - it seems almost unbelievable to me that such a main stream world wide technology change (from POTS to VoIP) that has been happening for over two years would, apparently, come as a surprise to a major mobile carrier. I had been aware from a visit to the UK over 18 months ago that EU mobile carriers had tried to slow down the use of VoIP over their services by 'crippling' the mobile handset hardware they were re-selling when the first data over mobile handsets were used but both by subsequent law and the technical ingenuity of end users those attempts were quickly rendered inoperative. I, of course, understand that the 'capped' and 'timeless' mobile call plans offered by mobile carriers are based on very high mobile call charges and assumptions on call usage based on previous call patterns. I can also understand that some 'marketing people' didn't foresee that VoIP would be used on their mobile services when they added data components to 'capped' and 'timeless' plans. Careless of the marketing people but such situations happen from time to time as things change - no big deal - use new modeling assumptions moving forward. There is VERY LITTLE DOUBT (in my mind at least) that VoIP will be used as extensively on HSPA by end users as it will be on wire line broad band services and I can't begin to understand that any mobile carrier's "plan constructors" wouldn't know this. They MUST have known this when you give it a moments thought. What appears to have surprised them (based on the change to the SFOA - and the same changes were made to the conditions for the 'timeless' plans) was that people buying data plans (or including data plans) for mobile hand sets would also use VoIP. Why this should have come as a surprise, again, is beyond my comprehension. In Optus case, as one minor example, we made it very clear that we believed that VoIP over HSPA handsets would be very appealing to the sort of corporate customers we had in mind to market to. We also made the point that one MAJOR HSPA advantage was that it was a "naked" broad band solution and that "naked" ADSL2 was increasingly out selling ADSL2 that needed a phone line by 2:1 at the moment and continuing to increase. I guess all that means is that Exetel is such a tiny customer of Optus that our stated intentions over six - twelve months never got to the 'ears' (or perhaps 'eyes') of anyone in Optus who was interested in such views and then checked out what was happening to VoIP over HSPA around the world. Or, perhaps, they figured they could control the mobile hand set manufactures to cripple any HSPA hand set's abilities to use VoIP. I don't know how this will 'play out' in terms of either Optus or the other Australian mobile carriers 'adapting' their ts and cs but one thing I would be fairly sure about is that VoIP will be used over HSPA by almost every HSPA user by the end of this calendar year if not sooner than that. I must re-check the terms of my HSPA data supply contract. Monday, January 5. 2009New Year - New Exetel 'Era'?John Linton The first five years of Exetel's existence are over and today we start implementing the significantly revised operating plan which includes several new 'directions' and very new ways of operating the overall business. In fact we have already started to implement some of the plans and to make some of the required organizational changes.(if that grandiose phrase can be applied to a company of 40 people). We will also finalize most of the new plans for business users we have been working on over the past ten days. Perhaps it's my strange personality but I always feel 're-energized' and more optimistic when starting 'new years' or even 'new financial years' - perhaps it appeals to my sense of 'neatness'? Yesterday we raised the ADSL1 activation charge to continue to slow the receipt of new ADSL1 applications and today we will begin the process of moving some 8,000 ADSL1 users to AAPT ADSL2 at the same prices they are currently paying for their current ADSL1 plans - this should make the people on 256/64 ADSL1 and 512/128 ADSL1 plans really happy. If this process goes smoothly we will increase the new user ADSL1 activation charge further and then phase out offering ADSL1 to new users before the end of the current financial year. Today we will also increase the activation charges for all ADSL2 new users from the December promotional charge of zero to a fairly innocuous $40.00. For Exetel users who are changing from ADSL1 to ADSL2 it will, obviously, remain at zero. We will also start the 'persuasion campaign' to move another 13,000 ADSL1 users to the Optus ADSL2 plans and see if we can overcome the problem of people wanting to keep their telephone line rental and call charges with their current provider (Goodness knows why, but some considerable number of people seem to think this is important). We have had some successes with this migration over the past few months but not nearly enough and we need to find the 'magic' words to actually make this happen. I have run out of ideas. We will aim to complete this program of moving up to 20,000 ADSL1 to ADSL2 by April 30th 2009 - though that is probably a little optimistic and the more likely time frame is going to be closer to June/July. Of course, all time frames are dependent on Telstra's decisions, if any, on the ongoing provision of ADSL1 services in exchanges that are ADSL2 equipped and also the pricing of ADSL1 services. As we have zero knowledge of those possible scenarios we can only base our own plans on assumptions. We will also start the process of moving a further 10,000 256/64 and 512/128 low usage ADSL1 customers who aren't on ADSL2 enabled exchanges to HSPA services - assuming that there is coverage then these users would get the benefit of 4+ times the speeds of their 256/64 service at approximately 2/3 of the costs they currently pay plus the opportunity of getting rid of the telephone line rental should they wish to do that. You would have to think such a move would be very appealing but there is an innate conservatism at that end of the market that is hard to get past. We will have to try much harder. If these programs are successful they will result in moving 75% or so of all current ADSL1 services to faster infrastructure at less cost to the end user (and less cost to Exetel) - everybody wins. That's the theory and the plan. If it's successful then the end would be at least in sight of no longer being 'controlled' by Telstra and it would also be nice to get our million dollar bond back and use it more usefully rather than the 'dead' money it currently is. We will continue to interview to create three sales teams to market Exetel's products and services to three different marketplaces and will begin the 'set up' work to make the services 'known' to prospective buyers by the start of next week. This is 'new ground' for Exetel and will therefore, in very different ways, be more difficult than migrating 30,000 ADSL1 users. We have never had any real sales presence other than to respond to telephone and email enquiries so building the equivalent of another Exetel (40 sales people) is going to be an interesting exercise. All in all it will be a pretty busy week operationally but, one of the many advantages of automated systems the 'physical' work can be accomplished by a few key strokes. The main work is in dealing with the customer queries and the provisioning 'glitches' that may occur. However we have extensively 'tested' these processes over the past few weeks and are relatively confident that the systems in place can cope with the planned increased volumes. Time will tell, but if there are any issues we will slow/stop the process until they are resolved. Our other key program over the coming months is to increase our HSPA sales from a few hundred a month to 3,000 a month by May. This will not necessarily be much more difficult but it will require us to reach new markets and put in place new programs that we haven't used for over five years and we therefore have no current knowledge of how to make this happen in any current detail. It will be exciting. So a new year and a 'raft' of new challenges and opportunities. Does life get any better - even without the smell of napalm in the morning? Sunday, January 4. 2009Interesting Challenges Will Abound In 2009John Linton I was thinking about the total weirdness of a company like Internode agreeing to resell ADSL2 services from Telstra Wholesale and the fact that some other ISPs have done the same. I have made my thoughts clear for some time (more than a year) about the actions taken by Telstra in their various 'marketing programs' and their sudden "Road to Damascus" conversion from "fighting the ACCC to the death to prevent being forced' to wholesale their ADSL2 services" to "Hey, pssst - wanna buy some cut price ADSL2?" approaches to what I presume was to every ISP in Australia in mid 2008. (my use of the words "cut price" were in keeping with the phrasing of the illustration of course as the pricing subsequently set by the various ISPs who are offering TW ADSL2 are anything but). The only conclusion I can come to is that Internode and other ISPs who have taken up this strange 'path' must have a more compelling reason than a cheap and nasty grab for money by selling massively over priced services to people who have limited/no options and have also decided that their revenue statistics need 'propping up' by adding re-sold telephone line rental and Testraesque sky high call charges as their current revenue growth tapers off (falls?). Doubtless I have completely misunderstood the situations but I can't come up with any other rationale. What is the 'compelling reason' likely to be? I obviously have no idea not having talked with Telstra myself (something I can't bring myself to do if I can possibly avoid it as my experiences in the past have always ended up with me leaving any meeting with Telstra feeing like I either need to visit a psychiatrist to check whether my understanding of reality is really as out of kilter as Telstra personnel insist it is or needing to find the nearest bar to drink more than several large single malts to get the taste of the sh** I've been forced to swallow out of my mouth). The only 'compelling reason' I can think of that makes any sort of sense out of the weird decisions recently by Internode and iinet and, to a lesser extent the other companies that have 'decided' to 'sell' TW ADSL2 is that they have 'formed the view' that Telstra's ADSL1 services in exchanges where Telstra has deployed ADSL2 will be 'withdrawn or 're-priced' in some not too distant future. Of course, as always, I could be totally wrong - I just can't think of any other reason why these 'independent' ISPs would make such a stupid decision. Telstra's ADSL1 pricing is far higher than any other wholesaler's ADSL2 pricng and presumably, far higher than any 'independent' ISP's own ADSL2 deployment pricing so moving from TW ADSL1 to ADSL2 should always allow a faster service to be provided at a lower cost that the slowest Telstra ADSL1 service (256/64). So moving from Telstra ADSL1 to ANY other wire line based broadband service is a 'financial no brainer'' - which is, of course, why so many ISPs built out their own capital city DSLAM networks. Then the 'NBN' "tender" came along and, at least it appears, that many of these 'independent' DLSAM builders have had a change of 'heart'/made a 180 degree turn and decided that "no more DLSAMs for me - Im going to join the Evil Empire and screw the Federation of Independent Planets - oops - Terria".......or something like that? One of the major projects that Exetel has to carry out over the first half of 2009, and we started this process in July 2008, is to convince as many of our current high speed/higher usage ADSL1 users as possible (that have the option) that they really should move to ADSL2 whether or not it means moving their telephone line service provider away from their current choice and use the Optus service which is much lower cost. Simultaneously we have the even more difficult project of moving our lower speed/lower usage ADSL1 customers to an HSPA service. Again this is economically to their advantage but it's "new" and therefore carries all of the "unknown terrors" with it - not the least of which is the plethora of bad press dished out to Optus in the middle of last year by the media brotherhood of Optus haters. One way or another we are going to have to cajole, convince, logically argue or 'sweet talk' in some other ways almost 40,000 current ADSL1 users to move to Optus or AAPT ADSL2 or to Optus or Vodafone HSPA in a limited amount of time. My 'gut feel' is that we have to make that happen more quickly rather than less quickly - but then I have often been wrong in the past. The alternative is.......well.....I can't think of an alternative at the moment as I would find it hard to imagine under what circumstances I would either sell my soul (assuming it had any resale value given its long and badly abused life to date) or submit myself to an ethicotomy. Saturday, January 3. 2009What Will 2009 Bring To Australia's Larger ISPs?John Linton It's again that time each year, for the past 7 years (since I first became involved with ADSL), that I have taken a few minutes to look at the coming 12 months in terms of what I think will happen to ISPs (including Telstra) over the coming twelve months. I used the time on the flight home earlier this morning to think about what Exetel can expect in the way of competitive pressures in 2009. My predictions on 2nd January 2008 can be found here: as a guide to how useful my views may or, much more likely, may not be. One thing that 2008 finished off was the almost total elimination of the 'lunatic fringe' ISPs. There are still a couple left but they too have almost completely disappeared from sight and, I suspect, will cease to exist completely in the coming few months. My random assessments of the 'top ten': It seems highly likely that Telstra will ramp up its ADSL2 offers and those users who can get ADSL2 from Telstra will be very 'tempted' to swap their ADSL1 service for the higher speeds of ADSL2 via a series of 'unbelievably low priced' "special offers". It seems to me that Telstra will do everything possible to cease suplying ADSL1 to wholesale customers, at least in its current form, as soon as possible wherever it has ADSL2 ports. With their elimination from the 'NBN Tender' they will do everything possible to use their current ADSL2 and HSPA networks to render any faint hope that an NBN can be delivered in some sort of 'this century' timeframe as unlikely as possible while they get their paybacks from their ADSL2 investments maximised. By already 'sucking in' some of the 'independent' ISPs in to becoming Telstra ADSL2 resellers and with the 'carrot' of also letting them re-sell (if not wholesale) their HSPA service at 20 mbps type speeds in the foreseeable future they have a fairly simple way of eliminating the urgency/need for an NBN of any description. Prediction: Will continue to grow ADSL2 and HSPA customer base at the expense ot their own and their competitor's ADSL1 customer bases.
They will have to cut Telstra's current HSPA lead but this will also be hampered (in terms of allocated capex) by their need to stay involved with the NBN. The ongoing squeeze by VoIP on land line rental and land line call revenues will make life difficult for them for the foreseeable future. AAPT iiNet Then there was the even stranger decision to become a "3" dealer"? What was that all about? Prediction: will run out of money and be bought out No-one else, including Telstra, delivers such profits (as a percentage of revenue) and the vast majority of communications companies don't deliver any profit at all. Mind you - the predicted 2008 profit disappeared in the predicted "unforseen issues" in the taken over company's books so it will be interesting to see just what profit is delivered but as a public company the predictions will now be more accurate. SOT continues to heavily advertise and has continued to develop its network so, far more than iinet, SOT has a 'reason to exist' as it does offer a low cost/high usage alternative to Telstra for a range of products but it may have to address the danger of burying its network with high end users at low prices. Prediction: TPG continues to grow and, as far as can be determined, continues to make a lot of money. It is the likely "third provider" in the current Australian marketplace. Their decision to wholesale Optus ADSL2 and then, even weirder, wholesale Telstra ADSL2 is bizarre for a company that claims to only offer value to its customers. Prediction: Will need a 3/4G service to remain relevant. Adam Internet I know absolutely nothing about this company but companies of this size can only have a future as a takeover candidate for someone bigger - given the money is right which in 2009 is not likely. Prediction: No idea Of the current crop of suppliers of communications services only TPG (SOT - must stop using "TPG" this year) appears to make any 'value offer' with Optus, iinet, internode etc just taking Telstra's high prices and offering the same service configurations at a few dollars a month less. Not very imaginative or any reason to be in the business at all. Exetel? Too small to bother with but may survive and grow in 2009. Friday, January 2. 2009First Signs Of The Pain To Come In 2009John Linton Krudd has urged Australians to approach 2009 with optimism but that is an almost criminal abuse of his position as he very well knows that 2009 shows every indication that it will be the toughest year in the history of Federation with the possible exception of 1932. Absolutely NOTHING in any expectation or analysis indicates that any individual or any company should "approach 2009" with anything except extreme caution. The first indication of the fearsome 'sea changes' that have begun to affect even the communications industry were contained in this article in yesterday's SMH: http://business.smh.com.au/business/mobile-phone-dealer-takes-hit-20081231-77xj.html You may take the view that large mobile phone reseller chains are particularly vulnerable to minor 'down turns' in the economy and you may well be right. Similarly you may also well say that PCs (in this case Apple hardware) would also be one of the products that would be an early 'victim' of any "softening of the economy" and, again, you may well be right. Similarly you may take the view that Vodafone bought out Crazy Johns for sound long term change of strategy reasons or, like me, you may take a more jaundiced view that Crazy Johns, having settled its non-payment of debt to Telstra by a court action still had an unsustainable business model (give away everything possible) that quickly put it in the same position with Vodafone whose only financial recourse was to 'buy' the company. Irrespective of what the real situations might be these are very real indications that as Ms Horne is quoted as saying: "due to weaker consumer demand and increased competition" It's axiomatic that as demand for any product falls the competition for the lower number of customers increases so that comment is actually tautological but irrespective of the semantics she 'eloquently' summarises the situation that FoneZone and all other mobile resellers are now facing and have been facing for some time - falling demand, lower margins due to increased competition for the smaller number of available customers, store closures, cash flow problems and a very, very bleak outlook. Closing stores, of course, means people losing jobs and people losing jobs mean less money spent in their local communities and more money required from the Federal Government for social security and less tax receipts to pay it. I know - this is sounding like national economics for the very young - so I assume the point is made. Which brings me to the point I had intended to start with as I did my final review of the amount of capex that Exetel may be able to use over the next 12 months. I eliminated for good (well, until the next capex review) any consideration of investing in DSLAMs. My reasoning was that, although it is now possible to get DSLAMs installed 'for nothing' (on no payment for 24 months and at literally 40% of the quoted cost 12 months ago) terms and the cost of the dark fibre needed to connect the DSLAMs is now about half the price it was 18 months or so ago the concept makes even less sense today than it did when we first considered it. Think about it - Telstra, Optus, AAPT, iPrimus, TPG, iinet, Internode, Adam and others have installed their own DSLAMs in the same, relatively few, exchanges. If Exetel can get interest free 24 payment terms you have to believe that all these other companies got better terms than a tiny company like Exetel can get which means that, increasingly, these companies have begun to reach the end of their 'payment holidays' and are now having to pay for their DSLAM equipment. Not a problem - they've had 2 years or more to build a realistic customer base on each of those DSLAMs so they are now cash flow and EBITDA positive on their investments. That could easily be the case - listening to the sales pitches from DSLAM providers/installers/financiers that certainly sounds like it should be true - so almost undoubtedly it is - at least at this point in time. The mobile phone situation echoes what I think may well be the case with ADSL2 - which is very good news for customers (whoops - unless of course they signed up for 24 month or longer contracts recently - they knew there must be a reason for that didn't you?). With all that competition in the top 150 exchanges and with the rapidly declining amount of 'disposable income' available to buyers of internet services there is going to be two things that are going to happen to ADSL2 prices over the coming 12 months starting very soon (probably have already started). The first thing that is going to happen is that each of the companies that has installed DSLAMs will have projections of how many additional customers they will get each month both during their 'payment holiday period' and then in each succeeding month. These forescats would have been made, for the most part, before the 'the economic slow down' of 2008 and while they would have been continually 're-adjusted' there would have been a 'floor' below which the sales forecasters wouldn't have dared to go. It will now become apparent that those forecasts are going to have to be revised downwards and quite considerably downwards. As this can't be financially accommodated for more than a few of these companies the end result will be to lower end user prices to give credibility to not reducing the sales numbers to what they point to. A major win for end users - there will be a series of offers that will be increasingly attractive but will always involve 24 month plus contracts. The second thing that will, almost certainly happen, is that even at the new lower pricing, increased advertising budgets and increasingly 'hysterical' marketing 'give aways' the total forecast new users for all of these DSLAM deployers is going to fall increasingly short of the number required to make the investments in DSLAMs make a profit or even, for some, break even. Until now the DSLAM deployers have been 'cushioned' by the two factors of 'payment holidays' and a growing wire line broadband market. The wire line broadband market (overall) is not growing anywhere near as fast as it has previously (according to the ABS anyway) and the upgrading of ADSL1 users to ADSL2 is also 'naturally' slowing as the number of ADSL1 users on ADSL2 exchanges decreases via transfers over the past 3 years. Now there is the looming 2009 'financial slow down' which will reduce the total number of broadband buyers to something approaching 70% of 2008 numbers and this occurs in conjunction with the growing use of HSPA (for low end users) further negatively affecting ADSL take up and 'ADSL1 conversion'. Ms Horne's statement will apply to ADSL2 just as surely as it does to mobile phone services and Apple computers: Less Demand = Lower Sales = Lower Prices = Lower Profits = No Profits - Quite Shortly I could be wrong but I think it would be better not to have to pay a monthly leases on ADSL2 equipment in 2009.
|
CalendarQuicksearchArchivesCategoriesBlog AdministrationExternal PHP Application |