Friday, February 13. 2009It's Darwin's Birthday......John Linton .....and his 150 year old views on the survival of the fittest are reinforced by the news from the Valley: http://online.wsj.com/article/SB123439862101275191.html and probably elsewhere - but I drifted in to a period of reverie and nostalgia when I read those town names earlier this morning and couldn't be bothered to read on through the rest of today's tech wreck items. I drifted away for 20 minutes or so looking for web site references when I should have been doing something more useful and remembered with great fondness my many visits to the different companies in the townships around San Jose and what a great, collectively, bunch of truly innovative and desperately dynamic people I knew back in those days and wondered what has become of them. One thing that did strike me in the bits of tech news I did quickly browse was this: http://www.itnews.com.au/News/96206,hotkey-franchisees-await-update-as-email-outage-rolls-on.aspx which caused me to wonder why a company the size of iPrimus could firstly have such a major data centre disaster (which affected other ISPs including Exetel because PIPE provides our Sydney - Melbourne link and our some of our local direct connects) and then couldn't get an email service back on line for ten days - just what sort of poor network design could cause such an issue? I also didn't recognise the names of the companies (I assume they are VISPs or hosting providers) that apparently rely on iPrimus/HotKey services. So I assume that they are tiny compaines or very small 'niche' service providers that have no ability to buy services for themselves. Maybe the iPrimus data centre problems are their equivalent of the alleged comet that exterminated the dinosaurs? I had thought that the number of tiny ISPs was continuing to rapidly decline and was continuing to go out of business leaving only debts to the companies foolish enough to supply to them (mind you the Strathfield Car Radio shows that a company can rack up tens of millions of debts to suppliers as experienced as Optus and GE Money so I'm not singling out tiny companies as the only examples). So I had to have a bit of a chuckle when I was sent this: http://www.asx.com.au/asxpdf/20090210/pdf/31fzj07rd6yx51.pdf The concept of a tiny company like EFTel with its unbroken record of making losses and having its auditors qualify their annual accounts saying there is doubt that they are able to continue in business offering "wholesale ISP services" is just plain laughable. What sort of services? ADSL2 ports on their handful of unpaid for HuaWei exchanges? Seems to be a case of the blind leading the blind. If iPrimus can't get an email and other hosting services back up for however many tiny ISPs they are currently inconveniencing it beggars imagination to think that a rag, tag and bobtail operation such as Eftel's (itself a kluge of half a dozen financially failed tiny ISPs) that its last five annual reports demonstrate it to be, can provide "wholesale ISP services". So it's fitting that on the anniversary of Darwin's birthday, a reminder that only the fittest survive, that there are at least two slightly larger companies doing their best to wipe out a larger number of tiny companies - talk about the triumph of hope over experience. I ponder Exetel's future when I read such nonsenses. Well, that's not strictly true as I tend to think about Exetel's future all of my waking hours so I probably should have said that when I read about the Valley closures and 'announcements' such as the one I referenced from Eftel I think through what implications there are for Exetel - if any. The only thing that crossed my mind when I read the Eftel announcement was what was happening within PIPE? A quick check of their last annual report shows Warwick Pye listed as a senior manager within that company on a remuneration package of around $A350,000 (including the bonus component of $A150,000 all or some of all which he may not have earned). Now PIPE is a supplier to Exetel, with a respectable background, a decent market capitalisation (though admittedly, not as good as a year ago) and, given that their cable investment pays off, an interesting future. Eftel, on the other hand, is a penny dreadful with no money and no future and a group of 'managers' who, at the wildest stretch of kindness, have no background in the industry or any serious qualifications to operate a technology company. So it made me wonder what happened to Mr Pye at PIPE to make Eftel look like a sensible career move (was it a simple 'didn't reach sales targets' parting of the ways)? Which lead me to further consider the reverse scenario as to whether it was a question of Mr Pye, knowing what was happening at PIPE, saw bailing out to a 'teetering on the brink' (according to its last two annual reports) dog's breakfast of an organisation (if that's the appropriate word) like Eftel was a sensible 'career move'? Darwin's birthday seems to bring such considerations to my mind each year and I make a note in next year's calendar to check that Exetel is still in existence and is still obeying all of the precepts of business survival which, as far as I can see, it is still doing even in this toughest of all years in which survival is going to be harder than ever. Without being pointlessly pessimistic I think it's going to be a year where 'survival' may well be counted as a success and if any commercial entity was able to grow, even a little, then that could be counted as being very satisfactory. I suppose that means that Exetel's plans to grow at a more rapid rate than in previous years is not very sensible - but, so far, that remains our objective. Where did I put my "what really killed the dinosaurs coffee mug"? Thursday, February 12. 2009
$15.00 Per Month PSTN Telephone Line ... Posted by John Linton
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Comments (68) Trackbacks (0) $15.00 Per Month PSTN Telephone Line Rental....John Linton ...with very low per call charges?...has to be the best telephone line deal in Australia? I have been trying to find 'the way' to encourage Exetel's ADSL1 users who are connected to the 400 or so exchanges that Optus have installed ADSL2 DSLAMs in to move to the faster ADSL2 speeds for almost two years now but particularly so over the past three months - and completely failed to come up with something that will break through this resistance. In fact there is now a 'hard core' of around 15,000 ADSL1 users on ADSL2 enabled exchanges that give every indication of not ever moving away from ADSL1 - at least with Exetel. So my latest attempt will be to offer Australia's lowest cost PSTN line rental of $15.00 a month which, as far as I can see, is lower than the infamous Telstra Home Line Budget (with its horrendously high call charges) at $A20.95 and even cheaper than Telstra's "Pensioner" discounted telephone line rental at $A17.95. $A15.00 is, of course, far lower than the sort of charges made by other ISPs/telephone service providers for their "bundled" telephone plans which seem to vary from $A25.00 to over $A32.00). As well as this ultra low cost line which already comes with very low cost call charges, again much lower than Telstra's or other ISPs, I was getting desperate enough to throw in unlimited local calls or something like that in this 'last throw of the dice'. I have been deeply puzzled by why a broad band user wouldn't move from a 256/64 line speed to ADSL2 speeds at no down time or transfer cost at the same price as they were paying for the slower service....but after two plus years of trying I can't make it happen. Exetel's ADSL2 prices are already as low as we can make them and stay in business so we can't 'improve' that aspect of the pricing. So, hence, my latest and almost certainly last way of looking at this issue is to offer the lowest cost telephone line rental (for many current ADSL1 users this would represent a 50% reduction in line rental cost) and not 'smoke and mirrors' that low line rental by jacking up the per call charges/per minute charges through the roof. So - new year - new offer: 1) Current ADSL1 plan monthly price/current downloads - no service change charge/no downtime. Maybe I've just lost it when it comes to understanding today's Australian communications buyer (as I said yesterday I've never understood the Australian mobile buyer). So we'll send this offer to the customers to whom it applies over the weekend and see if it works better than the previous approaches - if it doesn't - we'll just have to give up and move on to PLAN Z.
Wednesday, February 11. 2009Trying To Make Sense Out Of NonsenseJohn Linton It's that time of the review cycle again where we look at our mobile telephone offerings and, yet again, ponder the stupidities and mysteries of the mobile carrier's love of "capped" plans which are not "capped" and the, presumably, equally impossible to understand attraction the mobile telephone buyers have to "capped" plans. I've probably referenced my total bafflement with the buyer/seller symbiosis that has seen this 'cancer' overtake all rationality in the provision of mobile telephone services to the point where, it appears to me, that the buyers agree that they are truly stupid and that they want to be conned by the "Get $1,000 Worth Of Calls For 1 Cent" 'headlines' that are, apparently, the essential main wording of every mobile plan ad. I have always looked at technology pricing in the most straight forward of ways. You get a certain amount of service for a stated rate that the buyer can easily understand and compare. Obviously that's not the way mobile phone call plans are offered for sale. So we will, yet again, try and offer mobile plans that will "appeal" to what the mobile carriers have deemed, by long usage, that the buying public want to see: Large Amount Of Calls At Huge Discounts - If the headline ad is to be believed. A long time reader of this blog who has always offered opinions that gave every indication of a reasoning and intelligent mind recently pointed out the fantastic value of a new TPG (no contract) plan that offered $300.00 for $20.00. Fair enough - here's a company apparently offering the buyer a 93% discount - what a fantastic deal - in anyone's language. But does anyone with any sort of intelligence really believe that that in any competitive market anywhere on the planet there is so much profit in any product or service that it can be sold for 5% of its retail price? Apparently there are. Maybe not - maybe everyone knows that they really aren't getting a 95% discount and that the carriers are misrepresenting the truth but it's OK because they all do the same and it's just a 'cue' to work out how many minutes of calls you actually get for the monthly "capped" price. There is little doubt that the TPG plan (using the Optus mobile network) is the best value available compared to all other $20.00 "capped" plans from all other carriers or their re-sellers. A quick, and by no means comprehensive, 'analysis' of other $20 offerings seems to show that TPG offer around twice as many calls as all other providers of mobile services. Looking at the current market the 'average' "value" is around $150.00 of calls for $20.00. Of course it isn't that simple as the call rates and flag falls and data costs and...... all vary but this 'war' is fought on the two head lines of: "$10 million worth of calls for $00.001 cent a month' 'logic'. Doubtless the "Soul" part of the current TPG had built up some large volumes selling Optus mobile services and therefore buy infinitely better than Exetel's tiny numbers alows us to buy the same minutes for. However, even in my wildest imaginings and humblest view of Exetel's less than stellar negotiating skills, I can't believe that TPG buys at less than 50% of every other large mobile retail seller/reseller most of which are far larger than Soul let alone at 80% less than Exetel, tiny though it may be, buys mobile minutes for. Yet that is what TPGs retail pricing suggests - so it must be true. Exetel will offer 'new' mobile plans by COB this coming Friday and will incorporate new "capped" plans that are more than comparable to those offered by the main mobile resellers and carriers although I don't understand any more today than at any time in the past why I'm allowing Exetel's straightforward and, well - honest, pricing policies to be 'sullied' by conforming to those prevalent in the mobile market. I would prefer to sell mobile services on the honest basis of: No flag fall Charge per second (not 30 seconds) 0.25 cents per second Then again - I think that all 'savvy' mobile call buyers will use VoIP over HSPA mobile in the near future and pay 10 cents per untimed PSTN call and 30 cents per untimed mobile call and this whole "capped call" smoke and mirrors nonsense will just disappear. Tuesday, February 10. 2009And Then There Were Three......John Linton ....and while it was always true that Australia didn't need, or perhaps didn't even have 'room' for, four mobile carriers the Voda/3 'merger' illustrates that even trillionaires can't 'make it happen' in the "GFC": http://www.australianit.news.com.au/story/0,24897,25029119-24169,00.html So the first major 'Australian' telecommunications company has 'bitten the dust' and that may just be the first real sign of the financial events around the world are going to affect Australia even in an industry that will grow between 4% and 5% over the balance of 2009. Of course the deal has yet to be approved so it isn't certain but the message it sends, irrespective of regulatory approval, is quite clear. To build a viable mobile network costs billions to establish and then more billions to keep operating as technology continues to advance and has, looking at Australia only, a long ROI - around ten+ years. So there will never be many mobile carriers in any country and three is probably just right for a country of Australia's population; two clearly wasn't enough as a duopoly will always reach a modus vivendi that will mean no 'real competition'. However the loss of '3' will have bad results for mobile phone end users because they did have to try so hard to build their 8% (or whatever it really was) market share they did force the other mobile carriers to take some heed of their stream of low cost offerings especially, most recently, in the HSPA services.....or as the article puts it so delicately: "financially irrational pricing" So is it just the inevitable capitulation of an overly ambitious investment by a Hong Kong conglomerate that was bound to happen sooner or later? Or is it the first sign that these tougher financial times, for Australian communications companys that have borrowings disproportionate to their revenues and balance sheets, that the game is up and their grand dreams and delusions are now confronted with the need to pay back what they have borrowed? I certainly would have no idea. What I do think is that it has only taken until early February for the first major company to 'withdraw' from the Australian telecommunications market and that it won't be the last. Australia clearly doesn't need 32 (or whatever the latest ABS report will show) ISPs and, as the Strathfield Radio collapse showed, it clearly has far too many mobile phone and HSPA 'discount' retail chains. The 'demise' of PeopleTelecom also showed that telecommunications companies that try to be 'a one stop shop' just can't ever make a profit irrespective of how they grow their revenue. So these three 'incidents' can be regarded as inevitabilities, a long time in the making and whose time had come coincidentally at the same time or they can be aggregated as a clear trend that 'marginally' profitable/unprofitable, continuously needing investment companies will find it very hard to continue operating in 2009 in the communications markets in Australia. Given the worldwide collapse in mobile phone hand set sales (down 12% in the December quarter) continues in to 2009 you would expect to see Strathfield Car Radio as only the first of the mobile discount chains to disappear owing their mobile carrier suppliers many, many millions of dollars and disrupting that "Emperors New Clothes" mobile phone marketing fantasy leading to a reduction in mobile revenues and bringing the free flowing growth of mobile telephone call revenue and profits to a screaming halt. The same scenario could very well apply to ISPs who have relied on easy growth in broad band customers to 'forgive' their inefficient operating structures for the past five years. I obviously don't know what the December half year ABS statistics will show but I will bet real money that they will show a sharp reduction in ADSL growth over the last half of 2008 and an annual reduction in broad band growth rate from the 12% (or so) of the previous 12 month period. What this may mean, if it is in fact the case, to the 32 remaining ISPs (or I guess that is now 31 with the demise of People Telecom) can only be guessed at, but it would probably mean more ISPs ceasing to exist. So, while a 'merger' between two multi billion dollar mobile carriers, that seemed inevitable for many years, may mean very little/nothing in any other parts of the communications marketplaces the signs are that it will simply be the first of more than a few such changes over the coming months. As in every "down turn" - the weakest go first....and for those that think all is rosy in telco land: http://www.australianit.news.com.au/story/0,24897,25029119-24169,00.html
Monday, February 9. 2009Australia Is A Harsh Country In The Best Of Times...John Linton ....it doesn't deserve to also have the total inexperience, incompetence and doctrinally derived stupidity of a Krudd, Whine and Guillotine when the country is fire and drought ravaged and also facing the worst economic problems of its existence. Krudd's 'first' priority after being elected was to waste a great deal of time and money running his "ideas" summit, saying "sorry" to someone on behalf of someone and signing a 'protocol' that Australia was already adhering to while immediately repudiating the future requirements of that protocol which was why the previous government deemed signing it was a waste of time. And by the way - where is Krudd's "list of implementations from the "ideas summit"? Nowhere of course. It was a chilling reminder of just how stupid the man that some of you had elected to an office he had zero credentials and abilities to hold actually was and how little he understood about the office he now held. Whine's contribution to Australia's financial well being, and his clear demonstration that his knowledge of finance and economics equated to something less than zero (naturally he was made treasurer!) was to trumpet that "his" budget was all about "getting the inflation genie back in the bottle". Apart from the crassness and sheer inapplicability of using such a truly dumb phrase and being TOTALLY wrong about Australia's financial situation he showed himself to be a total wanker with no more knowledge of finance than pond scum. Where's the inflation genie now, Whine? - is it back in the bottle? La Gillard's screeching voice (which must rate as one of the major noise pollutants in the ACT - God I hope whoever is giving her elocution lessons makes some progress soon) and her juvenile hopping and skipping while she tore up some Work Choices pamphlets was only done to disguise that, after all her rhetoric, she WAS KEEPING MOST OF THE WORK CHOICES KEY PROVISIONS and only throwing 'some bones' to the Union running dog commo's that her parents had indoctrinated her to idolise. What she has tried to do by her stupid changes is to ensure that unemployment in these difficult times becomes even worse by her doctrinaire stupidities. And then there's the f***ing "stimulus packages" with their inclusions of p***ing away other tax payers earnings in cash give aways. This article in today's SMH outlines how Rudd has lied outrageously since his second day in office and how his wild distortions get ever more ridiculous. Krudd is a compulsive liar with a sociopatic attitude to his lying which he clearly believes no-one notices: Do the lunatics that still approve of Krudd in those opinion polls actually listen to his constant lying or do they think he tells the truth? As I can have no credibility in my comments that such pointless populism is as I wrote previously, simply a modern day "Panem et circenses", let me quote from today's WSJ (the most read article in that paper today): http://online.wsj.com/article/SB123396623933859023.html "A dollar doled out in jobless benefits may well be spent by the worker who receives it. That $1 of spending will count as economic activity and add to GDP. But that same dollar can't be conjured out of thin air. The government has to take that dollar away from someone else -- either in higher taxes, or by issuing new debt in the form of a bond. The person who is taxed or buys the bond will have $1 less to spend. If the beneficiary of that $1 spends it on something less productive than the taxed American or the lender would have, then the net impact on growth will be negative. Some Democrats claim these transfer payments are stimulating because they go mainly to poor people, who immediately spend the money. Tax cuts for business or for incomes across the board won't work, they add, because those tax cuts go disproportionately to "the rich," who will save the money. But a saved $1 doesn't vanish from the economy, unless it is stuffed into a mattress. It enters the financial system, where it is lent to others; or it is invested in the stock market as capital for businesses; or it is invested in entirely new businesses, which are the real drivers of job creation and prosperity." Obama is having a lot of trouble getting his "p*** away as much money as quickly as possible plan" passed and that's not because the Republicans are against its composition but also some Democras are against it! - something that doesn't happen in Australian politics. Sure its only another opinion but it does serve to underline the same problem we have with Krudd et alia - Obama is a very inexperienced "leader" with no knowledge of finance who is taking bad advice and trying to use his 'popularity' to do some really bad things. As the article notes "That's rhetoric for a campaign, not for a President hoping to rally bipartisan support." - exactly what Krudd and Whine are doing with their attacks on Turnbull - they are playing really bad politics instead of addressing real problems in the best possible way. As the opinion goes on to note (and the same applies in Australia): "because the size and waste of the stimulus means we won't have much ammunition left. The spending will take the U.S. budget deficit up to some 12% of GDP, about double the peak of the 1980s and into uncharted territory. The tragedy of the Obama stimulus is that we are getting so little for all that money" Krudd's uneducated and totally ridiculous lack of knowledge and his childish posturing and antics (and his shameless serial lying) are removing any hope of sensibly dealing with the financial situations in Australia. Sunday, February 8. 2009What Do Customers Want From Their ISP? (2).......John Linton .....or in this context, what can an ISP of the future give their customers? When Steve and I were first associated with each other, and coincidentally in setting up one of the early ISP services at TPG as it then was (obviously on dial up), providing the customer with one email account was the limit of the service 'add ons' that could be offered. Email in those days (mid 1990s) was not widely used - how could it be? - internet generally was in its infancy - so this 'add on' probably had a limited value to the residential user of the time. As we parted and re-joined ways over the succeeding ten years on various internet set up assignments for different companies (OneTel and Swiftel jointly and Paradox for Steve and Apple/iGreen for me separately) we gradually added to the 'add ons' but, when I thought about it at the time or think about it now, those add ons were not of particularly good value or even widely used by the various customers of those four different ISPs. I watched other ISPs similarly struggle to provide 'added value' including "free streaming radio", free 'PIPE' peering data, free mirror services, free garbage TV stations and so on - all of which were characterised by being of extremely limited value to less than a fraction of any ISP's customer base. ISPs have continued to struggle to 'add value' to a basic internet service since I was first involved in the ISP business and most of the 'added value' provided, across the board by every ISP in Australia, doesn't seem to add any customer value at all - only cost and in the "bundle your telephone line and call cost" scenarios they add massive costs to the customer, entrench Telstra's revenue and profit position in communications and ensure that progress in implementing new technologies is slowed to a crawl. Exetel has, since February 2004, tried to really add value to the basic internet service but I doubt that we have, as yet, succeeded in doing that in the ways we had hoped to do. Our current line up of 'added value' services either free or at minimal cost is, probably, more comprehensive than all other Australian ISPs but with a base premise of providing base internet at the lowest cost of any provider in the Australian marketplace our abilities are very constrained. So: We offer 20 email addresses rather than 1 or a few and we offer 500 megabytes of free web space rather than a few megabytes and a free blog service but Google and a plethora of others offer free emails and free web space and blog space that "have the advantage of not being ISP dependent".The cost to Exetel of offering these three services is around $A8,000 a month at the moment and I can think of plenty of uses for another $A100,000 a year rather than wasting it on providing services that can be obtained 'free' somewhere better. So perhaps we should drop those three services and spend the money on something more valuable to our customers? Unfortunately every time this suggestion is made the arguments for not providing these services fall away very quickly under a storm of protest from the customers who use the services (almost 80,000 of these services are in regular use at the moment so the appeal of "ISP Independent" email addresses and web space isn't as 'universal' as some proponents make out. No such arguments are advanced for our three most popular 'add on services': 100 free VoIP calls, 30 free SMS and 20 free FAXs each month and the rapid take up of those services, the majority of all Exetel broadband users use at least two of them each month and the use of FAX has now rapidly increased since we made the first 20 ten page faxes free. Our most popular add on, the currently 54 gb of uncharged downloads that can be used 12 hours a day, is unquestionably the greatest add on value offered by any ISP in Australia. Although one or two ISPs, clearly bereft of any ability to think up their own ideas have begun to try and offer a similar "add on" they are not currently succeeding with too many constraints and too little thought and control implementation to make it as valuable as Exetel's add on benefit. So, on balance, we have provided 4 'unique' value adds to a base Exetel broad band service that is the lowest price avaialble but these have not been enough to grow the overall ADSL business very rapidly so they are clearly not what the 'majority' of internet users deem to be particularly important let alone essential. I have given this a lot of thought over the past year as I tried to come up with a residential user broad band strategy for the second five years of Exetel's existence (should it continue to survive of course). I'm now, more than ever, happy that Exetel decided against our own ADSL2 DSLAMs in favour of a Layer 2 HSPS strategic future and give ourselves a 'tick' for logically looking in to the future and not seeing a place for a small company's own "infrastructure roll out" (sorry Peter). My problem is that at current costings Exetel can't continue that logical thinking and drop wire based broad band completely in favour of an HSPA based 'total communications solution' which is what is required. So what Exetel has to put in place as being what 90% of Australian users want from their ISP is this ten point plan/strategy/implementation/call it what you like: 1) An all in one 'communications centre' that is essentially a wireless router/HSPA modem with ATA capability for customer buy of $240.00. 2) An HSPA service with multiple sims per user that share a single account allowing the 'home' to use wireless/Ethernet to connect to multiple PCs/Laptops with the additional sims being used in mobile phones and or lap tops while traveling. 3) A low cost Yagi (or equivalent/replacement) aerial for rural/regional users that will extend distance from the nearest tower required for a good signal to 30+ kilometers. 4) Voice, SMS and FAX over IP for both all desktops/Laptops and mobile handsets to reduce all mobile telephone call costs to a minimum. 5) An HSPA service with a consistent speed of in excess of 10 mbps and a latency that allows playing the most popular games. 6) Data charges that are equivalent to current ADSL2 data charges (plus the cost of the lowest priced telephone line and ADSL2 service charge rental) 7) No service or part of any service to be dependent on Telstra's horrendous pricing models) 8.) A network of 1,000 agents across Australia who will provide the installation and early support for these installations where an end user requires it. 9) The ability, if required, to migrate a PSTN number to become a VoIP number without the current hassles and delays 10) A 'migration' strategy that will satisfy even the most cautious and conservative buyer that they can make such a move with no down side. If you've followed Exetel's service developments over the past two plus years you would see that we have been pursuing this 'holy grail' of residential communications for some time and put many of the base 'building blocks' in place. We are closer than we were three years ago. Saturday, February 7. 2009What Do "Customers" Want From Their ISP? (1)...John Linton ...apart from a consistently fast, 100% reliable internet connection at no cost? I rambled on about 'unified communications' yesterday more in terms of corporate users but with the view that young 'residential' users had adopted and adapted to more of the 'unified communications' aspects of today's telephone and data services far more quickly than any business user. That 'subject' had been on my mind for quite a while as we move towards a 'different' communications offering for business users and also for residential users over the next period of time. Since we started Exetel we always understood that high speed/100% reliabilty/low cost (no cost was never going to be achievable for us) were the three prime criteria or becoming successful in the Australian internet provider maket....and, of course, we recognised that every other sensible internet provider understood those primary requirements to have a viable service. We knew that, sooner or later, we could achieve each of the three primary objectives on a consistent basis and that the only differentiator would become price which we could never expect to win with against companies such as Telstra or Optus when the market stopped growing - which is pretty much now. Why couldn't we win? Because Telstra has the lowest cost base for simple comunications services that we would have to buy (directly or indirectly) and Optus would always have to offer lower pricing than Telstra until the early teens of this century. So, eventally, it would always come down to how it might be possible to compete with Telstra once 'natural growth' stopped and it could no longer rely on the 'inertia' and 'stupidity' of its customer base to maintain any sort of 'premium' pricing. The obvious answer is, as everyone with eyesight to read Telstra's "marketing hype" or has received their "special offers" would know is that Telstra will/already has cut the prices of their internet services to 40% - 60% below their "published prices" so that they can "win back" other ISPs customers without slashing the prices they are charging to their current customers. It doesn't really matter if that crude description of how stupid customers get to remain paying high prices for the same sevice that new customers pay much less for is an exact description of Telstra's approaches to the Australian ADSL marketplaces over the past two+ years or not; but you either get the point or you don't. So Telstra and Optus defacto discount their current customer's high prices (who are locked in to long contracts) to "win back" customers of other communications providers relying on a market share number increase to take care of both revenue and profit erosion. No real problem; sleazy but 'legal' - it's been done since the beginning of commerce - its called wielding maket power and some poor souls in the USA a long time ago passed some laws (the Sherman Anti-Trust Act) in a vain attempt to prevent such things happening. Of course, like the Volstead Act, it was never ever going to work - with the possible exceptions of Standard Oil and US Steel I suppose if you want to nit pick. So, we always considered that we would have to find a way of competing on something other than price if we were to remain in the residential business. It didn't take too much 'brilliance' to work out what that needed to be and how to go about putting it in place. It was and is going to be an awful lot harder to actually do it. Like any second year marketing student doing a maketing course you have to make a list, and after checking it twice, you have to have a series of advantages over the companies you think will be your competitors that are sustainable over many years. These advantages not only have to be sustainable they have to be 'uncopyable'. Not so easy when you come right down to it. So how would you go about it? I would welcome your input in determining how a small company like Exetel can compete with Telstra and Optus and those companies most predatory 'marketing practices' over the next five years? I will 'publish' my list and my reasoning tomorrow. Friday, February 6. 2009Unified Communications - Apparently A New ConceptJohn Linton ....to Microsoft if this is an accurate description of where they are 'at': http://www.microsoft.com/australia/business/voip/ In fact, it's a very, very old concept that technology has now virtually passed by. I also noted that they list Eastern Health (a group of major hospitals eponymously in Sydney's Eastern Suburbs) as a major user which based on my personal recent attempts to reach people within that organisation by telephone is not much of a recommendation - maybe I was unlucky. I can't remember when I first heard the phrase "Unified Communications" but I think it was in the mid 1990s so, if my memory is correct there is nothing new in using IP voice over a company's Ethernet network. Similarly Asterisk's predecessor and now Asterix's open code makes it a piece of cake for any IT department with Linux skills and the budget to buy IP handsets to put in place a "Unified Communications" system without having to screw the whole thing up buying yet more inflated price software from Microsoft. Having said that, it is surprising that a larger percentage of Australia's small and large businesses haven't really gone much beyond installing some form of VoIP PABX rather than taking advantage of the Unified Communications facilities provided by Asterisk (for a very small amount of money) or from some of the more progressive PABX manufacturers (at as much money as you care to pay them) or, now, from Microsoft for a great deal of money. The implementation of VoIP is simple and often requires little more than the purchase of IP handsets and some sort of VoIP controller 'box'. Using Asterisk, or any proprietary equivalent and either commercially packaged or developed in house then allows the huge range of "Unified" services to be implemented and specifically tailored for any particular business. Exetel, as in all aspects of IT and automation, has an ongoing program of "Unified Communications" that already fully operates in North Sydney and Colombo and in six other 'residences' around Australia and goes far beyond using VOIP and linking to a common intranet set of facilities. Over the past three years we have integrated our data base into our 'telephone system' and added a very large number of ancillary services that use the functions of both our data base and internal systems and our VoIP outbound and inbound teehone services. However we understand that such an implementation is never 'done' and not only known applications and facilities are scheduled for development (or purchase) but that there will always be new ways of doing business and operating our current functions continually 'appearing' making locking Exetel into any proprietary 'platform' a major error of judgment. We never expect to stop development of our "Unified Communications" services because we are pretty sure we don't know just what will become possible in the future. The same concept applies to residential users who are generally much more flexible and even more 'tech/phone/video 'savvy about how to use a mobile phone and broadband than a surprising number of IT decision makers within many commercial enterprises - sort of an extension of the old parental lament that "only the kids know how to program the VCR". With the release of HTC's Android Dream intelligent mobile phone in Australia today: http://www.itwire.com/content/view/23069/127/ and the ongoing development of the iPhone and even the Blackberry as well as a slew of new devices now appearing the concepts of integrated voice, video, entertainment and general data services for 'residential' users are far in advance of the clunky and very limited facilities MS is touting as being 'cutting edge". (they are in fact about as cutting edge as a block of concrete in technical implementation terms). Given the current directions in technology and mobile telephony the only piece of 'computer' hardware that will exist in a few years time will be a giant flat screen display(s) with all 'content' and control coming from a mobile phone/data device. While I have been appalled at the amount of money that Optus has spent promoting the iPhone and now, probably the Dream, I am taking some comfort that the decision we made some three years ago that it would be better to develop a relationship with Optus than with Telstra is beginning to show some signs of being a little more correct. Who knows - they may even get to build some future national fibre network and replace Telstra as the dominant carrier in Australia? In the mean time it seems to me that HSPA is becoming ever more certain of being the broad band data medium of choice for the majority of Australia's data users over the next two years based on the plethora of datta devices with 'pop appeal' which is where the big money spenders are. But then my predictions don't have a great track record of accuracy. Thursday, February 5. 2009Is "Left Field" Now Taking Over The Whole Pitch?.......John Linton ......or am I just developing manic paranoia? I don't have a wide knowledge of how other people deal with "left field" occurrences in their business lives but I've always thought of myself as a pretty resilient and adaptable person who deals with business life's little strange problems and occurrences with pretty much of a 'shrug the metaphorical shoulders and move on' attitude. It occurred to me this morning that either I am becoming paranoid or the incidence of "wow, I didn't see that coming" incidences are becoming more and more frequent.....and by this I'm referring to events/happenings that you just don't even think you should think about. One of the things I definitely don't think about is Exetel's financial reputation or Annette's and my personal financial reputation with our bank of 30 years as customers. This isn't self delusion it's a fact that we have enjoyed a 'perfect' financial standing with our bank for three decades and their latest 'personal asset minus liability statement' continued to show a positive in 8 figures for us personally and their Exetel company details are equally as exemplary. I had, until last Friday, never checked Exetel's credit reference report as I knew that Exetel had always paid every creditor's bill in full and mostly before time for the whole of the 15 years of Exetel's trading existence (as well as submitting and paying all tax returns, payroll tax returns, superannuation contributions, company with holding taxes and PAYG taxes in full and on time). We did/do this not because we are exemplary citizens but because it's essential for our start up business not to have any negatives associated with our financial dealings. I would have had no reason to believe that Exetel's and its directors credit standing was anything but as perfect as it could possibly be and had/has always been that way. So I was surprised/shocked/alarmed/devastated for Annette to tell me that our bank of thirty years had declined to issue Exetel with a $2,000.00 limit company credit card to allow our Financial Controller to pay for minor cash purchases without asking our employees, him or me to use our personal credit cards to buy such items. This is a bank who charges us quite significant fees on the $A4 million + we put through the Exetel account each month and knows that we have never run an overdraft and together with our personal assets never has less than control over more than $A10 million of our real estate, shares and cash. To say I was shocked/jolted/lost for words would be an understatement. The reason given by some junior clerk at Westpac was that Exetel's credit report showed that we had three defaults (for trivial sums of money totaling to a sum of less than $A700.00) registered by Telstra Retail on our VEDA listing. So we had managed to trade for 15 years on an account that was 'pristine' (no notices of default/disputed payment/legal actions/etc) and have turned over more than $A150 million over that time yet our credit rating is destroyed by a company (who happens to be a competitor) with whom we have never dealt and have no agreements, contracts or any other relationship with. God knows how many potential large customers and suppliers have looked at that report since Telstra Retail illegally placed those defaults on the report and subsequently decided not to do business with Exetel (certainly our bank made that decision). In terms of damaging Exetel's ability to do business, or even survive in business, the damage by that/those action(s) could be immense. Telstra Retail's actions appear to me to be in complete breach of the ACMA code C540_2007-1 apart from anything else - but of course my legal knowledge is miniscule. I will deal with this situation via our solicitors today. You may ask why I, someone else at Exetel, was not aware that Telstra Retail had besmirched Exetel's reputation in such a devastating way? The answer is very simple. We had no reason to ever look at our own credit report because we knew we had never defaulted on any payment in the whole of our trading existence (as the report shows for fifteen years). So is business now becoming so complicated and convoluted that a prudent person should check every last possible thing they can think up to verify that nothing untoward is happening? Does Telstra really set out to damage all 'competitors' in any way possible and then, when challenged, simply make it impossible for as long as possible for the damaged party to correct the terribly damaging results of their actions? Or is my belief that is the case just a sure sign of my irrecoverable paranoia? PS: A few moments ago (2.00 pm Tuesday 10th February 2009) we received an email from Telstra stating that they would arrange for the default notices to be removed from Exetel's VEDA credit report Wednesday, February 4. 2009'Nakedness' Surge Continues.........John Linton ......end of PSTN line/call charge and ADSL1 rip offs in sight? Exetel is a very small company but its business patterns are the only ones I have a detailed knowledge about so I can only gauge the 'nuances' of the DSL marketplaces from our own data. One, very obvious, continuing trend is the continued growth in 'market share' of ADSL2 without an active telephone line. I commented on this growth some time ago and since then it has continued in an ever more marked way. Since the beginning of 2009 there hasn't been a day when "Naked ADSL2" applications haven't been greater than ADSL2 that needs an active telephone line with many days now showing more than twice the number of "Naked" ADSL2 orders than ADSL2 with a telephone line service. Over the past few days there have been several where "Naked ADSL2" has also come close to or exceeded the number of applications for ADSL1. It's also evident from the enquiries being received by Exetel that the interest in "naked" services are far outstripping those for services with PSTN calling capabilities. If these trends are so clear with Exetel then I would think they are the same/similar for all other ISPs that offer a choice of ADSL2 services - and should be equally obvious to those that don't. Of course these volumes aren't yet significant in the overall broad band market places because the dominant ADSL provider and its wholesaler ISP customers (Telstra) eschew offering "naked" broadband services because of their need to maintain as many active PSTN lines (and their rip off call charges) as possible. It's also clear from the prices that ISPs other than Telstra charge for telephone calls and line rentals that they would be reluctant to see that revenue and profit disappear from their annual 'company size'. In one way Teltra et alia's decision to insist that their customers continue to live in the past regarding the provision of ADSL is a good thing because it obviously locks them out of what seems to be by far the fastest growing 'section' of the wire line based broadband markets. Not good for their customers but then I doubt whether there has ever been a day in Telstra's history where what was good for their customers ever intruded in to any decision making process - similarly with the other ISPs who haven't provided the quite obviously best version (for the customer) of wire line based broadband. I could be quite wrong of course and it may well be the case that ALL Telstra's decisions (and those of the other ISPs who have not provided a "naked" ADSL2 service) are ONLY based on what's in the best interests of their customers - perhaps I just don't look at enough facts before reaching the conclusions I stated above. From what I can see the trend towards 'wire line less' broadband services ("naked" ADSL2 and HSPA) will continue the current trends and Exetel's current small figures show net adds of "Naked" ADSL2 and HSPA exceeding the net adds of ADSL2 that requires an active telephone line plus ADSL1 with that 'surplus' increasing each day and showing no sign of decline. It's a pleasant result for us because when we stopped offering 256/62 ADSL1 services our daily application intake dropped about 13% for around two months before the HSPA applications 'filled the gap' and have now exceeded the previous contribution of that slowest speed ADSL service. I realise all the "smart" marketing people within the venal ISPs will point out that the basic residential telephone line user is both stupid and conservative and that those ISPs can rely on their customer's fear and inertia to keep them from changing to the newer cost saving technologies. It's what avaricious company's marketing/finance people always do - attempt to slow the progress of the human race for their own dull and petty understandings of their own self interest. However to misquote someone I don't remember: "There is nothing so unstoppable as an idea whose time has come" I've heard that phrase used about VoIP since Steve and I installed some of the first PAPL lines with voice compression boxes at either end in the mid 1990s and of course every year since then. Clearly, for many years that view was totally wrong - but not any more - VoIP (and VoIP over HSPA) is probably the ONLY way to make voice calls today because they cost a fraction of what Telstra et alia want to charge for a non-VoIP call (and the wire line to carry the call). 10 cents per STD untimed call with no telephone line rental has to be increasingly compelling to even the most conservative of users. NO business that uses anything but VoIP is doing anything but wasting huge amounts of money in a totally reprehensible way. NO residential user that doesn't make the minor investment in a VoIP TA/router/whatever is doing anything but costing themselves money that they should be spending on the basic essential and/or the joys of life - not giving it to a rip off telephone company. Much sooner than is the situation right now (according to the trends in Exetel's applications for broadband services) the upward trend in "voice telephone line less" broad band will become exponential and one of the Telstra "benefit of the shareholder's" curses on all Australians will melt away like unseasonal snow on a hot day. .....but then again, that was being said in 1995..... Tuesday, February 3. 2009Exetel Is Going To Be Wound Up Today......John Linton .....and hasn't paid its staff for three months. I wish someone had let me know that as I've been working as usual for the past three months and as I never check my bank statements I don't know that I haven't been paid. Typical that I'm always the last to know what goes on around me and I'm surprised that Annette or Steve hasn't raised the issue before I have to hear it from a total stranger! In fact the first I heard of this depressing change in Exetel's fortunes was from a very small, relatively new, supplier to Exetel who wanted immediate payment for services he had not yet billed to Exetel and he was going to hand carry the invoice round to our office and wanted my personal cheque as payment. Now I'm not known for my ability to tolerate fools (or foolishness) with any sort of tolerance and never have been for as long as I can remember but I was so taken aback at his claim and even more so by his aggression and his 'phrasing' that I was, momentarily lost for words which he apparently took as confirmation of the situation as he launched into one of the most vitriolic steams of personal abuse that I have ever heard. When a suitable pause occurred, and really resenting the words he had used and their total inapplicability, I told him to STFU and get himself under control. This served no purpose except to 'set off 'another vitriolic tirade which although repeating much of the previous one was mercifully shorter. When he seemed to have, at least momentarily, run out of breath, I asked him how he had come to this belief as there was absolutely no truth that Exetel's business was in any shape other than better than it had ever been and that, as far as I could see, business in December and January showed no signs of anything other than continued profitable growth. His response was breathtakingly inane and was - "XXXX (a much larger ISP than Exetel to whom he also supplies) had told him that they had been approached by Ferrier Hodgson to bid for the Exetel customer base as they were being appointed as administrators by Telstra to whom Exetel owed millions tomorrow (today as I write this) and they needed a very quick sale before the business totally collapsed. After a stunned silence (while I tried to understand how anyone with more neurons than there are spots on a king domino could possibly believe such an unsubstantiated statement to the the point they would then act in the way he had just done) I told him to bring his invoice around whenever it suited him and I would give him cash as payment but before he did that perhaps he would like to consider: 1) His previous bills (including the ones in the period where Exetel was apparently not paying their staff) had all been paid on time and in full as usual. 2) Apparently his Exetel competitor contact had information that was totally unknown to every other supplier to Exetel, any sort of media and to every Exetel employee. 3) Perhaps the fact that this "fact" appeared to be also unknown to all the usual 'scandal mongers/ill wishers' was some sort of indication that it may have no truthful basis. and that before he made any further decisions, and especially shared his current views wth anyone of any relevance, he should check the FH web site for a notice that they had been appointed in the way the Exetel competitor had stated or if that was beyond his capabilities then perhaps he could wait until tomorrow to see if what he was told was true. To which his reply was that it must be true because the XXXX account manager had provided so much detail and he had known him for years and he was always totally honest. From the slight slurring of his words and the emotional language he used plus the time of day (4.30 pm) I reached the obvious conclusion and told him to stop being a total idiot and go and sleep off his liquor induced hallucinations. I actually used rather different phrasing and vocabulary to convey that 'advice'. What is it in the stupider element of human society that makes them so prone to believe the very worst they hear irrespective of how likely it is? I suppose the real question about the stupider elements of the species is what makes them attempt to spread such stupid lies that, in this case, will be shown to be lies within the 24 hour time frame the liar included in his "so much detail". PS: 3.00 pm Tuesday 3rd February. I got a call a short while ago offering "sincere apologies for my unforgivable abuse to you yesterday..... it was caused by too much too drink". He was right about one thing - it was/is "unforgivable" - and having too much to drink (is there such an amount?) doesn't change a thing. I told him I was relieved to hear that Exetel hadn't gone broke while I dreamed away the past 3 months but we would not be doing any further business with his company as his words were so offensive that they could never be 'un-said' and neither could their affect on my view of a person who could say such things.
Monday, February 2. 2009The Problem With Being An "Unconventional" Company......John Linton ......is that you don't fit the expectations of so many people who wish to 'do business' with you. I don't know whether its a sign of the 'GFC' beginning to affect communications companies or just the time of year but over the past four weeks I have received far more than the usual number of enquiries from people who were interested in exploring whether they would be able to add to Exetel's development over the coming year in a 'senior management position'. I always return the enquiries politely with a "thank you for considering our small company but....". I have to admit that as the work load has steadily increased over the last five years (which has directly coincided with a decline in my personal physical and mental resilience to adapt to such an increase) I have considered, and Exetel's board has considered, whether we needed to employ some 'senior management' to more sensibly operate the company. We have seldom considered this for more than a few minutes at a time for a number of reasons - though when the work load occasionally appears to near 'breaking point' it seems to be the only way we should go. So we have considered how the future management of Exetel should be structured on more than a few occasions and have looked at, albeit, very briefly the capabilities and remuneration/operational requirements of some people who have expressed an interest in working at Exetel in various 'senior' positions. Over the weekend I received two resumes from two different 'placement agencies' of people with considerable management experience (and apparent success) in the communications industry. Both agencies stated that they had been asked to make contact with me personally on the 'instructions of our client' based on the fact that both 'candidates' knew me personally and knew that Exetel would be a 'good fit' for their abilities and backgrounds. It is true that I had worked with both of the people previously, though that was quite a long time ago, and at the times they had worked for me it was in quite junior positions. Since those far off days they, at least according to their resumes, had made considerable progress in their careers and had reached very senior and responsible positions within communications companies much larger than Exetel - much larger by a very long way. I returned the resumes with a brief explanation of the reasons for deeming the people concerned as being unsuitable for a small company and, surprisingly to me as it was a weekend, received telephone calls from both 'head hunters' shortly after seeking a more detailed explanation - which I provided. (where do so many people get my private contact numbers from?). My main point was that Exetel was a very small and very 'hands on' company that operated in ways that were totally alien and would be totally unsuitable for people who had become used to the ways large Australian communications companies operated. However I pointed out that the sort of 'remuneration packages' that the head hunters stated would be acceptable when I asked them what they thought a General Manager of a small company like Exetel should be paid was something like three times what I am paid (and that excluded the levels of 'performance bonuses' such executives would expect on top of their base packages). I also pointed out that there were no PA's within Exetel nor were there any 'manager's offices and personal meeting rooms nor even a car parking space let alone a company car. There's not even a receptionist to 'run their errands'. Being 'head hunters' these negative comments didn't seem to deter them and they both attempted to persuade me of what real value Exetel would obtain from the skills and knowledge an "outsider" would bring to Exetel which has had to rely on the 'inbred' thinking of people who have been too involved in the minute by minute development and operation of building a business to have had time to plan strategically. I ended the conversations as soon as reasonable courtesy allowed and assured both of them that Exetel wasn't a company they should ever consider for any 'senior management' placements in the future. I'm not sure how Exetel can develop "top management" given our size and our very different methods of operation. I'm not sure that we have currently built, or ever intend to build, a company structure that needs, let alone depends, on hiring in experienced "General Managers" and "Operations Managers" or "CFO's" or even "CIO's". As the company has grown each year over the past five years we have further automated more of our processes and continued to refine the processes that had already been automated relying on the growth of knowledge and familiarity with this 'philosophy' to allow the people who have successively joined the company to manage ever increasing levels of responsibility with no 'leaps' in knowledge or skill required at any time - just a gradual process. Maybe I'm missing something? That could easily be the case but whenever I get so tired I actually consider such actions semi-seriously I review the difficulties that an 'import' to Exetel's very, very different operational 'culture' would have to try and deal with and realise that, even if we were prepared/able to pay the remuneration such people are used to receiving we could never begin to address the gap between the way we operate and the way every other commercial entity I have some knowledge of operates. It's irrelevant anyway as we don't make enough money to pay 'senior managers' what they apparently need to turn up to work. I guess we'll just have to continue with our "inbred" ideas and ideals. Sunday, February 1. 2009To IP, Or Not To IP.....John Linton ...that is the very real question. In the not too distant future the combined caching engines that Exetel has put in place over the past three years will deliver over 1 gbps of customer data in peak times. This is mainly from the Sydney located Akamai 'cluster' and the Sydney PIPE interconnect (which isn't true caching but for the purpose of calculating data costs it is treated by us in the same way). This doesn't include the up to 800 mbps delivered from the PeerApp P2P caching 'cluster' which we 'cripple' in peak times and only allow full access after midnight. We have never used the PeerAPP for caching non-P2P data but it could be used for that very easily. Our view of caching has changed over time but it remains a complication that we have avoided over the past 2 years as we have moved the network from Sydney centricity for absolutely everything to a more dispersed 'architecture' - firstly activating additional PoPs in all mainland capitals and then progressively adding more 'local' interconnects and data paths. Caching engines, either from PeerApp or one of several dozen other caching solution providers, continue to fall in price and, who knows, in the economic conditions that are beginning to be seen around the globe those trends are more likely to steepen than reverse over the coming months. As we near our 'major' anniversaries for our IP bandwidth contracts we need to make a decision on whether we will continue the policy of buying enough 'pure' IP bandwidth for our peak time (non-P2P) usage or take the cheaper options available from various caching concepts and hardware. A lot depends on the $A - $US exchange rate/forward cover buying by the IP bandwidth providers as that will affect their own SX and Japan cable buy prices. The dire predictions of a sub 50 cent $A are not encouraging but, personally, I'm hopeful that won't happen (maybe that's just wishful thinking). We currently have, at peak times 1.9 gbps of 'pure' IP with Verizon and 600 mbps with Optus with up to another 1.2 gb plus being delivered from Akamai, PeerApp and PIPE and WAIX peering. This is almost double the traffic we were delivering at this time last year - largely thanks to the increases from the caching/peering boxes/connections. However we have increased the 'pure' IP quite substantially over the last 12 months as well - partly to cater for the growth in the overall business and partly because of the lesser efficiencies of operating a 'distributed' network. Our buy price for 'pure' IP isn't particularly good because even at over 2.4 gbps we aren't a "major" buyer of IP bandwidth and I suppose it also means we aren't the best price negotiators in the Australian communications business. As times get even tougher financially in Australia it is going to be difficult to continue to deliver the best value communications services at the IP prices we are paying today as well as cope with the ongoing increasing usage per customer that ADSL2 demands. We will either need to get much better pricing for 'pure' IP or use more caching in Sydney and deploy caching 'solutions' in the 'distributed' PoPs. The capex for the distributed caching solutions hasn't been worked out in any detail and, because we will maintain our "no leasing" policy throughout 2009, may prove a barrier to full implementation - however I'm almost certain that we can convince our current caching suppliers to 'accommodate' our cash flow needs to overcome that if it turns out to be necessary. The appeal (financially) of caching is obvious - it can dramatically reduce IP costs and can also dramatically increase delivery speeds - particularly in a distributed network. The downside is that it can also produce some unhappy experiences if everything isn't continuously managed very carefully. We have begun to get some 'indicative' IP prices for post 1/7/09 and they are 'hopeful' at this stage but if I had to make a decision today I think I'd move more rapidly on putting caching in to the distributed PoPs as the costs, even at the pricing being tentatively suggested, isn't commercially sensible for us to commit to with our current growth plans. It's a pity that the PIPE delivery dates remain so uncertain as it seems, at least to me from the little I know, that transit from PIPE is way more than a year away which is of no use to us. We will run some trials over the next two or three months to see what actually can be achieved and if it proves positive then we will probably freeze our current 'pure' IP expenditures at something below the current levels and use caching to handle the growth in customer traffic demand. It will be a challenging, (God, I must stop using that pathetic word) but very interesting, engineering evaluation. |
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