John Linton's Personal Musings

John Linton

......as somewhat cynically commented by someone we are in the early stages of discussions with about the opportunities in some sort of JV in the UK. I had sent them the preliminary FY2009 results and the latest iteration of the FY2010 business plan together with various initiatives we are taking in descriptive form and they asked the question everyone who sees our figures always asks - "why don't you raise your prices and make a lot more money"? It's a good question, if you are only looking at every commercial entity from basic commercial viewpoints - which is of course what every accountant and 'business visionary' does. We could easily raise our prices by a few dollars (probably more than that) and make $4 or 5 million more for 'ourselves' each year - we simply choose not to do that as it is not why we are in business.

No-one can seem to get over the objective of making $A1.00 per month profit per service and trying to make a contribution to your country's well being - they always ask but why did you set such a low figure which results in such paper thin margins and such a 'precarious' ongoing financial existence? To which there is no answer as it means that anyone who asks such a question hasn't bothered to read the half dozen or so paragraphs about why we created Exetel in the first place and if they can't be bothered to read that then, presumably, they didn't bother to read any of the following few pages that set out the details of how and why Exetel will try and do what it does. The main reason is that it's in every Australian's best interests to pay as little as possible for a utility like communications.

There are other reasons to spend your 'working day' doing something other than making more and more money even if you do participate in a commercial enterprise. Most people, who are not in a 'financial strait jacket' seem to prefer enjoying what they do and getting personal and professional satisfaction from what they do ahead of doing something they don't like or don't get satisfaction from just because it provides them with more money - I suppose the ideal would be to do both if you rank money as something important in your life - I have never been the slightest bit interested in money so it has never been any sort of priority for me. My views have always been that communications pricing should be determined by the government of the day for anything provided by tax payer's dollars which included the current national PSTN infrastructure and, in the event it ever gets built, the proposed "NBN2".

It's one thing that puzzles me about the Kruddster's NBN2 - why take a huge amount of tax payers dollars and build another infrastructure that you plan to then hand over to the same bunch of inefficiently managed and terminally rapacious companies that currently massively overcharge for current services on the previous infrastructure the Australian tax payers funded over the previous 100 years?

Exetel's view is that communications is pretty similar to education and hospitals and roads and the police force - Australians need as good as it gets and should be charged as little as possible for such services - not have tax payer dollars 'gifted' to greedy and lazy bunches of people (called communication companies) so that they can simply take no risks but pick up their share of a multi-billion dollar hand out courtesy of Labor stupidity.

Maybe I'm totally incorrect - it wouldn't be the first time - and maybe the actual end user rip off will not turn out to be the case. I am really curious to see what transpires between now and Christmas with the pricing for the "just about ready" to be announced Tasmanian 'NBN2' and am even more curious as to which "communications companies" are given access to this part of the 'NBN2' and at what preferential costs. I remember what happened when Telstra was privatised - almost instantly all the prices went up - and there I was, naive idiot that I am, under the impression that 'privatisation' was meant to drive prices down.

[Quick communications industry test: what was the monthly price of a residential PSTN line on the date that the first shares in 'Telstra' were sold to the public and what was the cost of a local call?]

If you actually know, or can quickly research, the answer then you will see what I mean about the ludicrous concept of a Federal Government turning over tax payer built and paid for infrastructure to the greedy and completely incompetent care of "private enterprise management"....who can't believe their good fortune of being handed a monopoly that they simply see as a license to print money for themselves (screw the shareholders  - check Telstra's share price decline but then check the salary increases of the current management over the same period and tell me I'm wrong).

I wonder whether Krudd and co will consider how access to the 'NBN2' should be priced to end users? I mean will they just hand over billions of tax payer money and say "let the market decide" on what the end user costs should be? I can't see that being a very good idea (based on what happened last time) but then it appears to me that the current muppets have actually learned nothing from the errors of the previous muppets - hardly surprising when you look at the deficiency of both knowledge of communications and the lack of intellect required to understand more complex scenarios than how to get re-elected and awarding yourself more and more money.

I wonder whether it will eventually dawn on Labor (it never would be a possibility for the Coalition) that it's actually a very, very bad idea for governments to build things they turn over to 'private enterprise' - not just ideologically but practically and that there never has been an instance, in the history of world commerce over the past 4,000 years (let alone in 'modern commerce of the last 150 years) where such a process has ever worked. So why would anyone, any group of people, begin to consider such a ridiculous path to go down when all of history (not to mention the current US banking and automotive bail outs) demonstrate, in huge flashing neon lights, that such an action wil simply become yet one more unmitigated disaster along with all the rest over a 4,000 year time span.

Perhaps if the new 'NBN2' company was registered as a charity and NOT run by 'private enterprise' then there might be some sort of chance of getting communications services in Australia at the lowest possible costs - I don't know - something like $A1.00 a month profit per service?

Seems like the best thing to do in line with "......helping Australian working families".

Anyone think the communications companies will have the best interests of anyone but their 'senior management' in mind?

John Linton

.....or like Vince Lombardi quotes are they just tired and discredited 'flim flam' dredged up from the 1970s by light weight "consultants" and other charlatans?

As I 'tidied' up the coming year's business plan yesterday morning I did the 'swot' analysis that various 'outsiders' always think is important (bank's, new major suppliers, governments) but that I have never been able to see any value in. I see no value in a swot partly because Exetel is very small and partly because our business and the marketplaces we address constantly change and would defy any analysis of which I am capable. In any event it took me less than 20 minutes to complete though, for the first time, I did spend the majority of that time on the 'key personnel loss/required' topic. What would we do if X, Y or Z left the company and to get project A,B or C completed on time who would we need to hire. In previous years I have just answered 'none' and 'none' to these questions giving them no thought.

However, I was talking with a business acquaintance late last week who was bemoaning the fact that two of his 'key' senior sales managers had recently left his company to work for his major competitor and he thought that would damage his future sales forecasts. I have not often been involved with such issues, in fact I have only been involved in quite small companies for the majority of my commercial career, and I wasn't able to be either even vaguely sympathetic (I didn't understand the situation) nor could I offer any sensible comment because I couldn't comprehend any set of circumstances where an individual employee could be a loss if they valued another company's opportunities as being of greater value than where they were - obviously someone would make a change if there career opportunities/rewards were greater somewhere else - sort of blindingly obvious I would have thought.

I didn't think any more about it until I read this earlier this morning:

http://online.wsj.com/article/SB124604332970762289.html

and realised that 'no compete clauses' for key employees are still alive and well in the USA.

The closest I've personally come to such a situation was some years ago, perhaps many years ago would be a better description, when I was involved with building a company in what was then a unique way and built it to a level where it was quite successful. We had several competitors who were multinationals and one company that was Australian. The Australian company obviously thought that at least one aspect of what we were then doing would be beneficial to them and hired a 'personnel agency' to approach people they considered to be our key sales personnel in several capital cities and even some larger country towns to work for them. In the event two people left us (our Brisbane and Melbourne branch managers) who took with them our five, for their day, very detailed operational and sales training manuals which as immediately following events showed were of more interest to the hiring company than the people themselves. It was all a storm in a teacup as it turned out but it seemed to be a big deal at the time.

The two people we 'lost' were immediately replaced by us from other people eager and grateful for the unexpected 'promotion' who subsequently did an even better job in the positions than the people they replaced. Of the two people who were 'head hunted' - one lasted less than 3 months the other lasted around a year with their new employer before the company that 'head hunted' them decided they were better off without them - or perhaps it was the other way round.

I did learn one major lesson from that incident though and have applied it subsequently which is something that the majority of other more sensible people learn much sooner in their business life. That lesson was, obviously, never build any part of your business that is any way reliant or dependent on its ongoing success on any individual person - not because you can't 'trust' individual people but because it's an inevitability that any individual person's growing needs, as time goes on, cannot be guaranteed to be met by any organisation no matter how it grows or what ever changing opportunities it develops.

Another lesson that I didn't have to learn in business (having learned it as most people do during your school days) was that people who do well (immensely well) at one company in a 'senior' position don't always, in fact very seldom, do as well when, for all the right reasons, they move to another company to progress their careers. Obviously some, genuinely talented people do, but most don't for the equally obvious reasons that most people's success in business is a combination of their own knowledge, skills and talents plus the products, pricing, assistance and relationships they are part of within their working environment - none of which 'move' with the person. I suspect the IBM case I cited was more to do with the deep knowledge of IBM's future planning the person had than his undoubtedly multiplicity of other talents though the deception he appears to have practiced to technically void the 'no compete' clause in his contract seems to attribute some less than desirable personal characteristic to him....

....which is my main point....that if people want to leave one commercial company to join another there is nothing that can be done to prevent that occurring and nor should there be....which comes back to my starting point that any commercial entity shouldn't  base any aspect of its continuing operations on either people it currently employs or on the basis that anything that is important to its business won't become 'common knowledge' sooner rather than later.

So is Exetel's future planning likely to be impacted by the 'unexpected' loss of one or more of its key personnel? Probably. Do we need new key personnel to make some things happen? Possibly. Are we going to plan for those two eventualities? No - there is no time to do that in any meaningful way. Is this lack of taking the swot topic seriously going to negatively impact Exetel's abilities to meet its FY2010 business targets? I don't know but I have no more time to think about it.

...and that's always going to be the issue with 'swots' - there is no realistic way of sensibly defining the possible problems let alone 'planning the solutions for them'.

I hope nothing really bad happens to us in FY2010 but if it does we'll deal with it as we always have. 

John Linton

......it's going to be very exciting and quite possibly be very different.

I finished my parts of the FY2010 business plan earlier this morning which is a little later than usual (a bare 48 hours to spare) but these have been a particularly busy few months and I am certainly not getting any younger and I certainly am getting more and more unfit - which tends to make things harder to complete in the time frames I might once have been able to achieve - at least if my rapidly failing memory recalls those times correctly. Our main objectives will not change over the coming twelve months as we have been working towards the same objectives since our first day of operating Exetel, but the ways we will operate the company will change progressively over the next eighteen months or so.

One of the major decisions we will need to make in the not too distant future is whether or not we establish a presence in the UK to sell HSPA services which we have been wanting to do for over three years - pretty much from the first time I was introduced to the concept of data over wireless for mobile users in the UK in July 2006. My initial views of HSPA services haven't changed; to me, they were the way to get away from the Telstra monopoly and the terrible attitudes Trujillo and McGaughie introduced to Telstra a year earlier than that. Exetel really didn't like being labeled a "parasite" by that duo and while we had no option but to put up with their rip off pricing and appallingly arrogant attitude to every aspect of their business dealings with Exetel we vowed that we would work towards not adding our pitiful financial contribution to sustaining their bloated Australian operations and overpaid management drones any longer than it took to find an alternative.

We have made a start in Australia and have over 3,000 HSPA customers with a TV ad being shot and edited over the next week or so for a country TV campaign scheduled to start in the last week of July and then run until Christmas. We hope to learn a great deal over the next six months about how to market HSPA services and how the Australian carrier and reseller/wholesale market will develop. Our concentration on rural/regional Australia is a major risk for such an inexperienced group of people like Exetel but it is a major emphasis for our next few years and is one of the reasons why we are in business at all of course. Anyway - I guess we'll soon know.

Annette and I, all things going to plan, will meet with our two different mobile contacts in the UK in late September to make a determination of just how possible setting up a company in the UK might be using either the Vodafone or T-Mobile network. We would prefer the Vodafone network simply because of the possible future 'appropriateness' of that in terms of joint volume pricing for the Australian company but the T-Mobile opportunity is always going to be more financially attractive. Our key determinant will be whether by operating in the UK we can get advantages for the Australian HSPA services in terms of buying hardware and associated peripherals and services or, perhaps, in buying the HSPA service itself if that is either possible or desirable.

So we will know the results of both the rural/regional advertising and the UK possiblities by early September and will be able to base further decisions on that information.

The other major new direction for Exetel that needs early emphasis and impetus is our more aggressive move into the corporate marketplace which we began by hiring the first eight trainees in the first half of calendar 2009. It's very early days for this key objective for Exetel but it has begun with very promising early results - far better results than we could have expected in many ways. It is, in most respects, a well timed and well executed project to date and hopefully the early momentum will be sustained in to the new year. Again, we are doing things completely differently to everyone we are competing with or, for that matter, any other company I have ever been aware of in selling technology services to the business market places.

I have done something similar once before and achieved results that far exceeded those of the 'conventional' competitors of those times and in those marketplaces so there is some precedent for what we will try and put in place for Exetel over the coming months. It's a very exciting 'gamble' and, personally, it is something that I am fascinated to see if we can make it happen. I have also, in very different marketplaces and a long time ago, done something similar in terms of ambition which for a number of years achieved amazing results - once again just turning the then accepted selling methods and processes 180 degrees and confounding the competition to the point where they virtually became irrelevant when we chose to compete for business.

We have spent a not inconsiderable amount of our time over the past five years building similar 'weapons' which we have had to do ourselves as this time we don't have the indulgence and ready and willing support of a giant Japanese multinational to 'bank roll' our wild dreams of total market domination. However if we have done our preparation work as thoroughly as I think we might have we should have more than considerable fun over the next 12 months making a great deal of progress in growing our corporate business in terms of the overall business done by Exetel. It's going to be a very interesting time for me personally and hopefully for everyone involved - not least the customers.

The third major project we will hopefully complete over the first few months of the new financial year is the completion of the second phase of the decentralisation of the Australian network with the commissioning of the Hobart PoP and the commissioning of the various customer direct interconnects to all of the State capital city PoPs - which should be done before the end of September if everything goes to plan. Then, of course, there is the issue of the Krudd madness that, because of his NBN2 "commitments" will require connectivity to the Krudd NBN2 in Tasmania before Christmas and the incredible scenario of actually seeing how this impossibility is attempted to be brought to fruition before they even appoint the personnel who will be given nine months (after appointment) to determine how things should proceed.

Exetel want to offer 100 mbps internet services to Tasmanian users before Christmas and Krudd has promised that will happen so it's going to be fascinating to get the technical details and 'negotiate' a connectivity contract with a non-existent company on a non-existent network. It is going to be a truly fascinating three months.

Apart from those 3 major new projects there is the small matter of increasing Exetel's revenues by 30% in July and.......

John Linton

......it's been a landmark year in which Exetel began to 'grow up'.

Last weekend of this financial year and therefore that means......... the new year is only a few days away. The FY2009 figures, with only two working days to go, show a very, very good year for Exetel in every aspect of the business with revenue up around $A10 million on the previous year which is around a 28% increase which is in line with a 27% increase in customer numbers and a slightly larger increase in our small net profit of a little over 30%....though as we make very little profit that is not really meaningful and in any event it really isn't possible to estimate profits accurately until the accountants do their thing. So....a very good year in almost any way you look at it financially. In our accountant's words - "they are going to be a very pretty set of numbers - ones you can be very proud of".....and undoubtedly we will be at the appropriate time.

Apart from the figures we did a few quite major things over the past twelve months in terms of both the current operations but far more importantly for the near and medium term future of which we are probably more "proud" and indicate that Exetel became a very different company over the past twelve months....perhaps an inevitability as we entered our 'second five years'. 

We opened a company in Sri Lanka to take over most of the back end processes of the Australian company and that has gone quite well; in many ways better than we had expected. It sounds a simple enough thing to do - open a company in a different country, hire people, transfer knowledge, organise complex telephone and data systems interfaces and......the list is actually quite long. For a tiny company like Exetel to do this while it's very scarce 'management resources' were more than fully occupied in running a growing business in Australia, in hindsight, was quite remarkable....as the Australian High Commission reminded us quite recently...."no-one has been able to cope with the various challenges (governmental, fiduciary, banking, regulatory, legal, real estate, recruiting, managerial, environmental) of establishing a new company so quickly and so successfully as Exetel has managed to do in Sri Lanka" - and without any previous experience and with zero knowledge of third world scenarios generally and with ones with active civil wars particularly. So now we have a new operation in a new country which is an awkward travel time/itinerary away from most of our other operations but we have managed, somehow, to move almost half our operations there and deliver acceptable, for this time of its life, results across a wide range of activities. Of course, we have a very long way to go to achieve all of our objectives.

Another thing we managed to accomplish, which also took a lot of time when it's all added up, was after looking and dilly dallying for the best part of 18 months we finally selected, purchased, fitted out and then seamlessly moved into our own premises. It doesn't sound like much of a thing to do - other companies do it all the time but it was a big deal for us and, again, we had to fit it in to a work schedule that was already fairly demanding. We had never bought commercial property before and, apart from our personal home, had never made an expenditure this large before, so even that was a new negotiating experience for us. However, as with setting up the office in Sri Lanka, the benefits are all in the future including the concept of freeing ourselves from the business rental mentality and further reducing our dependencies on outside influences and further conservatively positioning the company in terms of debt obligations and other people's, sometimes irrational, behaviour. By providing ourselves with our own data centre we will also further reduce our operating costs expenditure on rented co-location space over the coming 12 -18 months but, probably most importantly, we have taught ourselves to base future space acquisition, should that ever be necessary, on purchase instead of renting. It is a difficult step to take but one, once taken, again changes things for the better.

A third major change we are still in the process of making (and I suppose, when you think about it, will continue on for a long while if we continue to grow) was to change our network topography from the centralised 'hub' design we had used for the first five years to a mostly decentralised design involving us in completing the roll out of PoPs in all State capital cities plus Canberra and to then not only link them to the main overseas feeds in Sydney but add direct connect IP feed in each separate location and also add direct customer feeds to the local State capital city Exetel PoP rather than using our carrier's inter-State trunking. This obviously required more hardware in each location and the provision of redundancy in each location. With the exception of Hobart (which is in the process of being provisioned right now) and some of the additional links we pretty much accomplished that over the past twelve months. Of course, it's an endless process but we made major strides over the past year and also significantly increased both the scale of routing and switching power deployed and the amount of bandwidth linking those resources. As with the previous two projects the benefits of this work, and expense saving, lie almost entirely in the future.

I could go on with other major projects we completed during the past twelve months - after almost three years of looking we began offering data over wireless; we have hired the first eight trainees to build a corporate sales force; we designed and deployed our own VoIP 'PABX' with all the implications that has for the future; we appointed a CFO and CIO promoting two of the people who joined Exetel in quite junior positions within our first few months of operation - the past year has many, many significant achievements and events that the, albeit pleasing figures, can't begin to show.

A really great year in terms of Exetel's maturing, strengthening and future positioning as well as great financials for the almost completed year.

But, again, before  the current year is finished we have to finalise the planning for and then begin to make a whole lot of even more difficult things happen over the coming twelve months . We will hold a small celebration in both Sydney and Colombo in early July and then we will have to make some even more difficult things happen - and, in most ways, it will be almost a mirror image of the main challenges we planned and then executed in FY2009:

 - Decide whether to set up a new company in another country even further away - probably the UK

 - Buy another 'building' to cater for further growth if our corporate sales force plans work out as well as they currently look

 - Further develop our network to a new level of 10 gbps switching from its current 1 gbps design and decide whether to open our own direct connect to the West coast of the USA

.......as well as planning to grow the Australian and Sri Lankan businesses at a faster rate than we achieved in FY2009.

So the reward you get for putting in a huge and sustained effort over each of 365 days of the past twelve months?......

......you get to do it all over again with higher targets and a greater degree of difficulty.

(and before you get to feel too sorry for yourself you have to agree it's better than the alternative of failing in the previous year and being out of a job or the company not existing at all; perhaps after 4 years of no salary increase I can get an increase on my $A120,000 a year total remuneration?...maybe Annette and Steve can too (same salary - same time since an increase)?......then again....times are still tough and profits are still very, very small so clearly we haven't done a good enough job that is worthy of an increase).

John Linton

....with no access to sexual stimulation - well done Apple!

Growing up in the Stone Age when not only was there no internet but "men's magazines" were both expensive and from limited sources I never developed any interest in or even had much exposure to pornography. Together with no lack of healthy (though perhaps in those days people like my mother would probably use an antonym such as 'unhealthy') interactions with members of the opposite gender from adolescence onwards, I never felt any sort of 'loss' in my young life by being 'deprived' of vicarious stimuli. I came across this earlier this morning and read the reference (and the comments on the reference) with amusement:

http://onespot.wsj.com/technology/2009/06/25/327720521-and-then-there-was-porn/

I think that I'm far from being a prude in terms of things sexual, vicarious or otherwise, but I guess I am old enough to think that the boundaries of sensible content distribution has gone a step too far - even though I think the content showed in this instance falls far short of even a loose definition of pornography - I took it as a decision by Apple to move towards what could be defined as pornography. My amusement wasn't with the fact that the 'content' had a few pictures of 'topless' young females but with what must have gone through the minds of the relevant managers at Apple to even think of going there. What on Earth were they thinking the benefits were? Surely they would have realised the negatives? If this was a misguided 'toe in the water' to see what could be offered in terms of pornography in the future then I think the people at Apple have completely lost the plot. There is a big difference between providing a service that can be used to download pornography to actually becoming the publisher of pornography making a dollar from selling it via a respected brand such as Apple.

For as long as I have been involved in the provision of internet services I have heard and read about the myths that XX% of all internet downloads are for pornography. I have dismissed those comments as being total BS if for no other reason that it is completely impossible to derive any statistics on the content delivered over any single network let alone determine the type of content delivered over the complete internet. I have been surprised over the years at the vehemence of the religious loonies in the Australian parliament and their censorship drives from time to time to limit distribution of pornography and am constantly thankful to "God" that he chose to have me delivered from my mother's womb into a society where more widely spread loonies don't insist that females be covered from head to toe to prevent the male population generally being able to view feminine attractiveness in its myriad different forms as a 'healthy' moment by moment public 'event'.

Stupid Stephen has been very, very quiet over the past few months about his censorship (sorry, campaign against child pornography) trial and one can only assume the doctrinaire muppets in the ACT who proposed that particular stupidity have finally worked out that internet censorship is a sure fire vote loser and that particular religious inspired idiocy will be allowed to die a quiet, and completely deserved, death prior to the next election. But I couldn't help wondering whether this move by Apple won't re-ignite the whole internet censorship issue - not because some very attractive girls with very attractive breasts can be seen on an expensive mobile phone but the sheer pointlessness of exploiting teenage girls in such a strange way for no possible commercial reward and, almost certainly, only commercial 'punishment'.?

I, personally, don't give a toss what commercial enterprises do to generate income and am not, for one moment, commenting on where any line should be drawn on what is "pornography" or some other definition of what 'metaphorical line' needs to be defined for "inappropriate" content in any aspect of Australian life - to say I have less than no interest in such matters is to wildly exaggerate my involvement in such idiocies. However I think the association of Apple's corporate image with "peddling porn" is a mega major misjudgment by somebody and not only because the religious loonies in the US make our home grown variety look like X rated movie producers.

Again, if Apple gets some grief from some US maniacs picketing their stores and burning their iphones, I am less than interested - except to consider why such a company would take such a risk that cannot possibly benefit it in any way (and I have given this incident many seconds of deep consideration) but will, I would think almost inevitably, cause it 'image damage' and for absolutely no benefit. The only reason to even bother to think about it at all is in the context of what this particular piece of 'out left field' nonsense will ignite/re-ignite in Australia?

I am forming the view that irrespective of however well we planned our business and irrespective of how conservatively we 'acted' there were a minimum of two things in every year we have operated Exetel that 'come out of the blue' to rock you back on your heels and in all sorts of different ways endanger some aspect, or occasionally all of your business. Not that I think this particular silliness will affect Exetel but I'm pretty sure it will affect, negatively and totally unexpectedly, other people such as iphone stores.

I will finish the Exetel business plan for the coming year over the weekend and I took the 'Apple Porn' decision as a salutory reminder that no tiny decision should be made without giving it not only a second 'thinking' but almost certainly a third 'thinking'. I realise how pathetically timid that sounds but when I review the past disasters that Exetel has been subjected to (has subjected itself to) all but one could have been avoided with a little more thought and some sensible contract emplacement. In retrospect that is crystal clear. It wasn't anything like as clear at the time but that was simply because not enough thought went in to the decision making and planning processes.

But then again......there never seems to be enough time to put into future planning..

John Linton

....or worst of the recession to come?.....does anyone really have any idea in the Australian government or media about what is happening anywhere in the world including here?

I read this yesterday:

http://business.theage.com.au/business/more-job-cuts-on-cards-say-employers-survey-20090623-cvfj.html

among many similar articles today and over the past 18 months and remain puzzled as to what to make of it. As far as I can see (assuming you're not a share market investor or work for a mine recently closed by BHP or a clothing factory closed by PBG or similar) then no-one in Australia has felt any 'financial pain' from the "GFC" and many people are their share of $A23 billion (or whatever the real figure is) better off over the past few months.

Annette thinks that it is simply a concerted attempt by "the government" to make positive statements about how well everything is going and that "we have past the worst" and it only gets better from here on the basis that everyone sold their shares in a panic that drove itself and that banks around the world got their fingers burned and persuaded the US and UK governments to provide their re-capitalisation. I remain unable to determine whether there are going to be 'bad times' in Australia or not - my current view is that 9 months in to the widely predicted 'panic and despair' I see nothing but business as usual in the tiny interfaces to Australia's commercial processes in which we are involved. In fact business remains very strong for us and we'll finish up the year in a few days time with record progress in every part of our business endeavours.

So when I read things like:

"Although many employers expect to axe staff, the numbers they expect to cut are smaller"

and:

"Telstra this week moved to freeze executive pay and to limit pay rises for many of it staff on individual agreements ...... Commonwealth Bank and Wesfarmers have also moved to freeze executive pay."

I think to myself that they must be seeing the future very differently to what I see - but I understand they have far more information and are far more knowledgeable. I would freeze Exetel's executives salaries but that isn't possible - I can't remember when I or any other Exetel "executive" got a pay rise but I think it was July 1st 2005 so our salaries seem to have been frozen for at least four years.

I would "axe" personnel, even in the "lesser numbers" cited in the article; except I don't see how that's possible as the business volumes increase each month and we have actually hired 25% more personnel in Australia since March and roughly the same percentage in Sri Lanka. The "union representatives" would also be pleased to know that Exetel continues to increase it's current employees remuneration at the rates and frequencies that have always applied - always far higher than "inflation" increases.

On the flights to and from Sri Lanka we made in February and again in May of this year there seemed to be no sign of the 'travel downturn' with even the "premium cabins" (which are meant to be devastated by the GFC) being, as far as we could see actually fuller than they were on our previous three trips. Similarly when we flew to Melbourne recently we were lucky to be able to get a seat on any of the flights we checked. So while I see the massive losses that say British Airways have recently announced the flights to and from and within Australia I have flown on seem to indicate that the flying business here is in a different 'world economy'.

While I have used 'light hearted' phrasing to address the article's very serious points of view I understand that any loss of jobs in Australia are to be regretted and any reduction in business volumes will eventually 'hurt' a majority of people. What I don't see is how any 'slowing' of anything is going to affect Exetel. I'm in the very last stages of finalising what I think are going to be the objectives for Exetel in the imminent new financial year which, as far a I can see, will finish up planning for a slightly faster rate of growth than we have achieved this year - much closer to 30% than the mid 20s we will achieve in FY2009. Any way I look at the figures the growth has remained constantly increasing month on month over the past 9 months and remains very strong in June which is always a 'slower' month - at least comparatively.

Personally I go with the broad thrust of the views expressed by Elizabeth Knight yesterday in this:

http://business.smh.com.au/business/predictions-of-sharemarket-shangrila-may-be-overstated-20090623-cvcu.html

in that Australia hasn't been affected yet (other than the share market losses) but business wont be that good for another 18 months or so. I don't see anything negative affecting Exetel - we are the beneficiaries of our hard won efficiencies in these sorts of circumstances - and I can't see how the majority of the larger communications companies will be negatively affected either except that a la Telstra they may have to slow down the over paying of their management levels and, Heaven forbid, maybe 'let' some the dronier drones 'go'. Perhaps the only major threat posed by the problems in the USA is the potential end of the "automotive industry" in this country which would pose some very serious problems for a large number of people especially in South Australia and Victoria (and Geelong). That may be something that produces a very different scenario.

Annette may be correct - 'we' talked the share market down and called it a financial crisis but no one was actually affected and 'we' should talk the share market back up and pretend that whatever the 'GFC' was for other countries it never happened here. Exetel will continue to make our tiny contribution to talking up the economy and on top of the $A2 million of purchases we have made in the last quarter of this year on buying the NSW floor space and the commissioning of a new PoP in Tasmania and the ongoing employment of additional people rather than being one of those employers "axing" staff.

John Linton

We have, with only a few minor glitches, now completed the cut over of our NSW IP bandwidth from SX via Verizon to SX via Optus. As far as I'm aware there were no negative issues noticeable by any customer and the engineers responsible for the smooth transition are to be congratulated on doing an excellent job - every time the network gets 'touched' I fear for the worst so this is one time when my forbodings were not realised. I was interested to see, while we had both the old' and the 'new' bandwidth on line simultaneously, just how much bandwidth our customers would utilise while there was so much available - depending how much was actually 'switched on' at any particular time there was a theoretical resource of well over 6 gbps at different times.

There was no clear answer and in any event the whole 6+ gbps couldn't have been used as we don't have that much 'customer side' connectivity. However I was interested to see that our customers seemed able to use as much bandwidth as we provided on various occasions while there was almost two gigs or so more bandwidth than we would usually make available in the off peak times. So now we have cut off the Verizon feeds the net upgrade of 'pure' IP across the network is moving over the last week from just over 2.5 gbps to just under 3.5 gbps which is easily the largest single upgrade we have ever put in place. On top of that there is another 1+ gbps of cached 'bandwidth giving a peak usage availability of around 4.5 gbps - quite a long way away from the 10 mbps we started with in February 2004.

I have mentioned before that Exetel's broadband users have accelerated their increase in bandwidth usage quite considerably over the past 12 to 18 months and this exercise has served to underline that the increase may well be gaining more momentum. So I was a little puzzled when I was sent this yesterday:

http://www.itwire.com/content/view/25717/127/

Vocus was one of the IP bandwidth providers we seriously considered and went very close to selecting so we understand a reasonable amount about what they offer and we certainly know the pricing they offered us - which was very, very good. What puzzled me was (knowing the pricing offered to Exetel but not assuming that TransACT bought at it - they may well have obtained much better pricing than we negotiated) a $A500,000 per year doesn't buy you very much pure IP bandwidth - even assuming that TransACT have negotiated much better pricing than we were able to do. So it was this comment, which up to reading this I would have believed was true:

"It’s very satisfying that a company with the size and reputation of TransACT now sees Vocus as mature enough to be a selected as a major provider.”

I know nothing about TransACT's reputation (I assume it is highly reputable) but if the clear implication in this press release is that a $A500,000 pa spend on IP is a major part of TransACT's IP provisioning then they can't have many IP/data users - which doesn't make any sense. So what is a 'sizable' communications company in terms of customers? I am assuming that an ACT user has similar downloads as other users in NSW (as opposed to Victoria where average usage is much higher). Not that it matters in any way other than I was surprised at what it seemed to indicate about a company that is quite prominent in the 'media' and has, apparently, invested what appears to be a great deal of money in its own infrastructure and bid for the Labor NBN1 and is, apparently, lobbying for a chunk of Labor's NBN2. I do believe that TransACT is much larger than that IP spend would indicate......unless......

.....unless TransACT is buying the IP bandwidth from Vocus at a much, much lower price than we were able to get it appears to me that TransACT wouldn't have more than 10,000 or so users which is a fraction of the number I have always assumed they had and therefore I can't believe its a sensible estimate. So the, pretty clear, implication behind the press release for me has to be that we must have bought IP bandwidth at a much higher price than TransACT has negotiated and that, presumably given the ownership structure of Vocus, much higher than the ISPs who are going to get IP bandwidth from Pipe are going to achieve later this year.

It now deeply concerns me because over the IP transition we've just gone through we had been looking so closely at what sort of bandwidth is going to be required over the coming months and the just completed upgrade coincided with the release of the new ADSL1 plans (yesterday) and the new ADSL2 plans (later today) on which we have calculated the new lower plan prices based on likely usage indications and cost assumptions we are now contracted for. Have we (I suppose I should more correctly use 'I') got the buy pricing, and therefore the sell pricing, completely wrong?

It is a little unnerving to read an apparently innocuous press release and then feel a 'cold shiver' go down your spine as your sub-conscious starts to tell you that you need to re-look at what you casually read and then dismissed because maybe it means something entirely different. I can't go back and renegotiate the IP pricing now nor can I change the residential broadband parts of our FY 2010 business plan (which is only a handful of days away). So what the problem for Exetel might now be is that other ISPs are going to be buying IP bandwidth at substantially lower prices than we can buy at and therefore significantly impact our ability to remain competitive as the next few months deliver those possible cost savings to our competitors.

I badly need a holiday, but if it is the case that we have bought badly then I may not be getting one for a very long time.

John Linton

....and therefore thank the people who've misused this term about Exetel for so long.

I maundered on yesterday about trying to finalise new directions for wire line broad band plans in time for July 1st which over the past 24 hours I think I've finally done - at least for the ADSL1 plans and I've passed through the details to the data base administrators to put them in place some time in the next day or so. I'm pretty happy that what we eventually came up with are the very best ADSL1 plans available for the majority of Australian users who can't get ADSL2 and don't use P2P. I base this statement on looking at the alternatives from the largest ten ISPs in Australia and, as far as that has been possible, compared "apples with apples" and then removed every sort of obfuscation that exists in understanding the base premise of:

"what you think you see, is what you really do get" - and you get it at 10% - 15% less than you can get it from any other provider.

(It may sound really easy to do but it wasn't and it took weeks longer than it should have).

But the 'cherry on the top' is thanks to all the Exetel detractors who have tried to deride Exetel by using the inappropriate tag of a "no frills ISP". Really great idea to all of those people - thank you very much for the concept...we have decided to use the concept in creating a set of plans that don't have all the 'frills' the current plans do but allow us to reduce the 'entry' price at all four ADSL1 speeds and each of the three 'flavours' of ADSL2.......thus making available a range of "no frills" plans for incredibly low prices - and by definition elevating the current range of plans to.......haven't found an antonym for "no frills" yet but we will soon.

We will leave the current ADSL1 and ADSL2 plans in place exactly as they are, and we will leave them crammed full of all the 'frills' that add huge value for the average user but allow us to remove those values, sorry 'frills' to allow much lower cost plans to be offered that more than match the "frilled" plans of other ISPs but which are in fact very much "no frills". While that was very clumsily worded I think you should get the basic thrust of the logic. So over the next little while we will provide seven new plans (ADSL1 = 256/512/1500/8192 and ADSL2 = Naked/Exetel Phone Line Inc/Other Provider Phone Line).

Looking at our user's usage patterns over the past year - although they have risen appreciably as an average over the past 12 months it may surprise some people to know that over 60% of Exetel's end users use less than 6 gb of downloads in the noon to midnight period - which is why we eventually chose 6 gb as the included download for each of the seven new plans, in a different peak to the current and 'old' plans, period of 10 am to 2 am.

The major issue (after all the other major issues) was to determine whether we should offer an "off peak" plan component - given that so many inexperienced users seem to think they have to stay up to the start of off peak so they can start their downloads - apparently completely unaware of the myriad of download planners there are available at no charge to do this for them. In the end we decided to do this, but with a shorter time period and a much lower amount than the current plans. the decision was made more for consistency of plan presentation than for actual value to the average 'end user' and will be reviewed over the coming months. At this stage we think an off peak allowance of 12 gb on these 6 gb peak plans will be suitable.

As far as I can see, having looked at ten other ISP's prices, the new plans (no frills or not) have lower monthly prices by 10% to 15% than the lowest competitor's plan but with more included download allowance in peak time and even more in off peak times. So on an "apples for apples" basis the new plans significantly increase the 'margin of advantage' over every competitor's offerings.

So the issue now is what happens (if anything) when we put these new plans up? Will there be a gradual realisation by new prospective customers that every other ISP is ripping them off by charging huge margins? Very unlikely that will happen as we remain a completely unknown entity as far as the Australian marketplace is concerned. However I do think it will help us convince more country agents that there is a much lower cost (high quality) ADSL service than those they are currently selling - maybe that won't happen either but it is a possibility. Overall, and after a series of U-turns and mind changes, we think the new plans will add a new dimension to Exetel's wire line broad band offerings - no frills or not (stupid phrase) they stack up very well as the new base point in terms of pricing for ADSL services.

We will try and see whether we can get some "publicity" from providing this set of plans. I sometimes smile to myself when I see what Australia's 'technical media' deem to be "newsworthy" but in this brave new phase of Exetel's 'life' we will try to use 'publicity' for the first time in our short history. As we have no idea how to do that it will be a challenge to 'use' these different methods to attempt to make Exetel more widely known.

In any event, like many other things we have managed to use to our advantage over the last five and a half years, we have taken an 'attack' on our tiny company and are working on turning it around to a permanent advantage....may not work out completely but I would take any bet that the pejorative term "no frills ISP" will not be heard applied to Exetel beyond calendar 2009.

John Linton

.....because what used to be called shame and humiliation he now calls "if you don't have absolute proof then I didn't do it and if you do have proof then it's a fake but if it isn't a fake it was done without my knowledge and if it has my name on it it was an error by my staff and if......." and gets the Federal Police to harass the person who quibbles with his definition. ...and that's all I have to say about that - despite trying to avoid Labor obfuscation all week end it proved impossible. (apologies to P J O'Rourke for the misquotation).

The real work of the weekend was finalising the ADSL plans for the first quarter of 2009 (which was continually disrupted by the breathless updates of Krudd's, Whine's and the screech owls utterances and a very indifferent Geelong performance) and assessing the various levels of risk we should take in changing the direction of our approach to the wire line broad band market opportunities that may exist now that were not evident (to us) over the past five years. Sounds all gobbledigook to you? Seemed that way to me until I went through what's being offered to the Australian broadband buyer for the goodness knows how manyth time....and then you realise what the problem is for the buyer of broadband services - they've gone the way of mobile services - there is almost no possible way for any "average" English language literate and relatively numerate buyer to actually figure out what they are getting and what it's going to cost compared to what they estimate their current requirements are, are actually using now let alone what they might need to use in the near future.....

.......and I used to think I knew a little bit about ADSL in its various forms. So I threw away all my previous iterations including the almost decided on plans and tried to start again basing new plans on simple (perhaps more correctly, simplistic) assumptions that there must be a market for people who have a budget and want to use the internet within that budget without having to worry about "bundling" anything in to their "overall" spend or being "tricked" into long contracts or all the other smoke and mirrors that make it impossible to actually buy a simple service.

I looked at Exetel's plans and how they were 'presented' and then I looked at 6 other ISPs and tried to tabulate a comparison. This proved impossible because of the (and I counted three times to be sure) 38 different 'assumptions' contained in the six different ISP's parameters for providing an ADSL1 or ADS2 service. By the time you combined all of the different ISP's 'funny symbol' qualifications it was impossible to do a comparison. So I did that only comparison that could make sense to an 'average' user - I 'normalised' all of the different plans (I looked at 68) to a once off set up cost including a wireless modem and then a cost per gigabyte of upload and download per month.(I included download costs for those ISPs who charge for both).

I then set the objectives of the new plans to 'beat' the lowest cost ISP plan in each category by 15% on monthly cost wherever that would not result in a loss by Exetel where Exetel was able to compete with a similar/same service. It took some 5 hours, I never can work quickly on things like this, to produce the information matrix and double check it against the information sources I was using. Then I was able to work out a new set of wire line broadband plans using the experience we have gained on providing PAYU plans over the past 9 months or so and the current statistics that show that well over 50% of Exetel's current users use less than 6 gb of downloads per month.

It then took 20 minutes to work out what they could be:

All plans include 6 gb of downloads (no peak/off peak) excess downloads at $1.25 per gb with 10 email accounts, 500 mb of web space and a fixed IP:

256k $30.00

512k $35.00

1500 $40.00

ADSL2 $40.00 (naked)

ADSL2 $35.00 (rent a telephone line from supplier of choice)

ADSL2 $50.00 (with rented telephone line included)

$50.00 activation for ADSL2 and $90.00 for ADSL1 new accounts and $0.00 for churn customers.

Simple really with no fine print and no funny symbols....and no contract. Only consideration would be whether or not to add some sort of off peak allowance - almost certainly necessary but inconsistent with the overall "ideal".

That really would be the correct way of offering ADSL services - clear/concise/no flim flam.Why do I feel so reluctant to  pursue this very sensible path? Because it's just too different to present ADSL services without mis-direction and obfuscation and, it appears to me, that "honesty is the best policy" disappeared from residential communications service pricing a very long time ago. As with mobile telephone "plans" it seems that buyers and sellers of broadband services have reached the commercial version of an "armed truce" where both parties have agreed to a level of 'obfuscation' which although both parties recognise the lies they are prepared to tolerate them to pretend they are getting something they aren't.

So, if we decide to go ahead we will 'title' them something appropriate and will also prove a 'decision calculator' (that is a fancy name for entering a budget monthly spend and getting the speed/download options for that budget). There will also be a three 'warning system' that will bring up a block page at 1 gb, 500 mb and 100 mb telling the customer that charges apply once they have used their 6 gb. At 1.25 per gb 'excess' this approach should address a big chunk of the current broad band marketplace - or so I would have thought.

I think it the best way to present ADSL pricing but I probably won't be brave enough to carry it through. It was a good thought though on a wet and cold weekend.

John Linton

......not just one (the end user) as so many residential customers seem to assume.

Yesterday, I had a pleasant email interchange with an Exetel ADSL customer to whom we had sent a 30 day cancellation notice and he wanted to know why that had happened. As I had previously briefly contacted him in the past he had my email address and thought that he would ask me about the request for him to move to another provider. I explained to him how Exetel's policies worked in terms of providing services at the lowest possible costs to end users of broadband and telephone services and I explained to him, with some of the base arithmetic, how very, very little money we made from providing any single service to any residential user and some of the reasons why we chose to make so little money while risking so much of our own and putting in so much hard work - far more per person than any of our competitors in my opinion.

Basically, as the simple arithmetic of providing broadband services clearly shows, Exetel make a little over one dollar a month per service provided (that's an average across all different types of services but it is pretty standard across all services month to month). There are certainly months when we certainly don't make as much as one dollar a service per month and the occasional month when we make a little more than that. He said he was surprised we made so little but understood that many small communications companies go broke trying to compete with the large carriers to provide communications services in Australia so he could see that there could be scenarios such as the one I outlined to him.

I don't know whether he actually believed what I said despite him saying he accepted the figures as, like so many people, he shares the relatively common view that "companies" make big profits and all "customers" are hugely profitable for "companies". He also shared the other common view that "companies" never do enough to provide an acceptable service nor do they do enough to resolve any issue with the service when the customer experiences a problem.....and that was his view and he believed that it was appropriate for him to use the TIO to pressure Exetel (his words) in to getting his problem "fixed" although he accepted that there was nothing that Exetel could do at the time, he felt he needed to express his frustration and if it cost his ISP money then "serves them right". He agreed that when his problem was finally traced to a fault within his own premises that it was:

a) Entirely of his own causing and only he could resolve it and he should have accepted Exetel's and the carrier's advice that that was there the problem was occurring.

b) That the TIO was completely unable to speed up the process of determining and fixing the fault or actually adding anything positive or even useful to the problem resolution process.

c) That there was nothing more Exetel could have done at the time or subsequently.

...but he was adamant that he was quite within his rights, when he thought he wasn't getting the right advice from Exetel and the carrier, to involve the TIO (who as it turned out did nothing except charge Exetel for doing nothing except waste expensive time) and thus involve Exetel in significant costs and inconvenience in finally determining that his problems were entirely of his own causing. I didn't disagree with him that he, as an Australian resident, was entitled to take whatever, legal, actions were available to him - even though some legal actions available to him could not and didn't help in any way and in fact delayed eventual resolution and cost unnecessary money - to his supplier. He thought that it OK that he "used the resources available to him" and he was sorry he cost us unnecessary money but he was really annoyed at the time and it must be alright because he now apologised"......

...and there was the problem....IT IS NOT ALRIGHT.......

.......Exetel is caused unnecessary expense by an unreasonable customer and not only don't we make a tiny profit for the 'privilege' of a lot of people working very hard and the owners of the company risking a lot of their personal money for a return that is less than can be achieved by relatively sensible 'passive' investments (no work at all by anyone)....but we actually lost a great deal of money for the 'privilege' of providing this customer with the lowest cost broad band service available in Australia. We lost so much money that even if we provided the service for another ten years we would never recover it.

This explanation was given over an exchange of emails ending with the logical conclusion that if a customer believes that Exetel isn't going to do enough to resolve a perceived problem with the service it's the correct course of action to "punish" Exetel by causing them to be put in a position where they can never ever make any money out of providing the service 'for ever' ....then the sensible action for Exetel is to stop providing the service once the initial contract period has been completed. It's also more than sensible for the 'customer' to stop using the service of any supplier that is so remiss in their abilities that the customer believes that they need the intervention of a third party to perform at an acceptable level as soon as their contract ends.

Its why there is a contract - of course - so that both parties have a legal and graceful 'exit' from an unsuitable situation.

Despite my best efforts he didn't accept that it was reasonable for the 'supplier' to view 'the customer' in the way the contract explicitly provides for the 'customer' to view the 'supplier' - the supply of a service for a fixed term at a fixed price with an end date for the contract's commitments. Either party can end the arrangement if they are dissatisfied with what has been provided in the past or may be provided in the future.....in Exetel's case if we have failed to make money out of a contract then we would prefer not to repeat that mistake - eminently sensible and completely commercially essential.

Based on his 'final' email I don't think that particular customer understood  the basics of contract law....it doesn't seem to be a two way document in his view.

I also never understand why a customer who believes his supplier is incompetent (or worse) doesn't simply churn to a more competent supplier at the first opportunity including when a problem doesn't get fixed "instantly" - provided they are given the opportunity of a penalty-less churn away. Why use the TIO when they can simply churn to a "real" ISP and get whatever problem they are experiencing fixed instantly?

So Exetel gain nothing at all - the customer will now hold a new grievance and complain to all and sundry about how unreasonable Exetel is.

However the "world and other ISPs" may gain something because these sorts of customers may not be so unreasonable in their dealings with suppliers in the future.....then again....that's quite possibly a forlorn hope.

John Linton

....of 'private enterprise' scamming.

One thing that never seems to change in the business patterns in Australia is the 'end of financial year manic buying' of State and Federal government departments as they find "errors" in their spending over the finacial year that hasn't managed to use up all of their allocated budgets. As this money isn't theirs (it's yours and mine via the taxes we pay) they immediately find something to spend it on (the only criteria being the supplying company must provide an invoice dated prior to whatever their individual department's cut off date for accepting payments is). This happens for small and large amounts of money and in my many decades of experience in dealing with the Federal and State governments Australia is cursed with there has never been an exception to this practice.

You may well shrug your shoulders and simply say ".....well that just the government - what do you expect". Personally I expect sensible spending of the taxes I pay but I understood a long time ago that wasn't ever going to happen. However I'm particularly appalled at the glimpse I got of just how much money Krudd and co are wasting on their mantra of "it's all about jobs". A three page fax came through our home fax machine from this organisation:

http://www.upskilled.com.au/about-upskilled.html

urging us to pay them $4,000 per person (no limit on the number of people) to send them on an 8 day course to "do a National Qualification In:Increased efficiency in administration and better management" for which "the government" would reimburse us. "A more detailed course outline can be seen on www.upskilled.com.au" - but it can't - there is just a few sentences of general fluff on each page of that site with absolutely no specifics of anything including the people runing this scam nor their pretended or actual qualifications - the web site has a 2009 date on it and some of the, few, pages link to the same general page linked from other 'tags'. It also references an organisation called Outsource Services Pty Ltd with whom "Upskilled" has "an auspice partnership".

The first claim of the "Business Sales Cert IV" was that it "Developed product knowledge"....something I would have said was impossible to do without having a course teacher who had detaied knowledge of each attendee's company's products and services wich woud be clearly impossible.

The first three claims of the "Business Administration Cert IV" was that it would each the atendee how to "produce complex business documents, use complex data bases and develop and use complex spreadsheets"...clearly an impossible promise to keep even if the attendees had many years business experience and an MBA.

The fax stressed there were no formal educational or experience pre-requisites for attending any of the courses and the courses were "ideal for eople looking to move into a supervisory or management role".

The fax also..... but no need to go on....you either get the picture or me citing more examples isn't going to help.

I'm not sure who this scam is being pitched to - it arrived on our personal home fax in our case - no addressee company or anything other than our fax number. I can only assume that the intended target bunnies are the same people who respond to the Nigerian - "send me money to get access to millions" dumb scams....only this seems pitched at even dumber people.

If this is an example of Krudd's "Job creation" lunatic spending it exactly defines why 'pump priming' only wastes money that will be impossible to replace.

So nothing to see here....government waste is, for whatever reason, acccepted by taxpayers in every country in the world because it is an inevitability, like corruption, of democracy - as the recent parliamentary scandal in the UK has amply demonstrated - it is very difficut to find a "demoratically elected" politician who is not corrupt - often in the meanest spirited ways. Perhaps Turnbull and co actually do have the proof that Krudd and Whine have not only illegally conspired to misuse the powers of their offices "to help out a mate" but have also brazenly lied to (mislead) the lower house (and the media) about what they did on several occasions. It seems quite probable but whether, if in fact it is true, Krudd can get any such evidence destroyed in time is another matter.

Given Krudd's propensity to keep flinging billions of taxpayer's money in every conceivable direction, including the sort of scam I cited previously in this rambling, it is entirely consistent that he would think it OK to "use a quiet word" to get Ford Finance to provide their money to "a mate"......it's not real money after all.

It doesn't really matter of course.......Krudd is odds on to beat the rap whether there is any truth in it or not......but, for the first time in his smarmy 18 months of demeaning the office of Prime Minister of Australia he will not escape some of the mud that, as the proverb correctly points out, will always stick. It's the only way that 'insignificant' people like us can tell on a few occasions which of the 'significant' people have been found with their hands in the cookie jar.

John Linton

.....with broken promises....or from a supplier's view..."ahhhh....you must have read the contract differently to what it REALLY means"....

Back in the days when honesty and accommodation were the principal components in commercial dealings (some people put that as recently as 3,000 BCE) a commercial agreement between two parties was based on mutual benefits to buyer and seller with clearly understood obligations, on both parties, with clearly understood delivery arrangements - if only of the type that ".........and when I return home (God willing and may his name be thrice blessed for eternity) I will do my best to get your beads on the next available camel headed in your direction". Even in the dreaded "Clause 13" days of IBM in the grip (squirrel or otherwise) of the US Federal Government's anti-trust lawsuit the most powerful commercial entity the world has ever seen was punctilious to the point of exquisite agony to, legally, bend over backwards to ensure the 'other party' got the fairest possible deal with almost every aspect framed in the customer's favour....and that was less than 40 years ago.

In those really nice, honest days both sellers and buyers used to take the view that signing a contract was something you did to get the installation process started - the contract was placed in 'the bottom drawer' of the buyers desk and never referred to again by either party and particularly not the lawyers of either party. Contracts were necessary evils that legal departments wanted so they could justify their employment and so that they could convert most of the office space in the CBD into storage areas for filing cabinets holding expensively prepared documents that no-one ever referred to again once they had been signed and countersigned.

At my advanced age I can clearly remember how business has been successfully carried out, even with the most punctilious of the larger Federal Government departments and the most pettifogging legal departments of major Australian commercial enterprises, over the last three decades of the last century in this way with never a "contract dispute" being considered by any party. And then there is now - in the second decade of the revised Telecommunications Act and who would know what is really 'promised' or can be expected to be 'delivered? Certainly not me - partly because I come from a different era (the era of contracts/bottom drawers) but mostly, at least so I think, because I've always thought it was reasonable that a buyer should reasonably get what they sign up to pay for and a seller has the obligation to do that. I guess it's one more clear indication that I should pursue some other way of filling in each day's empty hours because I equally clearly no longer, if in fact I ever did, understand today's commercial legal/contract practices.

So, apparently, it's now possible for large organisations (and I'm truly talking generally and that phrase isn't 'code' for "Telstra") to resort to legal cost 'bullying' as their primary method of 'solving' issues of delivery or performance when such issues arise. Exetel has no ability to deal with such providers as we have neither the time nor the money and we definitely don't have the capacity to string out critical (to us) supply situations that affect our end users. So we only have one course of action - we do whatever the supplier requires which often either inconveniences us, often also inconveniences our customers and/or costs us money or reputation loss. This happens more often than any reasonable person could expect in any given year. If these sorts of legal bullying issues just affected Exetel then it would be obvious that it's simply our own fault in being careless with either our contract negotiation or contract drafting. I am completely happy to accept that I am truly lousy in both those areas of business and it could well be entirely my personal fault that Exetel ever gets itself in to 'trouble' on contract issues - I understand that I have a very old fashioned view of contracts which is why we always use highly competent (and very expensive) legal advice in both our personal and professional lives....but not until this moment in time on simple supply contract issues.

I was jerked back to Australia 2009 reality this morning when I read an 'overnight' email drawing my attention to a 'breach' of one of our current supply contracts and a peremptory demand about what I (Exetel) was going to do about it. I was a little taken aback by the tone of the, very brief, communication as well as by the content. I will do something about it today but it has left me a little bewildered as to what the supplier's intention is in sending such a tersely worded communication. How do they expect Exetel/me to react? I well remember this particular supplier taking action against a smaller company than Exetel not too long ago which resulted in that company being sold up by the supplier to pay for services that the smaller company had never used but was, at least in legal detail, required to pay a great deal of money for even though they had never been used. I have a very busy day today in terms of the monthly management reviews followed by the June board meeting so I will deal with it over the weekend.

Perhaps the time has come to admit that business in 2009 is beyond my ability to deal with and go to the UK and work with people who have more reasonable attitudes to commercial relationships? Maybe there aren't any such people/entities any more and it's simply my inability to deal with today's Australian commercial realities.

John Linton

.....but of course we did and, yet again, we didn't allow enough time for dealing with all the issues that are "out of our control". It has exceeded even my pessimistic view that allowing nine months to plan and execute the promotion of HSPA in country areas of Australia would be more than enough.

There's a lot going on as we approach the end of another financial year and it is becoming a little clearer on what Exetel is going to become involved with moving into the new financial year in terms of HSPA activities - just as well really as that's only two weeks away now. It really does still surprise me just how fast the years slip by these days and why we make so little progress - I think it's getting more and more obvious that we need a change in management as I clearly can't make things happen as quickly as I once did - or perhaps more accurately, kidded myself I did.

Early yesterday morning I 'shook metaphorical hands' (the other party was the other side of the world) on a deal to buy HSPA modems from early in 2010 at pricing we can only dream about in Australia and will execute the formal paperwork when we go to the UK in a couple of month's time. In the meantime we will need to either get the source we have been pursuing for some time now to actually agree a ship date or change our strategy on that aspect of our HSPA promotion. I will be disappointed not to bring that to fruition as it would be an important 'edge' to have in the early days of the country rural/regional promotion. However we have put a quite considerable amount of effort in to this activity but have still not achieved an actual usable result.

I also was given the perfect 'magic box' pricing late yesterday together with the specifications that exactly matched our requirements. Their ship date, unfortunately, is not till October which is disappointing but at least I know its possible now and I will pursue some other options and also encourage the other people we have asked for help to make more effort to get an earlier ship date and a better price than they have offered previously. Again I have been unprepared for dealing with the issues required to achieve a successful result in a realistic time frame from what I thought was a pretty simple process - wrong again.

It looks like the antennae will finally ship next Saturday (we made the final payment today) and we will decide on a 'fulfilment house' tomorrow so they have a home to go to when they eventually clear customs. That will be a relief, assuming it happens, because it has taken "for ever" to reach this point. Again I think it will help our rural/regional agents to have a significant price advantage over their local competitors - the antennae should be around $A50.00 including shipping to them which is a big price break from what I can see. We have never used our own fulfilment house before so this is yet more new territory for us but it is going to be something we are going to become increasingly involved with if things turn out the way we are planning.

The new pricing for the HSPA services was released yesterday and was, largely, well received - the expected percentage of "but why isn't it all free with massive downloads and millions of dollars of inclusions" smaller than expected. I made one error in the construction of the order form (why do I always forget that there are thieves and a***holes who will always exploit nice suppliers like Exetel) and I will have to fix that later today. I am happy with the sensible people's general approval of the plans. We still need to price the 'add ons' and put in place the processes that make them easy to order (and cancel) and that has to be done in the near future.

Our latest 'push' to increase the number of regional/rural agents we have in more locations is bringing in a slowly increasing number of new agents in new areas and we have most of the project milestones locked down and capable of being achieved. It is good to see that our 'second effort' is much more successful than our first attempt and I am really pleased to see that the new 'towns' are names I have always liked but never had the chance to visit. We are still a long way from finding agents capable of servicing the 1,132 townships we ideally we would like to have in place (actually a very, very long way short) but we will persist with that objective.

I was reminded today during a discussion with someone with long experience with Telstra's "activities" to be extremely careful of the design of the TV ad to ensure that Telstra don't have an opportunity of derailing the campaign by filing one of their numerous complaints about "deceptive behaviour" a la their last ludicrous complaint about the three words on an obscure web page (that at the time had actually been 'de-linked' so goodness knows how they got access to it).

I like the ad concept as set out on the 'story board' when the agency presented their pitch because, to me, it was unambiguous in how it described the HSPA offering and, as far as I could see, there was nothing at all that could be construed as "deceptive" or contravening the numerous sections of the act as set out by Telstra's legal person when objecting to the heavily qualified words "pretty much anywhere". However if I put my mind to it I could almost certainly object to EVERY ad I've ever seen in finding something misleading or deceptive in it so doubtless some legal pettifogger among the scads of 'legal experts' could find something wrong and proceed to attempt to ruin our investment and advertising schedule and processes. I will have to seek further reassurances from the agency that they do understand the 'legal requirements' of producing an ad that will be 'invigilated' by Telstra's lawyers - have I ever made it clear what I think about Telstra and their ways of running their monopoly?

So it was a day almost full of dealing with details about HSPA and its promotion in a month's time which left precious little time to deal with the work needed to be done on the other nine products/services on which we will rely to produce FY2010's revenue and profit targets....but, I suppose, there are 9 days left before the new year commences.

John Linton

.....some might say unkindly, the only trouble that ever happens on a network is when/just after a network engineer changes something to "improve" it.

I suppose it's a sign of the times that we are in the last few days of the planned transition from 2 x 1 gbps IP links to Verizon/SX to 3 x 1 gbps links to Optus/SX which will increase the 'pure' IP connectivity for our NSW users from the current 1.9 gbps to 2.4 gbps by next Saturday. Steve told me that the links were now in place and he would start the transition, very slowly, late yesterday afternoon. It isn't a particularly remarkable scenario for larger ISPs but it is for us in a few aspects:

 - it's the first time we've planned a complete cut over from one to supplier to another

 - its a big increase in IP to a single State - 25% upgrade in one hit

 - it is the first major upgrade in IP we've accomplished at a net reduction in cost to us/our users - 25% more at a net 10% cost reduction.

......and a few other minor 'firsts' for our network group. Later this month/early next month we will also add 'pure' IP feeds into the PoPs in Adelaide and Canberra as well as direct feeds to those PoPs and the Perth PoP for our ADSL2 customers in those States. Then there is the commissioning of the Hobart PoP scheduled for late June/early July. We will also add more 'pure' IP connectivity to each of the other PoPs in a similar time frame. So over something like 2 - 3 weeks we will dramatically change the topology and capabilities of our 'National' network....3.6 gbps of 'pure' IP feeds and another 1 gbps of caching feeds for Australian users with every State's customers connected directly to local IP and peering where that's available.

We have come a long way from the 10 mbps IP feed (or was it 20 mbps - I can no longer remember) to our single Sydney PoP with its 2 x 7206s and 4 IBM X series servers in late January 2004. When I look back at the last five or so years of continual network build out and evolution I remain amazed at the skill and knowledge employed that has made it all happen without any interruption to any service over so many iterations of development. Steve and the still very small networking group have a great deal to be proud of....even I don't call it a "small network" any longer. The logical next step, which we very seriously considered this time, is to buy direct from SX or, perhaps, from some new carrier who provides fibre to the world should that eventuate as it was 'hinted' to us some months ago. We will look at doing that towards the end of this calendar year.

We also finished making the changes to the HSPA plans yesterday in preparation for the rural/regional advertising planned to start in mid July. We signed off on the contract for the campaign yesterday and are now committed to a significant expenditure as well as an unbelievable amount of work on putting all of the agent support processes and logistics in place (and our antennae still haven't shipped which is an issue we have no control over). We are slightly more rapidly finding agents in rural areas where we have had no representation to date but there is a long way to go to make that happen in the brief amount of time left to us now. However, I feel relaxed about what we are attempting and think that it is going to be worthwhile in several different ways irrespective of how successful this first 'raw' attempt by a company with zero knowledge of advertising is.

We are also getting closer to finalising the new ADSL plans for the start of the new financial year but it is tough going in terms of coming up with something truly innovative as our current ADSL offerings, irrespective of how anyone outside the company or its users may regard them, have taken five years to develop and I really am having problems moving away from that long term development now it is "almost perfect". I wish I had the courage to really do what is required but I'm simply not brave enough in the face of the glutinous mass of 'me tooism' that is today's ADSL market. Perhaps a small company can never actually meet the objective of offering the really essential elements of broadband in ways and prices that need to be put in place? It may prove to be the case despite all of the efforts we have made over the past few years and all of the risks we have taken.

Then to fill up what are clearly empty spaces in the working day in the June dog days (a friend of mine yesterday called me up and, among other things, asked me how I filled in the 'empty' days in June commercial life when there was seldom anything to do) there is the remaining work on next year's business plan and the personnel allocation and reviews that are required. While we pretty much operate on a 'rolling review' process (as I assume most companies in 'dynamic' environments are required to do) there is the statutory and fiduciary reporting aspects of the end of each financial year which have to be accommodated. We have had a pretty good year in those respects and Krudd's Krazy Tax Incentives are a bonus as we have had to spend over $250,000 on our new office fit outs which, so I'm told, qualify for the KK incentives in terms of tax rebates (as we paid cash for those improvements as we still maintain our no leasing/borrowing policies) which gives us a surprise extra 'profit'.

While I do realise that there is no particular real significance attached to arbitary dates such as June 30th or December 31st I always seem to become physically and mentally exhausted at those times of year and 2009 is no exception. Dog days schmog days - I seem to be unable to find no spare minutes let alone days/weeks at this "dog days" time of year - I can't wait for this "quiet time of year" to end. 

John Linton

.....clearly much bigger than I, and the ABS, think they are.

It was an interesting start to the week with a 'stream' (if four calls can be called a "stream") of phone calls before midday yesterday from people wanting to see what interest Exetel might have in buying internet companies and one call (definitely not a "stream" of itself but perhaps can be considered as similar enough to the other four calls thus contributing to the overall creation of a "stream") from a person expressing "urgent interest" in buying Exetel as "he had heard from a very reliable source that we were about to dispose of the company" - I assured him the reliability of any "source" who made such a statement must, regrettably for the "source", be regarded as so incorrect that it would have to be regarded as unreliable to the point of being a completely lying piece of (fill in the noun of your choice).

It makes me wonder what happened over the weekend? Did four company owners look at their draft results for FY2009 and realise that it was red ink into the future as far as the spread sheet could calculate? Did those depressing outlooks cause a co-ordinated reach for the phone to call their accountants with a chorus of: "get me out heres"? Well...something like that must be happening - obviously not the exaggerated scenario I just attempted to depict but some sort of disturbance in the "Force".

I asked the four 'agents' acting for the 'sellers' for size of the companies for which they were acting and their ball park sell prices and after the usual attempts to obfuscate they each produced a few numbers that allowed me to say that we weren't able to raise that sort of money so we wouldn't waste their time by signing NDAs etc and reminded them that we were much too small to ever be approached by them in the future - though I did give them the phone number for M2 and said they were always in the market for failed communication companies. I told the agent for the 'buyer' that (after he fluffed around trying to recover from the comment about his "reliable source") that we had no current plans to sell Exetel but if he told me who his potential buyer was we would let them know if we ever changed our views - he wasn't able/prepared to do that so I hung up....he must have thought that I am even stupider than I obviously am.

Ignoring the time frame coincidence, until yesterday morning I don't think we've had a "please buy me" enquiry for over six weeks, I am getting a lot more calls from all sorts of different people I have never heard of enquiring about all sorts of aspects of the broad band and related marketplaces looking for all sorts of information as opposed to trying to sell Exetel products or services - in fact those sorts of calls have diminished to virtually nothing over the past two or three weeks. So I'm wondering what may be happening. Someone who might be assumed to know told me last week that he believed there were more than 20 ISPs with more than 100,000 ADSL customers outside "the top five". That surprised me but if it's true then there must have been a great many of the tiny/small ISPs being quietly sold up or simply quietly going out of business if that is the true situation. While I understand that there would be almost no basis for tiny/small ISPs (with the exception of Exetel of course that has very different objectives to those normally espoused by 'commercial entities') to actually stay in business the last ABS statistics indicated that there were still well over 200 - if I read the report correctly.

It would take at the consolidation least the 200+ of those tiny/small ISPs to build so many other ISPs up to greater than 100,000 broadband users if you, extremely optimistically, take the average user base of the ABS 'rats and mice' as being (at best) 2,500 users.... personally I doubt the average is more than 1,000 but my opinion isn't based on any knowledge. If there were 20 ISPs with greater than 100,000 broadband users then I must have completely lost touch with the marketplace. If you assume that the "top five" are:

Telstra, Optus, TPG/Soul, AAPT and iinet

and the likely bigger than 100,000 ISPs are iPrimus, Internode, Dodo, M2 (including PeopleTelecom) and Adam - where are the other 15? I would struggle to think of more than couple of 'maybes' - I could get nowhere near 15. But my informant who was getting his information from what he regarded was an impeccable source was very sure of his 'facts' so clearly a lot of things have happened while I have been buried in the tiny detail of running a small business and have lost track of the 'bigger picture'. I have put Exetel somewhere in the 'top 15' ISPs for some time now but if the information I was given is true then I must hire a research assistant to correct my yawning knowledge gap of what has happened over the past twelve months.

Perhaps what has happened is that several hundred tiny/small ISPs have gone out of business by being bought out/absorbed by 20 of the larger ISPs and their 250,000 users have been distributed widely enough to push 50 - 100,000 broad band user ISPs over the 100,000 customer level - but the numbers don't seem to work unless you get to around 300 plus small ISPs being absorbed in to other entities. I suppose it doesn't really matter in an Australian user base of something like 4 million with Telstra having something like 50% of that. Two million users between 24 other companies is never going to result in the smallest of those companies having a minimum of 100,000 users.....unless my math is even ropier than usual....particularly when at least four (excluding Telstra) of those 24 claim to have over one million users between them. That would leave 1,000,000 users divided by 20 'medium' ISPs and some unknown number of 'small' ISPs....the math just doesn't work. The Australian broad band user base would have to be much bigger than the ABS reports it as being for there to be 25 ISPs with a broadband user base bigger than 100,000 (and personally I would put the ABS figures as 'exaggerated' but I could be being too cynical in that view).

I only have a mild interest in what the actual numbers are because I try and ensure that the 'numbers' planned for Exetel over the new financial year are consistent with us continuing to grow above the 'market average rate' by a factor of at least X2. If 25 ISPs have more than 100,000 broadband users then that can't be the case.