John Linton's Personal Musings

John Linton

.....because I think there's a bit of a conundrum beginning to develop.

As anyone who has a vague interest in the Australian economy knows all publicly listed companies report their last year's financial results between about now and the end of September and, like the 'literary' community waiting for the Booker prize results in the UK, the Australian business 'community' rediscovers its interest in fiction as an art form. It's not so much the actual figures that are 'fictional' but the words used to describe the actual situation with the company and the circumstances that pertained to the 'achievement' of them in their annual reports and in their 'investor briefings'.

The key, by daylight to a dying match, to understanding what is actually happening in the Australian communications industry is looking at what Telstra achieves as Telstra accounts (according to who you listen to, for around 80% of the total profits made from the provision of communications services in Australia. Obviously the last public report on Telstra's progress in the current financial year was delivered by the late, and totally unlamented, El Sol and in case you've forgotten what was 'said' you can find it here:

http://www.telstra.com.au/abouttelstra/investor/docs/tls666_shareholderupdate.pdf

One of the things that Telstra can't be criticised for (at least as far as I know) is the accuracy of the figures it provides to the ASX so in a few pages you can see the basics of the whole industry - pretty much (ignore the 'industry/general comparison charts at the end - they are pure 'spiv spin' and completely irrelevant to anything other than to attempt to obfuscate El Sol's non-performance).

So the key figures, at the half way point of the year are whatever you decide but I would suggest that some important ones could be the estimated overall revenue growth for the year of something less than 6%, but the huge growth in ADSL revenue of 30% for the half year and the less stellar (but still respectable) growth of HSPA customers to well over 800,000.

Now, when Telstra and the other comms companies report their full year results it is going to be fascinating to see which companies compare their ADSL growth revenue/customer figures to Telstra's possible 30% growth over 12 months (assuming that is what it turns out to be). I know Exetel, which had a very good year and being so small still has very big growth because of it low base, certainly didn't reach 30% and Telstra is the largest, by far, ADSL provider with the great difficulties size makes on double digit growth let alone a growth rate of 30%. It's unheard of.

I have no idea what the ADSL market grew by over the F2009 period but the ABS statistics in January were indicating an overall growth of something like 12% (depending on the credibility you ascribe to those numbers - personally I always think they are almost certainly overstated). The new ABS numbers will be published within a few weeks but they are unlikely to be much different you would have thought - they never have been.

So If BigPond grew by 30% for the year and the total ADSL growth is going to be 12% (according to the ABS) then it means that all other ISPs, collectively must have lost 6% of their customers - or some revenue adjusted figure in that ball park. It will be very interesting to see which ISPs claim to have grown by the ABS average of 12% (or whatever the figure is) or if, as I suspect they will all claim greater than average growth where on Earth did Telstra's growth of 30% come from?

Also, and I understand my math is ropey but this is just a heads up, if Telstra's ADSL revenue grew 30% and their previous market share was 50% then, even allowing for the higher average price of ADSL2 (which is no very much for Telstra) then shouldn't their annual report show their new market share at over 60%?

Does Australia really need an ABS that gets some basic figures so very, very wrong?

Or is the more likely explanation that 'some' public companies get a little careless with their non-audited non-financial figures?

Tough call.

John Linton

.......and the very weak go out of business:

http://www.itnews.com.au/News/151448,ecomtel-folds-blames-telstra-adsl-billing-dispute.aspx

...which seems a bit odd that if you've been in business for ten years and have enjoyed 60 day terms from your major supplier that you get yourself in to so much trouble that this actually happens to you. 60 day terms from Telstra......I must be the worst commercial negotiator in the world as even with giving Telstra a $A1,000,000 bond Exetel only gets 14 day terms - not that I have a problem with that as I see no reason to need more than that and we have paid on time for the whole time we've purchased services from them....in most ways short payment terms are much safer; especially in 'tough economic times'. Unless, as appears to be the case here, you are using your supplier's money to finance your loss making business.

I have never heard of Ecomtel and therefore have no idea of what size user base they had or what volume of business they did with Telstra. From the very small amounts mentioned in the cited article it didn't seem to very much but of course there is no context for the few numbers that are mentioned. I haven't heard of a Telstra forced closure for a while, not that means anything as I imagine most such events are likely to involve very small companies and wouldn't get even this amount of low key media attention. (I wouldn't have noticed it except it cited Exetel which 'rang a signal bell').

While I would be the first person to agree that there are many, many errors on many communications companies bills I am a little surprised that a company can be in business for ten years and therefore have survived these 'taxes' for long enough to either build them in to their monthly cost of sales or to have reached some other process of dealing with them.....I know we have had to do that and I have known many other companies that have had to do that for more than 20 years.

So is this some sort of new 'trend' within Telstra? In the lead up to whatever they think will be lead up to some new 'accommodation' with the Labor party or are they 'clearing their books' of the more reluctant payers to maximise their asking price from the Federal Government for selling them back their wholesale business? Or is it a slow news day and one of the Ecomtel owners has some media contacts and wanted to put a sort of acceptable version of the "story" so he saves a bit of face? In changing the trading terms from 60 days to 30 days there could only be one result for a company already struggling to pay its bills and Telstra would have known exactly what would happen.

Personally I don't understand how there can be a situation where Telstra's routers/servers could be:

"the incumbent's usage meters for ADSL were faulty and resulted in "grossly overcharged excess charges""

- and I have no idea what the Telstra product/service could be that a wholesale customer would buy that is measured in megabytes but I'm pretty sure that Telstra's data measurement systems are unlikely to be significantly incorrect for over three years - and I think very poorly of Telstra's systems generally.

So I'm puzzled - I have little doubt that there was no real billing error that extended over three years (if there had been it would have been very easy to demonstrate by Ecomtel) and that the real issues was slow/no payment. My puzzlement is why it took so long for Telstra to decide to take the action it did and whether there is something more important than simply a single incident of ceasing supply to one problem customer and is there something that I should take more trouble to become aware of?

John Linton

...I wonder whether 8,000 Verizon ex-employees would agree with that assessment?

http://online.wsj.com/article/SB124869147720483401.html

...and I doubt that either the Verizon management and shareholders would agree with any such view.

It seems necessary for various of the more stupid and irresponsible presidents and prime ministers, and I'm thinking here particularly of those of the USA, the UK and of course of Australia, to make truly ridiculous statements such as the ones in Krudd's recent sheer nonsense endlessly repeated in his turgid (or should that be turded?) 6,100 word fantasy that appeared in last Saturday's papers that suggest that their personal brilliance has ended the "worst financial crisis in 75 years. There are only two things wrong with that self praise - the problems are by no means over and any good news about the current state of Australia's economy and financial situation is entirely due to the actions taken by the people who preceded Krudd.

Ross Gittins said it in his Monday column much better than I can sum up and of course, as someone not known for his support of John Howard's time as prime minister he can be seen to be a more sensible commentator. While I doubt that many people can be bothered to read the total garbage written by Krudd, Ross Gittins provides a succinct dissection of Krudd's lying self glorification here:

http://business.smh.com.au/business/rudds-new-bogy-fearing-the-pain-of-recovery-20090726-dxj3.html

As I said about the "NBN2" (and I acknowledge I expended far too many words on that topic) it isn't the fact that Krudd is completely clueless and moving his insane preoccupation with getting a second term of egotistical self indulgence it is the fact that there is a very real chance of him doing very serious and very long term damage to Australia's future.

The recession is NOT over and anyone who catches a taxi and asks the driver how business is or does the same where you buy petrol or check with your local newsagent would know that. For most people, excluding the ones who have lost their job over the last six months, the 'GFC' has hardly affected them at all, for many people there has been no negative affect whatsoever - yet. The very certainly will be very negative affects over the coming 12 months and, apart from the fact that several hundred thousand more Australians will lose their jobs and have difficulty finding another one many 'services' that are used around Australia will cease to operate.

Why do I say this? Apart from it being the conclusion of everyone in Australia who writes on the economy and finance generally (apart from Krudd, Whine and Linseed) there is now a clear trend in Exetel's business that is showing that new customers are, on average, spending $10.00 less on their ADSL plans and current customers are downgrading their ADSL plans to one level, sometimes more, down from plans they have used for over two years. I think that these now very clear trend are the most obvious indications that more and more people are having problems balancing their personal budgets.

(this is my first attempt at reducing the average blog from what has crept up to over 1,000 words a day to around 500 words).

John Linton

It was exactly two years ago today (counting the leap year's extra day) that I took on a bet with an old ex-colleague that I could write a 500 word plus a day 'blog' without missing more than 5 days (illness, travel, impossible internet locations) within the year. I won that bet a year ago (though I have to remind you if you're reading this, Tony, that I have yet to see the prize - perhaps you're saving it for me as it certainly wouldn't travel very well) and for a variety of reasons I decided (with no bet involved) to continue to do it for a second consecutive year - which ends today with this, the 731st consecutive daily blog entry. In total I have written well over 700 words on average each day and by doing so I have met the objectives and have achieved all of the seven (perhaps eight) benefits that the original articles he gave to me in July 2007 said would be achieved from such an exercise. It has been an interesting 'task' in all sorts of ways and, although I have seen the results with my own eyes, I definitely would not have believed they were possible before actually seeing them materialise one by one over the past two years.

I don't see any value in going in to any details of the 'good things' that writing these random thoughts about Exetel, my personal association with Exetel and other interests and our country's various political and financial vicissitudes over the past 24 months - they are related to a particular company, person and of course a specific time and place and set of particular situations. What I can say is that such an exercise has been immensely valuable to Exetel (and to me personally) and has returned the time and effort put in to it many thousandfold. Such a deeply personal endeavour will, obviously, always be dependent on the individual writer and the circumstances in which they operate. Each person who writes a 'blog' will do it in their own very personal way and 'aim' it at their own idea of a particular set of audiences and obviously each 'entry' will be dependent on the individuals personal state of mind and the events and interactions they have been involved with over the preceding twenty four hours or, if you are like me, what is uppermost in your mind when you decide to write your next 'blog'.

I can see why few, if any, senior managers of large companies wouldn't write a blog. The legal ramifications and other 'political' issues would make it a pretty emasculated/heavily (self) censored piece of writing. I guess you have to have the freedom from such constraints to be able to write pretty much whatever it is you want to - or be as irresponsible as I so often am as so many 'kind' people have pointed out to me over the past two years. However for people involved with tiny/very small companies, like Exetel, I can absolutely recommend writing a blog as a very, very effective way of developing your business in all sorts of ways you would never have thought of. I can't tell you that writing a blog has added XX% to Exetel's revenues or Y% to our net profit but I can say it has saved us many hundreds of thousands of dollars (I know exactly how many) and has given us opportunities and accesses to people and possibilities that would never have happened without it.

We created Exetel as an 'on line' company and I think we can safely say, that after five and a half years of ceaseless development we do operate one of the most highly 'on line' automated companies in our industry. We have enjoyed some, small, measure of success in our endeavours to date and I would suggest that there are now three on line (two way) personal communication media between our customers and ourselves that have played a pretty major part in whatever success we have enjoyed to date.

The first of those, and still the most intensely practical in a problem solving sense, is the Exetel forum which was up and operating before we took our first order - I wrote the first entry on January 4th 2004. Through the efforts of the dedicated forum admin people and the many Exetel personnel who give their time to helping customers with whatever problems they encounter we have been able to keep all and any generic problems we have ever encountered under a fairly fierce spotlight and therefore ensured they have never 'escaped the notice' of Exetel's management. However, like the other two on line two way communication functions it has been the five and half years of constant improvement suggestions that have enabled Exetel to become aware of so many different needs and desires of our customers and to constantly improve every aspect of our business.

The second communications medium between us and our customers has been this blog - which apart from the 'published' comments has yielded a constant stream of suggestions on how we could improve the current business but even more importantly alerting us to new and different products, services and opportunities - as well as new and better pricing for services and products we already sourced from other suppliers.

The third on line medium, and one suggested by our forum chief administrator is the suggestion box that allows any customer to send their views direct to Exetel's directors and averages three implemented suggestions every day of the week. It has had an amazingly positive effect in making hundreds of small improvements to all of our ten services and the ways they are procured, changed and administered as well as several 'large' changes.

In these three ways we have maintained, and maintain, a very lively interaction between Exetel's customers, Exetel's personnel and Exetel's management, directors and owners. Without being able to really know - I would think that Exetel's customers have more direct access to any level of Exetel's personnel and very real access in terms of getting any issue directly addressed or any suggested improvement seriously considered than any other communications company in Australia. I would have thought that this is a unique and highly beneficial 'support' aspect and that is is better provided by Exetel than by any other 'support organisation' of any company with which we compete.

I can definitely recommend writing a blog for any tiny/small business manager. I have to write daily because of my own problems with personal discipline but I would think two or three times a week for a more disciplined mind than mine would be quite sufficient.

For those kind people who read what I write occasionally and send encouragement and suggestions - thank you for your support - it has been a pleasure sharing some thoughts with you.

For those, amazingly persistent, ill wishers who read so many of my meanderings with the apparently sole objective of writing your poisonous comments to me with such amazing regularity - thank you too - it gives me immense pleasure to know that I can continue, so casually and effortlessly, get so deeply 'under your skin' that you have to keep reading day after day so you can write your rubbish to me - does the word "masochist" resonate with you in any way?

John Linton

Over the weekend I looked at the various HSPA offerings by the Australian carriers and their resellers as well as updating the research we have been doing on EU SPA offerings for the past two years. The EU is far in advance of Australia in terms of numbers of offerings and methods of deliveries and it is very hard to actually track the changes that occur in terms of determining overall trends so all we have been able to do over the last 3 months as been to get an overall trend of pricing per gb and the overall trend of sustainable speeds.

In Australia it has been much simpler because there are only four carriers and the technology has barely changed over the time we have tracked it. The fierce discounting 'war' so evident 24 to 18 months ago has fought itself to a standstill and become a sort of sullen stand off with Optus/Vodafone/3 all settling on pretty identical offerings with Telstra sitting well above the other three on price based on continuing extensive advertising pushing the 'value' of the faster speed and claimed greater coverage.

So currently in Australia there are four carriers plus their resellers plus a very small but slowly growing number of Layer 2 wholesale HSPA customers vying for a rapidly growing but still quite small set of markets. The pricing to the end user has settled at a level which is below our costs and I doubt makes much money for any of the carriers but does make money for the carrier resellers who get a negotiated fixed commission from the carrier set end user buy prices.

There is no chance for a small company like Exetel (a Layer 2 wholesale customer of Optus) of making a profit either now or in the immediate future as the carriers continue to do their usual "free" modems, "free" activation and various other "free" offerings together with their saturation advertising and promotions. We are going to be lucky if we hold our monthly losses to an acceptable level over whatever period of time it takes us to build some sort of 'presence' which will take at least nine to twelve months and maybe longer - or until we can no longer sustain the losses.

We decided to use advertising for the first time in our 5+ year existence to help us get through the coming twelve months of extreme difficulties but we have absolutely no knowledge of how to accomplish that other than the 'suck it and see' approach we are currently pursuing. One of the principle attractions of setting up an HSPA operation in the UK is to get access to much lower cost hardware for Australia - specifically the basic HSPA modem and the elusive 'magic box'. We are hoping that a combination of being able to source the base hardware at even lower cost than the carriers (which will give us an advantage over the carrier resellers if not the carriers themselves) and our ability (being a Level 2 HSPA provider) to add functionality that a simple re-sell of a carrier retail service can't provide.

The decision to use advertising has instantly added $A500,000 of non-recoverable expense to the first six months of the HSPA business plan and we doubt it will provide very much in terms of additional numbers of new customers for many months and probably not very much at all for the first campaign. We understood that very real risk when we made the decision but reasoned that we would have to try and even if we almost certainly failed we would hopefully learn from our initial mistakes and do better the second time (assuming there is a second time of course).

Looking at the ABS figures for HSPA take up the trend, already fast, is getting faster and that simply tracks what has happened in the EU which, from what I can see, is around two years in advance of Australia. If the trends evidenced from the ABS figures are truly indicative and continue along the same trend lines over the 24 months to June 2011 then there will be as many HSPA users as ADSL users by that time (I'm assuming there will be no impact from the 'NBN2' in the coming 24 months). If that is going to be the case then the challenges will become extreme post July 2010 and we really only have this brief time frame to establish our small place in the provision of this technology in the markets we choose to operate in. I can see little 'evidence' that any other small provider is making any progress at all and, unless I'm going blind, many of the larger ISPs have yet to make any progress in defining an HSPA offering.

Our challenge is to increase our customer numbers quickly enough to allow us to 're-negotiate' ongoing base data rates that are at least as good enough to allow us to remain on a par or better with all other Optus wholesale customers and to source the other aspects of the HSPA service (non-Optus) at better prices than any of our competitors. If we can do this then our very low overheads and our willingness to accept very, very low margins should allow us to out-perform companies that can't do all of these things without us having to take the very high risk option of having to sell at a loss for any longer than is absolutely essential.

I could obviously be wrong but, as I've said before, I think the future 'NBN2' is unlikely to be priced low enough to appeal to up to 50% of current broadband users (and certainly not the remnants of the dial up and satellite users) so that leaves a total market of perhaps as many as 3,000,000 users around Australia out of the current 6,000,000 ADSL users. So the current ADSL providers will, almost certainly, lose approximately 50% of their current (most profitable users) to their own and someone else's HSPA service and it should be realised that all but the mobile carriers haven't even got as far as Exetel has in putting in place a realistic (in most cases they have put in place no HSPA program at all) HSPA and HSPA is already bigger today than ADSL was only 3 years ago.

Very difficult times ahead - and almost certainly not only for us.

As Johnny Horton once sang - "....the rush is on"

http://www.itwire.com/content/view/26512/127/

John Linton

.......after looking at a few very, very small/tiny companies recently my conclusion is that, if there is any value, it is only in one or perhaps two of the people - there is no value in their actual business.

I never thought we would reach a situation where we would consider 'buying' another company - principally because we have never had any money for such expenditures but also because it has always seemed to me to be a pointless exercise when you consider the more obvious transactions over the past 15 years or so of Australian communications companies buying other Australian communications companies. While these 'transactions' overwhelmingly involve the purchase of the 'distressed assets' of a small company that has gone broke or is about to go broke being bought out by one or other of the 'bottom feeders' of the industry which results in no-one gaining any benefit least of all the poor customers involved in those transactions even the larger transactions seem to generate no noticeable benefits for anyone.

Over the past two or so years Exetel has been approached by various brokers or, in rare cases, the owners of the small companies themselves to determine whether Exetel had any interest in buying out or taking over the customer base of various small telephone or internet providers. These transactions involve hundreds, or at the most 1 - 2,000 customers and the provided information rarely shows that the companies are even break even profitable which means they actually lose a lot of money (proportionate to their turn over). So they are never a financially attractive 'opportunity (at least they aren't for Exetel) but more recently we have been looking at such opportunities not in terms of their revenue, profit (there never is any) or 'boosting our customer numbers' (we could do that faster and less expensively by discounting) but in terms of whether the personnel would be a valuable acquisition.

It is a very strange thing to do - to look at the employees of another very small company and to try to assess their 'worth' to yourself as a possible future employer of them because, of course, you don't have the opportunity of doing an interview nor of observing them in their daily working environment but you do have the opportunity of 'seeing' them in the context of the time they've been working in the very small/mainly tiny company you have the financial records for. I don't have any experience at all of even knowing how to begin to form this judgment so it has been a very difficult, and different, set of experiences for me and I would be the first to admit that I have made absolutely no progress in reaching any sensible or even vaguely valuable conclusions....but what has almost always impressed me has been how the few companies I have looked at survived at all and I put that down to the one or two people who really made the company 'work' and while these one or two per company were sometimes the founder(s) it was more often the case that it was one or more of the 'early' employees who appeared to be what had kept the company operating as long as it had.

I have been surprised by that conclusion, and I'm not saying it is actually correct, because it just doesn't seem logical and therefore it's unlikely to be correct.....it's just been my view after looking at several 'opportunities' over the last few months but particularly the past few weeks. I have been looking for people within these 'opportunities' who, if we acquired the company would be good additions to Exetel without the need to introduce them to all the rigours and difficulties of working in a very small company and the problems of operating on ultra thin margins with no 'big company' comforts and the 'forgiveness' that goes with such management sloppiness. So far I haven't seen what I expected and am coming to the conclusion that I am somehow 'looking incorrectly'.

For Exetel to meet its plans and objectives and the growth implied in those aspirations we need our current employees to grow and develop faster than they have to date and we do need to acquire a wider and deeper pool of intellectual and creative talent to ensure that our small company continues to find the very best ways of implementing the best technologies that become available in the shortest possible time frames at the lowest possible costs - attributes that I would have thought would be the key characteristics of the personnel involved in running the tiny/very small companies that become available for acquisition from time to time......but I can't seem to find these people in the ones I have seen to date....doubtless my inability to see what's in front of my eyes.

While we will keep trying to find additional experienced people we will need to put far more effort in to developing all of our current personnel and, as far as that is going to be possible, increase our already very high hiring standards. We have a need to increase our Australian personnel from the current 30 to 55 by June 2010 which while very small in actual numbers is very, very large in terms of percentage and all that implies in terms of integration, training, supervision, management and financial control. It is easily the hardest thing we have to do this financial year, or for that matter any financial year in our existence to date, and it is the thing I am most concerned about.

I understand that every company deals with these issues on a day to day basis without giving them a second thought but I have no experience or competencies in handling these issues. Clearly my hope of finding experienced people by acquiring two or three tiny/very small companies has met with no success to date and the 'package' I read through yesterday evening doesn't seem to offer anything different. I'm not sure what the best way is to accelerate the growth of 'management' capabilities in our current people and our possible new hires over the coming months but it is clearly going to be the key to any future success that Exetel may achieve.

I would like to think it is going to be possible but I have some doubts about the time frame.

John Linton

So if you've bothered to read/skim/scan the last few entries you will have, hopefully, followed the story to date of Kevin In Blunderland but let me summarise it for those people who, probably quite rightly, haven't bothered:

1) In true fairy tale style a poor boy from the Queensland bush is, after many amazing adventures chosen to become the king of the realm after being given the magic NBN jewel by his fairy god mother (or was it a fairy 'sound bite spiv'?)

2) When poor, ignorant Kevin was chosen and sat on the throne he instantly transformed from Kevin the totally ignorant about everything in to Krudd The Omniscient.

3) Using his magic NBN he dazzled the peasantry (and the sycophantic courtiers and reptiles of the press) with his promise to wave his magic NBN and produce communications magnificence throughout the land instantly, with no effort or problem and at a trivial cost.

4) But there must have been a time in the past, and he still has not worked when, he had somehow offended his FGM and his magic NBN didn't work month after month and after 15 months try and wave it as he would no realm wide communications network instantly appeared and the peasantry began to shuffle their feet when Krudd the Omniscient talked about how glorious nation wide communications was all going to be and started muttering "yeah - right" and things that sounded suspiciously like "He's full of it".

5) So one day during two of his many, many magic carpet rides he emerged triumphant saying that the reason that the magic NBN hadn't delivered as promised was because it was a girl magic NBN and had been pregnant with, and had now given birth to, a new even more magnificent magic NBN2 which was even bigger and brighter than its poor drab mother and if the peasantry would just wait another eight years the national communications magnificence would become available as long as the peasantry left poor Kevin on the throne because he had tried awfully hard and he had been let down by the evil wizard Telstra and it was all going to be all right, really and truly and in any case Sir Malcolm FullaBull couldn't be trusted because he was rich.

Of course that's just a silly attempt at sarcasm by a noted Krudd despiser.

The reality is much, much more frightening.

1) Krudd, a political hack with absolutely no knowledge about anything generally and even less about communications, is trying to save himself from the lies he told to get elected (a promise that could never have possibly been delivered) by telling an even bigger, more like gigantic, substitute lie that has the ability to wreck Australia's communications services.

2) Unlike the usual hack politician's lies Krudd's lies about an "NBN2" is unbelievably dangerous because by promising a "new" communications network he is jeopardising the status of the current network.

3) One thing's for sure - Australia can't afford TWO national broadband networks. (it almost certainly can't afford one).

4) But the real danger about Krudd's lies about an NBN2 is that (in Tasmania as painstakingly set out in the previous ramblings) he has been given the political magic bullet that just might let him get re-elected but the cost to Australia is going to be not only billions of wasted tax payer money but far more seriously a hiatus in real broadband investment while the Krudd nonsense eventually proves to be just one more political lie that will endanger all Australians.

5) Krudd is going to push himself in to a corner within 12 months where he is going to have to admit he outrageously lied (no chance of that happening) or he is going to announce a price for a residential user to use 'NBN2' (the tiny Tasmanian piece of it) that is below the cost of supplying it - just to save himself from being seen as the lying and facile poltroon that he is.

6) Remember these simple facts:

a) No costing has been done, by anyone, on what an 'NBN2' can be built for and then operated for.

b) Not only has no costing been done but no study has been done that would provide the parameters on which a costing can be done.

c) Not only has no study and no costing been done but they wont be done until AFTER the Tasmanian pricing has to be announced.

So there you have it:

A politician who needs to save his job being given the means to save his job (price of Tasmanian 'NBN2') with no-one to audit, check or even have any basis for determining what should be charged.

His only self serving decision will be to pick a price that is low enough to appeal to the peasantry (sorry - electorate) which would have to be attractive when compared to ADSL2 which will mean no-one will invest any more money in ADSL2 which means when the 'NBN2' can't be delivered for Krudd's job saver price Australia will be even further behind the delivery of faster broadband than it was when some silly people elected Krudd based on his insanely undeliverable promises.

Krudd can pick whatever price he likes because not even anyone in his own party has been allowed to provide input and certainly none of the departments that would normally have prepared all of the figures and policy papers (Treasury, Finance, Funding) have even been given the parameters on which to base the advice to cabinet that is standard procedure for any sort of major capital expenditure let alone the largest expenditure, by far, that the Commonwealth has ever engaged in - and all with borrowed money.

This is, probably, the most flagrant abuse of ministerial power, let alone prime ministerial power, ever attempted in 108 years of Federation and it is made infinitely worse because it has the possibility of effectively setting back Australia's communications industry many, many years if Krudd gets away with it....and yet the Australian peasantry led by the noses by the Australian media and the so called communications industry "experts" ask no questions at all about why no costs have been established before a decision is made on whether it should be attempted.

Perhaps my feeble attempt at a fairy story actually is closer to the truth than its absurdity should allow it to be? Perhaps there really IS a magic NBN that befuddle's the peasantry's minds and makes them think Krudd does have some new clothes, I mean a workable national communication policy?

Well done you.

PS: If you think I'm scathing in my assessment of the costs and benefits of "Krudd's legacy to the nation" are check out what SXE has sumitted to the Senate NBN2 Committee:

http://www.theaustralian.news.com.au/business/story/0,28124,25830445-5013565,00.html

or

http://www.smh.com.au/technology/pmx2019s-national-broadband-plan-really-is-no-net-gain-20090802-e5re.html

John Linton

So, following on from yesterday - at some time before mid 2010 Krudd will almost certainly have to publish the terms and conditions and wholesale pricing for Telstra on downwards to gain access to the Aurora Energy built Tasmanian 'NBN2'. It would seem to be much too difficult for Krudd to go to another election with the opposition letting him get away with another 'Alice In Wonderland'/back of a bus ticket pricing of this "most important infrastructure build in Australia's history" - though given there performance to date that isn't beyond the bounds of possibility. However, even if that were to be the case there will be a lot of other people between now and then who will produce/leak whatever figures are eventually put in place to allow the funding of this illusion to proceed via the laws that will have to be enacted.

So......ADSL's costs aren't going to change any time soon in terms of the non-Telstra DSLAM providers. Why? My guess would be that the clock is now, even be it ever so faintly, 'ticking' on some sort of date when some sort of attempt at an 'NBN2' will get delivered in Tasmania and what that will actually turn out to cost and therefore what will be charged for a residential connection. There are a couple of major plusses in using Tasmania for a 'test bed':

Firstly Aurora Energy has the ability, the already installed back bone infrastructure and the detailed knowledge of the terrain and topology to actually be able to string some wire and get some sort of a semblance of a network installed (as I said in an earlier rambling they are a construction company with a decade long track record of actually terminating wires in buildings and homes all over Tasmania so that is a long way ahead of setting up an "NBN2 Co".

Secondly they have an ideological 'twin' of Krudd to ram through whatever State legislation is needed to get rid of any 'road blocks' that may be encountered and who can also be relied upon, at least until the next election has passed, to keep the project's financial records far from independent scrutiny.

So this provides the two key circumstances required by Krudd - some sort of fibre data delivery actually in place or 'nearly' in place and the ability to have the actual costs of construction and future maintenance "under control" (known only to a select few Labor 'accountants'). This is good news for Krudd but really bad news for ADSL2 futures; Tasmanian and otherwise because in mid 2010 Krudd is going to have to go public with the wholesale ts ad cs and the wholesale pricing so that those wholesale customers of 'NBN2' can offer end user pricing whenever the fibre is turned on.

Now, because he will be the only one to know the actual costs and because he can use the "test bed", "early stages", "not final but firm for two years" scenarios his spin spivs can cook up, Krudd can pretty much announce whatever he thinks will get him re-elected. There can be no 'real figures' for an Australia wide roll out at that time and Krudd can protect any actuals of the Aurora roll out under 'c in c' and 'not audited as yet' crapulence. Krudd has to get the figure as low as possible (and it doesn't matter what it subsequently turns out to be) for the announcement but he is going to face intense scrutiny by people who have a much better understanding and far deeper knowledge of costing communications infrastructures - the carriers and the larger communications companies.

So the future of ADSL in Australia is going to be determined by the depth of untruth a politician not known for his high regard for differentiating fact from fiction is prepared to articulate. There is little/no doubt in my mind that Krudd will be pressured to come up with the number that Telstra tells him to and my guess as to what that number will be is something much higher than ADSL2 is provided for today. In fact if you want to start a sweep my pick of Telstra's number is $89.95 per month including 45 gbytes up/down....but that almost won't met Krudd's needs.

I realise my 'plucked out of the air' number is simply that. However by mid 2010 ADSL including a telephone line rental (naked or not) is going to cost something like $A28.00 to a competent DLSAM owner plus another ten or so dollars for the data and another five dollars for their on costs which means they will be charging around $A65.00 for their average user and making a profit before tax of something like 35%. Telstra's costs will be lower and their end user charges higher but the figures will be somewhere in that ball park.

So over the coming months, intensifying in the lead up to the announcement of the actual charges, there will be an enormous amount of self interested pushing and pulling of numbers between Labor and the possible wholesale customers of the 'NBN2' and none of it will have anything to do with arriving at a sensible price a properly costed infrastructure needs to be sold at.

My guess of what the price will turn out to be is based on the price that Telstra/Optus/AAPT etc are happy will not spell the end of their ADSL investments and my understanding of those numbers is that an 'NBN2' cannot be sold for less than that price without ending ADSL2 as a delivery infrastructure - hence my estimate of $A89.95.

However at that price it is difficult to see more than 10% or 20% of current broad band users taking it up and it also seems highly unlikely that any eventual owners of the "NBN2 Co" could even break even at the end user cost (which would have a wholesale cost of less than $A45.00 ex gst - a cost likely below the cost of provision).

So scrap all of those speculations - the arithmetic to get Krudd re-elected and to keep ADSL2 viable is mutually exclusive if you are going to deal with reality and the reality is that Krudd's re-election is his over riding factor in any decision.

You will therefore see the announcement of a Tasmanian 'NBN2' priced at $A50.00 for 50 gb and unlimited local and national telephone calls and a "Foxtel" service for an additional $9.95 per month in June 2010 and the end of any further investment in ADSL in Australia.

Anyone want to start the sweep?

....to be concluded tomorrow

John Linton

We connected the first Tasmanian customers direct to the Exetel Hobart PoP yesterday and have begun the 'migration' of the 'old' Tasmanian customers to the new PoP which we would hope to complete by the end of the month. Currently Exetel use Optus (in their capacity as a Telstra Wholesale customer) to provide us with the ability to provide ADSL1 services in Tasmania and we have been unable to add any new customers in Tasmania for some eighteen months - during which time we have slowly lost some of the customers we had connected either because they moved and we could no longer provide a service or because they preferred to use ADSL2 from another provider. So everything has been on hold for us (and our customers in Tasmania) for far too long. It's good to be able to offer services in Tasmania again but it remains a pity that we can't provide an ADSL2 option or even a sensible HSPA option at this time.

Providing services in Tasmania is still much more expensive than providing them in any other part of Australia (including the Northern Territory) and if we were making a cold blooded commercial decision then we wouldn't have incurred the expense of the PoP which requires an expensive back haul simply to get it to Melbourne and from there to the 'outside world'. Even with the lower trans-Bass Strait costs provided by BassLink we can never make any money out of providing ADSL1 to Tasmanian customers and we never planned to - and, for the nit pickers, we also aren't 'complaining' about that fact. Our original reason was that we wanted to provide business data and VoIP services in Tasmania via Aurora Energy's fibre network around Hobart and Launceston and believed that over time, and if we were successful a combination of residential and business services would eventually break even. Hopefully Optus will also make more effort with HSPA in the future which is something that will become important to us in the not too distant future.

Of course we now have an even greater incentive to have a 'local presence' in Tasmania given the grandstanding that the Labor government is doing with their pork barreling of the Tasmanian federal electorates with the "NBN2 will be available by Christmas" nonsense they went on about which is now "NBN2 in Tasmania by an unspecified time in 2010". It really doesn't matter when the "NBN2 in Tasmania" comes about but, at least based on current political 'corner painting into' statements there appears to be a necessity for getting something running prior to the next election at the latest.....and that means, or at least I would have thought it would mean, that the commercial terms for wholesalers to gain access to the "NBN2" would have to be in place long before any 'turn on' date.....so those figures should be known around March 2010.

Of course, it may come to pass that tiny companies like Exetel are prohibited from gaining access to the "NBN2" on some commercial basis or political pretext or other - maybe 'legally scammed' by some sort of "during the pilot stages only a limited number of companies will be permitted access" type of stuff....but I think that could be quite difficult to make fly given the basis on which "NBN2" has been touted to date. Nil Desperandum - we are proceeding as if general access to whatever is turned on in Tasmania will be available to any sensible wholesaler with the credentials to meet any reasonable criteria:

(carrier license, financially sound, long term history of supplying data services, unique value adds, lowest pricing, already operating in Tasmania).

Failing that 'direct contract' we will certainly work with our current wholesale providers to buy 'indirectly' - though that would be undesirable for any length of time. Either way we would expect to be able to determine what we would be able to offer in terms of a high speed residential data service in Tasmania by "nn/nn/nn") depending on the desperation of the Labor party not to go to two successive elections promising to deliver an "NBN" (of whatever number) and having failed to do that.

So, sometime in the near future (prior to March 31st 2010?) Krudd is going to have to put up or shut up about what price high speed broadband can be delivered to an end user residential customer - and that is going to be a pretty seminal moment in Australian communications. One of the major repercussions (admittedly in microcosm) will quickly be seen. That will be what changes, if any of course, will be seen in the 'brave statments' being made by more than one small ISP about the future of their investment in ADSL2 DLSAMs in Tasmania. In other words will the actual reality of Krudd's "high speed broadband" service be priced at a level that would make a user decision on whether to buy a lower cost (assuming this is going to be the case) ADSL2 service that requires the user also renting a copper telephone line or will the new "NBN2" be priced low enough so there would be no case to continue to buy ADSL?

Perhaps that decision won't be clear cut and you can already hear the Labor spin spivs polishing their selection of cop outs:

"..of course it's very early days....",

"....you can't take a prototype test bed and read anything in to initial knee jerk reactions....",

"....take up was always going to be dependent on the applications that are not yet ready...."

etc, etc, etc.

Ignoring Krudd's nonsensical claims and whatever his spin spivs come up with to attempt to explain away anything negative for the Labor party you, me, any other person with an IQ closer to Central than Waterfall will be able to determine within days as to whether the Krudd "NBN2" is going to be the unbelievably expensive white elephant it has always looked like being or in fact whether it has some chance of, eventually, succeeding. We will see the statements of the ISPs who have ADSL2 DSLAMs in Tasmania telling their shareholders and the media whether they are going to continue investing in their own little Tasmanian networks or not.

Krudd needs to turn on, or be able to say it's very close to being turned on, the Tasmanian "test bed" (let's all get used to the downplaying of the importance of this exercise now and beat the rush next year) before the next Federal election but if he does try and do that he faces a major problem - one side of politics or the other is going to have a doozy of a scenario to go to that election with - and there's almost no chance it will be Krudd.

.....to be continued

John Linton

While the likely success percentage of the current Labor government managing to build an NBN2 within any reasonable time frame and at any sensible cost (thus allowing a sensible selling price for residential users) would have to be well below 50% with more cynical people suggesting it's closer to 0% only time will tell what the reality may be. On the other hand the take up of mobile/wireless 'broad band' by residential will be reported in the next ABS report as growing even more strongly and will provide some indication as to what residential users may be selecting as the preferred general purpose internet interface long before the metaphorical shovel 'turns the first sod' in a putative NBN2 construction. Whatever is going to happen in the  use of wireless to connect internet will become more and more evident over the next 12 - 18 months. The few people I know, and the even fewer that have some sort of knowledge of where the mobile carriers are 'going' with wireless broadband all are beginning to postulate, not on what the future holds for HSPA/LTE/Whatever, but on what the future of ADSL is. Not doubting that it has a future but whether that future is the straight line growth, all encompassing be all and end all of internet delivery.

Exetel is only a very tiny company so I am not extrapolating from our experiences with Exetel or with other companies of which I had some knowledge of in the ISP business going back to 1995. I have participated in some interesting discussions over the past few years on the 'future' of residential communications and I have always held a very, very different view to most of the others involved in these, pleasant lunch/alcohol fueled and distorted conversations. Over the past three years I have held the view that even the most erudite, well researched, long experienced and deeply knowledgeable 'industry participants' were progressively blinding themselves to what internet usage was really all about in Australia and this 'self blinding' was hiding the real situation from them, who by and large being key decision makers within their own comms companies was sending a not inconsiderable 'slice' of Australian communications down the wrong path.

It was my turn yesterday to give the 'reason everyone is wrong' five minute address and I hadn't done that for over a year as I have had less and less time to indulge in these  extremely pleasant but far too time demanding occasions. I am sure that a large martini added emphasis and enthusiasm to my brief point but my humour failed to find any kindred spirits although I had thought I made my points with a sensible amount of comic illustration. I guess it must inevitably happen every so often. My points tried to illustrate the view that it was obvious that HSPA would cannabalize ADSL and that ADSL was an expensive to deliver and expensive to use technology that would occupy a only a brief time period in the 'history' of the internet (shorter than dial up) in the last dimming rays of the sunset years of 'copper communications' (which should have died back in the 1980s). My attempt at a comical few minutes died a miserable death and my three points were generally regarded as wrong.

I actually think I'm right and these are my three reasons for thinking that the vast majority of residential users will move away from ADSL once a (non-NBN2) alternative is available:

1) ADSL is a kluged solution burdened by the end user having to pay for a transport layer (the copper telephone line) that is unnecessary and a poor choice for the job in any event and is very expensive for what it is.

2) Current Internet via ADSL is overwhelmingly based (by almost all providers) on the demands/needs of a tiny percentage of actual users who are characterised by a desire for 'speed' and large 'downloads' - while the majority of internet users in Australia (by a factor of something like 9.5:1) have neither a need nor wish to pay for such capabilities.

3) Given the choice (and echoing an old Telstra claim) 90% plus of today's ADSL users would prefer a much lower cost to paying more for a faster service and almost none want it tied to telephone line service.

Now I was going to wrap up this piece of 'heresy' with the simply obvious logic that once you remove the need for "fast pings" for WOW type games and big download allowances to stream pornography (and these requirements apply to only one relatively small demographic) you, as a supplier of internet services, have a very different scenario to deal with and it is best dealt with by wireless. Now, I am not saying that the 10% of end users who wish to play interactive games and stream live video aren't an important, and very lucrative, end target market - they are. But they are not that important and certainly aren't anything like the main market for internet services nor, when you actually do the research, even a very big market. They are certainly, courtesy of chat rooms and fora, an incredibly 'noisy' market but then 'noise' seldom if ever equates to importance.

So my, clearly muddled, reasoning brings me to the conclusion that some 80% of the current ADSL user base would settle for a 'line speed' of around 1.5 mbps with a download allowance of 3 or 4 gigabytes for $A30 a month - which is what I think HSPA will deliver to those people and will eliminate the problems and costs of a copper line as well as giving them the advantages of being able to move residences and obviously also have truly portable internet. Which why my summary was going to be, before I abandoned the process, that HSPA may well suit over half the current internet residential users which will not only affect the future of the ADSL market but will make predictions of take up of the NBN2 (assuming it ever gets built) more problematical than the 'experts' constructing the current take up models have dreamed about.

....to be continued.

John Linton

.....with July now almost 'August'.

The new financial year has got off to a good start though there is some indication that more than a few Exetel people are suffering from 'shell shock' due to the number of new initiatives that have been put in 'train' and the number of new 'directions' we are beginning to take. Orders are very robust across our ten products/services and our new initiatives have all made positive starts though, of course, these are very early days. We finally got the Tasmanian PoP operational with the first connections now live which was very positive - to hit our first major mile stone on time in a long series of network changes in FY2010.

On a slightly negative note I was sorry to have to 'give away' our pursuit of the 12 hour free period each day but after so many years of trying to get that offering to work effectively I have given up, at least for the time being, as I just can't make it happen. I will miss the 'competitive advantage' and also, and mostly, the simple elegance of 12 hours 'free' each day but neither I, nor anyone else within Exetel, can find a way of offering it at this point of our development. However there simply isn't any more time (and certainly no more money) to pursue that 'holy grail' after over five years of failure and it was too much of a distraction to continue wasting any more of our scarce management and technical resources attempting to make it 'happen'. It is a weight off my mind not having to try any more and I'm sure it's a relief to the network engineers. It clears the way for many things to happen and allows us to deploy scarce resources to other developments that have been held up while we made our last attempts to 'solve' this issue. Sometimes you just have to accept that something really is too difficult to make happen.

I may well not have noticed any changes that may have been happening in ISP land lately as I haven't being paying too much attention to the Australian media and when I do it seems to be 'drowning' in various NBN2 non-stories for anything else to be discerned but based on the odd thing I pick up here and there from 'insiders' there seems to be nothing much happening - perhaps because all the larger ISPs are planning their involvement in getting a chunk of the NBN2 'pie'. One thing that has been contunuously mentioned to me is that HSPA sales were booming all over the country by all mobile carriers and the predictions that HSPA users would exceed wire line internet users by the end of 2012 was well on 'target'. It was an interesting piece of information as I could vaguely remember Telstra making such an estimate (I think that was even more extreme - 75%?) and I have read about similar estimates in the EU but not, strangely, in the UK.

We continue to move forward with our own HSPA 'campaign with the first TV advertising 'tests' being run yesterday and almost everything else needed just about completed (web site, back end processes, printed material, agent acquisition program etc). It is going to be an interesting few months, between now and Christmas, to see what can be achieved by a very small company with a set of different approaches and I am looking forward to contributing to doing the real work involved in making it happen - in whatever ways we can. Never having done something like this before it will be quite interesting to see what can be done and how much we have to change and modify our initial ideas (and budgets) and to find out whether it is actually possible to make work.

As the Exetel HSPA user base continues to slowly grow we learn more quickly about how better to provide and support the services and how to generally improve many aspects of getting the most out of the current wireless infrastructures and smooth out the 'bumps'. It is a very steep learning curve and we have a very long way to go but if the forecasts of the take up in wireless broadband made by the various sources is anything like correct it is going to be a very important thing (set of things) to learn how to do and do 'right'. I am curious about what I see from the different companies 'marketing' the various different carrier's HSPA services (and the marketing done by the carriers themselves of course). I am having a lot of problems attempting to work out what they are aiming at in terms of any sort of specific marketplace (geographic, education level, age group or anything else) as I can't see any  pattern and many of the claims seem quite outrageous to me - at least based on my own experience and from what our users tell us.

Personally, I'm a very happy Exetel HSPA user (both mobile hand set and computer) and the majority of my personal acquaintances who are using Exetel (because of my recommendation) are as happy as I am with only two people having anything negative to say and that's readily acknowledged to be a coverage problem unrelated to the general usage of the service. Apart from the strange customer who claimed it was unusable, after he had used up 5 gb in 8 days, I haven't seen any bad customer feedback from people who use it in realistic coverage areas. I am assuming (as someone who remembers the early days of mobile telephone networks when Optus first offered mobile services) that coverage will only continue to improve as the user base and geographic location grows.

What obviously needs to happen is for pricing of data to continue to fall and for more capacity per user to be deployed on an ongoing basis by all of the mobile carriers. This 'must' happen and I personally have no doubts that it will but I have no ideas of any actual plans or development time frames....I am just basing that statement on previous experience and logic. I will be interested to see what has happened in the UK in September in terms of both coverage (in the very rural places we always end up in) and sustainability of speed in those places at night which was a bit of a problem last year.

John Linton

......and cause us more problems and waste more time than our customers.

It has been progressively more difficult to check our bills from our major suppliers as the years pass. We have developed automated processes to check each suppliers bills as, of course, they are all in completely different formats from supplier to supplier and in the case of most suppliers their billing formats also vary service by service. It's impossible to check some supplier's bills even with our most sophisticated code for all sorts of reasons but they are all related to the fact that, amazing though it may seem, some our largest suppliers have really inaccurate invoicing systems and, even more amazingly, some of them have 'semi manual' billing systems that generate very large billing errors.

There is not a single major supplier to Exetel that consistently submits accurate bills and it is costing more and more each year to continue to write code that copes with the ever changing processes most carriers use to submit their bills. Even worse is their attempt to cope with their 'special discounts' which while they negotiate various terms in the supply contracts they are unable to incorporate these new terms in their billing software for many months (sometimes not at all) resulting in our continually having to ask for credits having to be applied every month for the duration of the newly negotiated terms and it actually isn't unusual for the credits not to be properly deducted once another new contract is negotiated.

I read this with interest:

http://www.news.com.au/heraldsun/story/0,21985,25798009-664,00.html

yesterday because it will be interesting what at least one of our major suppliers achieves in terms of 'compensation' from Telstra for over billing for the past twelve years. I wonder whether they will pass on any savings they may subsequently receive to their wholesale customers? Not very likely I wouldn't think.....but it is an interesting concept...however it is not something that is likely to be seen as being capable of being dealt with.

We will now need to spend a considerable amount of time (and therefore money) addressing  the various anomalies in at least two supplier's inaccurate billing and their attitudes with dealing with 'billing disputes'. Writing new versions of the bill checking code is an ongoing process but it is one that, at least in theory, we can deal with completely by spending time developing the current bill checking software to meet the needs of the constantly changing supplier billing formats. At least that's the theory. As we have bought more services our suppliers seem to got progressively further behind in writing new billing processes that sensibly address the new circumstances and we are left with progressively more disputes that make a progressively bigger mess that needs progressively more 'meeting' time to resolve the 'disputes' manually.

We can sort most of these issues out by spending more and more time with 'meetings' to agree manual adjustments. In the case of one major carrier's recalcitrance we are unable to reach any sensible resolution of their implacable intransigence and I have reached the view, after many years of simply writing off their over charges, that we will use the court processes available to us to reach a resolution on what we consider to be their total unreasonableness.

The trouble with doing that is that they have always used the court system to spin out any court based resolution for as long as possible relying on the fact that small companies like Exetel simply don't have the money to seek a legal resolution of their refusal to behave rationally or reasonably. To date whenever we have reached the view that we have had to 'grin and bear it' because as the cited article alludes to - large companies rely on long drawn out court 'defences' to prevent 'justice being done'. We have now found a way round that problem, at least we think we have.

Rather than seeking a resolution of what we consider to be their unreasonableness in general we will use the lowest level of the NSW court system (the local courts) to seek resolution of each individual small claim and use the big companies legal overheads against them by going to local courts in different suburbs and towns around NSW to seek a court judgement by the local magistrate to refund us trivial sums of money on individual disputes - amounts less than $A200.00 at a time - but file several hundred claims in more than 100 different local magistrates around NSW.

In theory this will result in very substantial legal costs to the supplier who chooses to use "because we say so" as their response to refusing to provide credits that are clearly due. I don't know how this will work out in practice but it seems that there is no option. The credits that have initially been refused over the years (by several suppliers) have reached over $A3 million which is a gigantic sum of money for a small company like Exetel and one that if we hadn't spend so much time and money resolving would have put us out of business a very long time ago.

My best estimate of the amount of money we are now being over billed each month is between $A80,000 and $120,000 of which we only recover less than 70% and more often than not lately, closer to 50%. For a company of our small size that is a very serious financial problem and due to the bullying attitude of at least one supplier causes us a serious financial hardship that if we don't take some very serious action will continue to become an increasingly heavy burden on Exetel and may become even more serious than that. I really hate spending money on legal costs but it seems we have no alternative but to take the actions we propose to attempt to overcome the attitude of "what we say is right/what you say is wrong".

I am heartened to see the ACCC 'hang in' for so long achieving their eventual 'win' over one major Australian carrier......perhaps there is some justice in the Australian court systems.....just too expensive and time consuming for many people or companies to afford. I hope we won't have to wait twelve years to solve our own far more more minor and trivial problems.

John Linton

....than I can remember used to be the case in the past....though with the way my memory is these days the 'past' isn't very long ago.

Without getting deeply philosophical, which I personally can't do because of an irremediable lack of education plus a massive disinterest in such things, I sometimes wonder lately whether it's worth getting out of bed in the morning. Saturdays used to be pleasant days with email dropping to around 30% of the 'week day' average and zero phone calls as well as few contacts with Exetel personnel (who, quite rightly, choose to do sensible things on their weekends that don't involve a need to contact me). Yesterday was far from pleasant with too many work related issues intruding in to almost every hour of the day and being of the type of intrusion that cannot be ignored very easily and can't be ignored at all if you have even a vestigial sense of responsibility.

I started the day normally catching up on the communications media 'news' and when I completed yesterday's blog I turned to my email which I noticed with mild surprise when I opened my email client yesterday morning that it had much more email than was usual (I habitually clear my email before going to bed each night). However I was dismayed to see the heading on the first unread email was "$42 Million Lawsuit" and even more concerned when I read the contents from our compliance manager referring to this:

http://www.screenhub.com.au/news/shownewsarticleG.asp?newsID=28062

and demands by the apparent litigant earlier last week alleging Exetel was involved somehow in his problems. While it is all stuff and nonsense (as far as Exetel's alleged involvement is concerned) it was an unpleasant way to start the day and it yet again reminded me that the world's percentage of unreasonable people seems to remain on a steeply increasing curve. I cannot possibly comment on the 'facts' of the situation as I know none but it is becoming a more regular scenario where Exetel, and therefore Exetel's scarce management resources, are dragged in to ludicrous situations that have absolutely nothing to do with our business. I wrote to Larry asking for the full details but because of the time difference between Colombo (where he is at the moment) and Sydney there was nothing more I could do for 6 or 7 hours so I sighed and moved on.

After a few less mind jolting emails I read another communication relating to a customer believing that Exetel owed him $A3.5 million dollars for share trading losses he incurred because his ADSL2 service was off the air for five days (including Saturday and Sunday of last weekend) and his email was over 2,000 words of densely convoluted 'argument' concluding with a demand for Exetel to provide him with a bank cheque within 48 hours of the send time/date of his email (12.20 am Saturday 18th July). I'm unaware of any bank that is open over a weekend and assuming we actually had that amount of money lying around in cash and were prepared to agree that we were liable for such a claim I would think he would know it would be impossible to actually get such a financial instrument raised in such a period. I didn't know how to reply to such insanity so I deleted the email and moved on with a feeling that there must have been a full moon on every one of the days last week....

....and thus came across another example, which clearly vied for first place among all the insane claims made against an internet service provider ever registered. These sorts of gross insanities are becoming more evident in our 'nanny state'/'cargo cult' society. The third email of yesterday morning was from a clearly deranged man who wanted Exetel to provide compensation to him because his wife had left him to move in with someone she met in a sex chat room using an Exetel ADSL service. He thought he would "be satisfied with about $A10,000" to pay for getting someone in to clean and cook for him while he "adjusted to the situation". When my mind stopped spinning I deleted that nonsense and managed to get through the remaining messages without coming across any other such ravings.

What is wrong in Australian society where any sane person involved in a mundane business can get three such claims for 'compensation' about such nonsensical situations in one email 'session'? What deity have I offended so badly that I have been selected for this particularly cruel and unusual punishment on a weekend? How can there be such insane people running around unrestrained who haven't been certified and locked up years ago? Well, it certainly got the day off to a really weird start and it never recovered. Throughout the day it seemed to me that the tone and insistencies of emails I received during the day were thoroughly unwarranted and often contained 'demands' that were just plain unreasonable and in several cases very offensively worded....what is it about email that seems to encourage people to lose all inhibitions in phrasing their thoughts and opinions so unacceptably?

I blame Krudd for his constant lying promises of a socialist cloud cuckoo fairyland in which every loser in the country can get showered with money just "because", the because bearing no relation to the person's individual circumstances, an actual cause of those circumstances in Australia or, for that matter the rest of the planet but "because" Krudd needs to shore up his election chances. It has to be something as widespread as that as I can't believe the whining level in Australia can be caused by any other single factor other than the lunacies perpetrated by Krudd over the past 2 years of lying and pretending.

I usually deal with between 200 and 300 emails a day on week days and something less than 100 on Saturdays and Sundays but yesterday there were over 200 emails including the three amazing ones and more than a dozen other distasteful communications.

A thoroughly depressing day.

John Linton

...though this time the uninformed criticism is totally unreasonable. (apologies to the late Jim Backus)

I noticed a series of objections on the Exetel Forum over the past few days because of Telstra's recent line activation price increase reported here:

http://apcmag.com/telstra-slugs-new-landline-customers-with-100-penalty.htm

Anyone who has ever read anything I have ever said about Telstra would realise that I am no fan of that company, it's personnel or its business practices. However it is more than a little ridiculous that people criticise Telstra for moving to prevent people taking advantage of a heavily discounted installation price (based on recovering the cost via long term usage) and then canceling the service before the cost of installing it can be recovered. All you can really say is that Telstra was using a cost model that has become outdated due to changing technology and all they've done in this instance is to recognise the changed circumstances. In fact, even a highly critical person like me would say they have acted in the best interests of all customers by leaving the discounted installation price in place for 'real' customers and simply recovered the installation COST plus a profit margin (all commercial companies must make a profit) from the people who were taking advantage of an offer that was never meant to apply to their particular usage.

I'm not commenting on/defending the current prices in terms of reasonability or otherwise but people who are talking about anti-competitive practices and other balderdash need to take a reality check. ANY transaction in the provision of communications costs the provider money and therefore that money has to be recovered from somewhere (in this case ongoing rental of the line and calls made on the line). If that recovery period is, say, 12 months of line rental and $A100.00 worth of calls then someone who orders the line intending to make zero calls and cancel the line rental as soon as the line is active has completely destroyed that cost/price equation - unless someone actually believes you can activate an inactive telephone line for $A59.00 and make a profit - which would make them completely unrealistic which, I suppose, by publicly 'complaining' about the revised installation cost terms they have proven themselves to be.

I have wasted those words on a situation that I care nothing about because it seems to me that Australian communications users and some of the Australian communications media, or those 'vocal' enough to express themselves so petulantly so often (and, yes I realise that print shouldn't be described as a 'vocal' medium), are becoming ever more 'strident' about ever more ludicrously petty issues - or increasiingly often, total non-issues such as the Telstra PSTN line installation charge. Personally I put it down to the 15 plus years of the mobile carriers providing 'free' mobile hand sets followed for most of the past 8 years by 'free' ADSL activation charges plus 'free' modems and even 'free' months. It has always puzzled me that the customers who took up all these 'free' offers seemed to actually believe they were getting something for nothing - but based on this latest storm in a tea cup, that seems to demonstrate that they really did. How just plain stupid do you have to be to actually think that something that involves a cost to the supplier can ever be provided to lucky old you without the supplier recovering the cost of supplying it? Have the basic tenets of supplying goods and services been temporarily suspended in your particular case to allow the manufacturing, distribution, accounting and delivery costs to disappear? 

Obviously not for all those people whose lift goes all the way to the top floor.

"Free" is playing on my mind more than usual at the moment because it is being applied to a service that Exetel/I personally find unbelievably compelling. Of course, like the 'free activation', 'free' modem', free handset offers it isn't really free but is, or appears to be, very definitely 'free' so I am re-considering my labeling of customers who are lured into longer term contracts or very high monthly charges to obtain something associated with those circumstances as being 'stupid' - because while I don't think I'm the sharpest pencil in the box I really don't think I'm stupid. The 'free' offer that is exercising my mind is the opportunity of getting free access to a sensibly dimensioned EU HSPA network for 24 months in exchange for some marketing assistance and some (quite a lot really) operational systems code and the assistance required to implement it. So far from free in reality but very definitely 'free' in terms of the operating plan cogs lines - or at least many of them. I'm wondering whether that word 'free' is therefore making me as 'stupid' as I think other people are being when they 'snap up their bargains' based on the claim that they are somehow truly free?

To be able to market any service in any country in any marketplace with a zero cogs for two years has to be the ultimate dream of any person who is involved in starting up in business. I have never come across such a scenario in the time I have been involved in business but that may be my lack of contacts and almost certainly my lack of imagination in even thinking such circumstances are possible....but when I think about it (like the consumer offers that are made by such companies as Harvey Norman of interest free terms for 4 years etc) it really is only deferred payment with considerable up front value (the zillion lines of code)..so it will be a really defining moment later in the year to see if it is in fact as real as it seems to be.

I've always known that "free" is the most powerful word in selling/marketing/promoting anything; as any 15 year old who is introduced to 'business' at school does. I have constantly bemoaned the destruction of the value and meaning of this poor word in so much marketing hype, all over the world and applied to every conceivable product and service, but it appears it is the same hook that has entranced me that has entranced all those other 'fools'.

I think it must be well past time to move on to less demanding things when I can even consider taking up a 'free' offer.

John Linton

.....but I don't seem to be being considered to head up Krudd's NBN2 company....so I guess I'll just have to find something else to do with my time.

However there were a surprising number of 'missed call' messages when I looked yesterday evening (11 in total - there is seldom any for a week)) and they all seemed to be from people wanting to 'explore the possibilities' I raised in yesterday's musing. I thought this was surprising for at least two reasons. Firstly that so many people whose names I don't recognise have my personal mobile number and secondly I was, yet again, impressed with the power of an unadvertised/promoted 'blog' to be read by so many people who then act on what is written on occasions. When I started this process almost two years ago I never would have expected such a result but have been amazed at how accurate the predictions made in the two articles that were the origin of the 600,000+ words I have written since late July 2007.

Back to appointing the head on NBN2 inc......I have read with some degree of interest the various media speculation about the likely appointees to chair and direct this possible monstrosity and remain amused at the lack of abilities that seem to be attached to the various names that have been mentioned. Now, I would be the first to admit that I know sfa about running a company that will employ an alleged 40,000 people at its highest point and will have a 'construction' budget of $A5 - 6 billion a year but I would have thought that the person to head a company that for some 5 - 8 years will be involved in digging trenches (hopefully not stringing wire) and building secure concrete structures would come from, errrrr, the construction industry?  I would have also have thought that the people to manage this project would have a hugely successful track record in 'green fields' company development from zip to mega in very short time frames? But, assuming the media speculation is correct this is not the case at all......the people being considered are big city lunching fat cats whose only claim to experience is that they once got their snout in the trough of some monopoly or other.

Now, given that the media guessing at the possible 'leaders' of this mythological adventure are almost always well off the mark in terms of any prognostications they make on any subject they report on, their current speculation is meaningless and almost certainly completely wrong....but then who in Australia is qualified to manage a quasi-commercial entity that needs to build an Australia wide infrastructure? No-one with any sort of track record springs to mind and that is including reading the various rationales in the various media. Leightons is a great target as a contractor (and presumably there are others) but anyone who has any knowledge of major contract negotiations on major building projects (of which NBN2 is the grand daddy of them all in Australian terms) would know that you would need a whole lot of detailed construction knowledge to deal with ANY company on a project as complex as seems to be suggested - you certainly don't need a person who has warmed board seats in monopolies or the monopoly wannabes.

I don't seem to see too much talk about appointing someone similar in experience and success as William Hudson who was chosen by another Labor Prime Minister (but one of infinitely more practical common sense and self knowledge than Krudd) to create the Snowy Scheme from ground zero (he was the only employee at the time of his appointment). Why not? Why isn't an experienced construction engineer (even if we have to hire a Kiwi again) being sought for the overall management of a construction job in the field he is experienced in? Why is all this media speculation about telco board room drones whose lily white hands have never handled a theodolite let alone a pick? Because it's the ultimate 'jobs for the boys' lurk? Probably that's much too cynical but you have to wonder at the names currently being tossed around as being capable of actually making any sort of contribution let alone defining and managing the project. Not one of them has ever created a major (or any?) corporation and not one of them has even tangential experience of managing a massive construction project. Maybe I'll be shocked and not see a succession of Labor hacks given all the board positions and key executive positions over the coming weeks....I'm not holding my breath though.

I have never been involved in anything other than very small businesses since I left corporate employment shortly before the Vandals sacked Rome (or was that the Visigoths?)...in any case a very long time ago. Since that time I have only been, like most other people, a mildly bewildered peripheral observer at the demise of Ansett, the tottering on the brink of Westpac and the near collapse of AMP all long before the recent commercial self destructions of the 'GFC'. This means I have zero knowledge and absolutely zero experience on how huge businesses (such as the vaunted NBN2 Inc) can be brought in to existence and then actually deliver something as undocumented as a national optical fibre network with hand off abilities to multiple other networks as well as linking directly to 10,000,000 residences and commercial buildings.

I have some realistic experience of trying to use (as a wholesale customer) far smaller networks from companies such as Telstra, Optus, AAPT, UEComm, Pipe, Nextgen etc and have some realistic ideas about the shortcomings of such networks and the difficulties of interfacing to them over the past 15 years. My experience of those infinitely smaller networks has been that they are very difficult to build and even more difficult to manage over time even though they were built and managed by companies that (with the exception of Pipe) had long experience and a lot of internal engineering competence in doing just that. What chance does a non-existent company get to do something infinitely larger with an infinitely higher degree of difficulty in a much shorter time frame and then deliver it at a realistic cost in competition with other established (albeit smaller) networks?

Buckley's?