John Linton
......or is the usual incorrect reporting in the communications media quoting incorrectly over the past few days?
Ignoring the comments about Telstra's usage meter apparent anomalies and that the CBA's NetBanking system is having an amazing run of ongoing problems my 'eye was caught' by two other directly quoted statements over the last day or so which, in my current semi-exhausted state, I can't be bothered to look up and I've deleted the emails that originally drew my attention to them.
The first was that by iinet's CEO who seemed to be stating two facts that I found extraordinarily strange and I think it was from a post on the iinet section of Whirlpool but, as I said, having deleted the email advice I can't be sure. In the referenced post he quoted two numbers which seem extraordinary (in the context of another statement in the same post that iinet had 500,000 customers) if they were correct which were:
- 'iinet take around 12,000 inbound customer calls per day"
- "iinet add 5,000 new customers per month"
If Exetel take 12,000 inbound customer calls each day and have a customer base of 500,000 customers then does that mean that each one of iinet's customers call iinet support an average of 7 or 8 times each year? What on Earth would they need to do that for?
The other statement is even more extraordinary - if iinet get only 5,000 new customers a month and if iinet (now this is from a confidential source so I can't give a reference for it) has an annual churn away rate of 22% then they are losing customers at a rate of almost twice as fast as they are obtaining them. Based on an analysis of iinet's customer numbers over the past few years (available from the publicly avaialble data) it seems possible that customer retention is quite a problem for them with only their constant ISP acquisition disguising the fact that they always seem to lose more customers than they gain "organically" each year. Given the stated amount of advertising done by iinet each year this seems an extraordinarily low take up.
Perhaps the quoted number of new acquisitions should have been "per week" and not "per month"? That would eliminate the strange inference about net customer loss. Perhaps the number of inbound calls should have been per week not per day? That would get rid of the ridiculous inference about the excessive number of calls needed to keep a simple service operational. Maybe I just don't remember the statements correctly?
I didn't quite know what to make of those 'facts' stated publicly by a senior company executive who there would be no reason to doubt would know exactly what those individual figures were - but put them together and they make no sense at all....or is that in my mind-benumbed state I have made serious simple arithmetic errors or drawn totally unreasonable conclusions?
The second extraordinary piece of information that was emailed to me (and this one must obviously be published on the ASX web site but I can't be bothered to look) was that a tiny ISP - EFTel - was trying to raise a little over $A1.6 million from its shareholders by offering them a 1 share for 2 owned shares for 1.95 cents (cents not dollars) to buy some DSLAMs.
This struck me as quite odd for at least two reasons. The first was that $A1.6 million, even in these tough times of telco equipment supplier deep, deep fire sale discounts, won't buy you much equipment. The second was that it is really strange for a commercial company to have so little, apparent, credibility with their bank(s) and their chosen equipment suppliers that they wouldn't spring for such a trivial (relatively) amount of money either by commercial bill (from the bank) or by vendor lease (from the equipment supplier). It seems incapable of any other interpretation other than neither their bank nor their equipment vendor wishes to extend their current financial exposure to them. It will be interesting to see if the non-executive/non-family member shareholders feel the same way as their bank and equipment vendor.
Of course both those above references are to Western Australian ISPs who always seem to be more than a little different to ISPs based in other Australian locations (or other countries for that matter). Though to be fair I noticed that the several floors occupied by PeopleTelecom just up the road from our new (very small) office in North Sydney are now for lease so it hasn't taken the new owners (M2) very long to decide they didn't need very many of the PeopeTelecom personnel unless they have all agreed to relocate to Melbourne?
So that was three indications in a short space of time that not all was as well in ISP Land as the, claimed, lack of recessionary affects on the Australian communications industry would have indicated. I had two more indications of possible "trubble oop at t'pit" (at least in terms of ISPs even smaller than Exetel) when one of our larger suppliers approached us about taking over the ADSL2 bases of two of their customers who were unable to pay their bills and had now exhausted all alternative 'rescue' efforts. (may well be a new financial year decision by the supplier's financial people).
We couldn't help them as it is something we just don't believe is in anyone's best interests to do (treat customers as some sort of 'asset' to be disposed of as some supplier decrees) though we understand that is not a universal view. I will be interested to see who 'buys' those two 'customer bases' if that is what happens and what sort of retention rate is achieved. Harking back to the iinet 'take over' of OzEmail some years ago it never seems to work out as well as even the most pessimistic view held before the event would indicate - in that case it seemed that iinet simply borrowed $A100 million and then wrote it all off as it realised it had paid for nothing.
So strange happenings at five ISPs may mean something - or maybe it just means some of the facts are mis-reported and I can't correctly interpret the rest.