Sunday, August 16. 200914 Days And Counting.....John Linton ...and it has occurred to me for the first time in decades that I have tyranised myself over many years with the use of 'to do' lists. In two weeks we will be heading off to the EU for some badly needed r and r ...... and a little bit of work. As usual it always appears to me that I have left everything too late to actually get the required 'tidying up' done so that I can leave the office with a clear conscience for a few weeks....this time is no exception and I am going through my usual pathetic "will I cancel the tickets now or will I be able to squeeze it all in" thoughts - knowing I won't cancel anything but still wondering why I can somehow go through such nonsense? Pathetic is the correct word but, despite what some 'pop' text books might say, 'self knowledge' doesn't actually help any situation in any positive way. I have 11 'critically important' items on my current 'to do' list, plus 16 'revenue affecting' items and 28 'must do within 120 hours' items - about average for this time of year but it seems much more difficult due to the absolute time constraint of holiday departure. It raises the issue of what is a realistic 'job load' for any responsible person and, much more interestingly, what would really happen in things as relatively unimportant as commerce if 'critically important' issues were not dealt with within a realistic time frame? I'm pretty sure the answer is.....nothing....or near enough nothing. So what is it that 'charges' business to do lists with so much urgency/importance/worry or however any individual treats them? I have no idea - I have always (as far back as I can remember) been a to do list maker and user and have always dealt with the lists of items by starting at the top and doing the items that seem to be the shortest/easiest and when I reached the bottom I went back to the top. At the end of each period (a 'period' being not related to any particular time frame but just when the list got too long for the one piece of paper or got too messy with 'crossings outs'). I started using this to do list method for "real" so long ago my 'piece of paper' was an IBM punched card which was a convenient size (for me) and could be slipped in to the inside left hand pocket of your suit jacket (in the days when I wore a suit to work). It's only over the past few years that I have started dividing things I add to the to do list in to the three categories I used above. I don't know what the most common method(s) of reminding people who have fairly wide ranges of responsibilities that are based on innovations or totally new characteristics - in other words things that don't have a procedure or method to address but call for something entirely new to make them happen. I have talked about it briefly to various people but I don't recall getting any replies that I can remember that were helpful. Presumably there are many methods of handling a 'creative' job that constantly involves not just thinking of new ideas but deciding how they can be implemented. There is absolutely no way that I am going to get through my current to do list let alone deal with the 4 - 5 things I add to it most days so I have decided to do what I should have done many years ago - I'm going to ignore it and simply do what I can in the next fortnight. I have worked under the pressure of meticulously adhering to a work schedule that only ends when I have done everything I set out to do each day or just got too tired to continue trying and that is too great a burden for me as I continue to age in mind and body. It is now well past time for Exetel's managers to take on a much more serious part of the decision making and for us to employ a few more people to allow them more time to do that. I would like to see what life is light when you get a full night's sleep again and actually think about something else other than the business every second of the day. Probably not the best thing to do 'cold turkey' but with the unbreakable deadline of taking leave in the immediate future maybe it will be possible. So yesterday I contented myself with finalising the design of a "Why Buy From Exetel?" business service 'brochure' and whiled away the rest of the day reading the papers and watching nonsense on Foxtel. I feel much better this morning. Saturday, August 15. 2009HSPA Results Continue To Be Very ImpressiveJohn Linton I read the Vodafone/Hutchison annual results report earlier this morning and while the Telstra reported growth in HSPA revenue was spectacular (at 70%) the HTA results of a 45% revenue growth are also very impressive given the limtations of their sales areas but it was their increase of 167% in number of HSPA users that was the figure that caught my eye: http://www.asx.com.au/asxpdf/20090811/pdf/31k17sj8tbrhw1.pdf As I commented on the Telstra figures that growth is steepening an already steep trend and the take up is a pretty clear indication that another marketplace is emerging for data over mobile devices that looks like becoming the dominant driver of data and mobile usage in the very near future if it isn't already but not only that bt it will become the major use of a mobile device - over taking revenue from voice calls over mobiles. Growth percentages of above 50% or more in the mobile data market in a single year compared with single digit growth in ADSL and barely double digit growth in mobile (and I'm not sure whether that includes data or not as the figures aren't clear) is a pretty clear indication of a true 'sea change' in the Australian communications marketplaces.....and this is before there is a 'universal' take up of data capable mobile handsets in use - imagine what the numbers will look like once every mobile telephone user can access the internet? In the meantime the various wire line internet providers continue to gloss over their ADSL 'growth' by burying it somewhere in their results with the sort of comments that Telstra's CEO used that 'growth was slowing' after his predecessor previously saying that growth was 'very strong' and quoting his amazing number of 30%. The last ABS number (Feb 2009 for 31/12/080 was around 6.7 million connections which is almost certainly a little rubbery but with 9,000,000 'households' in Australia is right up there at a saturation sort of level. The new ABS results will become available next month and it will be interesting to see if they make double digits....my bet would be thy won't even allowing for the 'creative reporting' of the companies that input the base data to the survey. So, from what figures are available at this point in time HSPA, barely out of its 'infancy' in Australia is growing at a rate that will see it over take ADSL in terms of number of users within 18 - 24 months and will surpass ADSL in terms of revenue within 12 months of that happening - at a rough and ready estimate. Interesting enough conjecture and heavily reliant on spectrum availability and capex decisions by the mobile carriers. Also, dependent on the increasingly fast upgrading of the current mobile users from non data capable phones to data capable hand sets which will be a given over some sort of time frame. So pretty soon the 'excitement' of the reporting season will be a dim memory and the oohing and ahhing over the ABS figures will be a thing of the past and the reality of one more technology change will have to be dealt with by the various participants in the Australian industry. The 'NBN2' will continue to be re-defined (and continue to be pushed back in terms of implementation) and it's impact on the actuality of data delivery in Australia will continue to become more 'real' or, as I would think, more irrelevant as more people begin to see it for what it always was - total nonsense winged on the gullible voters by the most unscrupulous set of unmitigated liars yet seen in Australian politics (and that's a fearsome record to attempt to beat). With a mere six weeks of the new financial year completed the current set of announcements and the more realistic of the predictions only seem to confirm our views that ADSL will become less important to Exetel in terms of both revenue and investment and HSPA and VoIP will become more important in both those key aspects of our overall business and, more importantly in terms of the people currently within the company and the new hiring we may do over the balance of the current financial year. I'm not saying our take up of ADSL will lessen - every indication over these first few weeks is that ADSL will continue to grow, for us, at a faster rate than it did in FY2009. However our business products are more quickly growing and are set to grow even faster as a percentage of our total monthly recurrent revenue and both our VoIP and HSPA services are also tracking much steeper growth curve - at least at the moment. So my conclusion, based on the early results from the carriers, is that they will continue to lose market share to the next level down and that HSPA and VoIP will continue to make rapid gains at the expense of ADSL and conventional telephony - mind you I would have said that at any month in the past two years. Friday, August 14. 2009I'd Have Paused For A Moment Of Self Congratulation.....John Linton ....if it hadn't been so "bleeding obvious" four years ago that HSPA and VoIP were infinitely better longer term investments than playing around with ADSL2 DSLAMs for a year or so. I was looking forward to the Telstra publication of their annual results yeterday but was sort of disappointed at what was made available in the early media reports: http://business.theage.com.au/business/telstra-profit-jumps-10-20090813-eipa.html as it didn't seem in line with the half year results as announced by El Sol some months ago - and for those of you with short term memory loss (like me) or just plain disinterest some of the figures can be found here: http://business.theage.com.au/business/telstra-profit-jumps-10-20090813-eipa.html Even the first financial analysis in today's early editions was equally 'fuzzy' as evidenced by Elisabeth Knight's assessment here: http://business.theage.com.au/business/telstras-future-is-not-clear-cut-20090813-ejy0.html I was particularly surprised by the apparent dis-connect between El Sol's claim of "Retail broadband (BigPond) grew revenue by almost one-third in a maturing and very competitive market" in the half year report to David Thodey's statement of: "Fixed retail broadband revenue was $1.5 billion, up 15.9 per cent on the previous corresponding period" in the full year report. Where did the missing 17.1% go in the next 6 months of trading? Or more exactly how did Bigpond go from recording growth of 33% in the first six months of FY2009 to finishing the 12 months at 15.9%? Does that mean there was virtually no growth at all in the second six months of FY2009? Maybe I'm reading the numbers incorrectly and will have to wait for the sensible financial and industry commentators to analyse the full figures - a 16% growth is still very impressive but not nearly as exciting as a 33% growth (which I think I opined at the time would have been virtually impossible to achieve in the quoted "maturing and very competitive market"). We will have to wait and see what the ABS statistics for the FY2009 year state as being the overall growth rate of the wire line broadband market but the early indications seem to be that last year's "12%" will be a single figure result for FY2009 so it would seem that Telstra has managed to 'hold it's own' with its effective growth of 8% of the total market growth over the past 12 months (and perhaps some less kind, and certainly less refined, person than I am would describe that as Telstra's perennial position) in the ADSL marketplace despite the promise in El Sol's earlier statement that Telstra had blitzed the market courtesy of its ADSL2 services and aggressive 'win back' campaigns. What was very impressive was Telstra's growth in HSPA broadband: "Wireless broadband revenue grew by 69.2 per cent to $587 million" A 70% growth is truly impressive and the annual revenue has now very rapidly reached around one third of the revenue from wireline broadband in far less time than it took for Telstra's ADSL revenues to exceed half a billion dollars. If Telstra's other statement: "however there was a significant slow down in subscriber growth in fixed broadband over the year." is going to represent an ongoing trend then it might be that HSPA revenues will equal or exceed ADSL revenues before the end of calendar 2011 - a little earlier than generally predicted. Of course, so many casual observers will say that HSPA will never replace broad band because of blah, blah, blah.....and undoubtedly that's true in certain market segments. But copper wire is truly in the last of its sunset years and not much more is possible to derive from it while wireless is in its very early stages of development and a great deal can be expected to come out of today's research and development labs around the world. Solving back haul costs, spectrum congestion, latency issues, among dozens of current issues, remain to be done - if they can be done at all......but the current growth of HSPA versus ADSL, not just as evidenced in Telstra's current reporting but similar reports from the EU and the USA, is quite clearly a trend that seems unlikely to 'turn around' in the next year or so. But, for the skeptics, let's see what happens in the FY2010 half year reports early next year. The other 'proof of concept' figures in Telstra's full year figures was the steepening of the decline in wire line telephone revenue: "PSTN revenue, from services including local and international calls, dropped 4.9 per cent on the previous corresponding period to $6.3 billion." Now this could be ascribed to the strong growth in mobile revenue but if you really look at the statement that immediately follows it seems far more likely that the mobile growth was mainly from add on revenues and particularly data over mobile revenues. The steepening decline in Telstra's telephone line rental and voice call revenue would be caused by the steepening up take in VoIP used in business and residential implementations where companies like Exetel no longer use any Telstra lines or call charges in the major operations of our day to day business - and this is becoming more common as each day passes. There are undoubtedly many other inferences/interpretations that can be derived from these early reports and doubtless as more details become available and sensible people make their assessments of them different views will emerge. Before moving on to doing some real work I am pleased that the first report that relates to our industry seems to confirm that three of our most time consuming and expensive decisions of the past few years appear to be exactly correct.....but then perhaps I just want to believe that? PS: Another view quoting ome unreferencd numbers: http://www.businessspectator.com.au/bs.nsf/Article/3G-pd20090814-UW286?OpenDocument&src=sph Thursday, August 13. 2009Advertising, Promotion, Marketing - What Is Becoming Of Us?John Linton Two phone calls yesterday gave me pause for thought which I duly did over the remainder of the day and again over the first waking hours of this morning. They were both related to promoting Exetel's services via 'dual marketing' with other companies. Exetel has never had such approaches before and to get two within a few hours was an odd co-incidence. I suppose our TV advertising in various regional areas has, as usual, drawn the attention of non-intended 'viewers' and maybe makes us look as though we are a spender of money on these sorts of exercises. That's certainly true in one case as they specifically mentioned how much they 'admired' our short ad. The other one was similar in that it referenced our web site's content that deals with our small contributions to fauna and flora protection. Since our beginnings in January 2004, Exetel has done no promotion, advertising or marketing and until February of this year has had no 'sales force'. Since that time we have been adding sales trainees at a rate of around 2 per month, have agreed a regional country television advertising program and have designed and distributed an increasing number of 'posters' and brochures' - we even sent someone on a brief 'promotional trip' to Central Victoria! All this from a company that for five years had strictly adhered to its base m.o. of only using a web site to 'sell' its products and services. We have even been discussing with more than one of our suppliers how we could be involved in 'joint promotion' of some of the services we buy from them. FCS pretty soon we will be hiring a "Marketing Manager" if this trend continues! Perhaps it's just a phase we had to go through or just an indication of how tired my mind has become to allow my total aversion to all advertising and promotion to be overcome by the steadily increasing 'pressures' exerted by people in and outside the company to involve ourselves in these, to me, always pointless and money wasting processes (not the hiring of sales people which is the one essential change we had to make to Exetel to accomplish a move to a much higher percentage of revenue from non-residential services). It seems to me that, in a very short time, we have moved from our previous position of "no marketing/advertising/promotion whatsoever" to doing all of those things simultaneously. I fully realise that I agreed with each of these initiatives and am neither ascribing 'blame' nor distancing myself from the decisions to do any of these processes - I'm just expressing a belated surprise at how much time and money we are now committing to things that I have regarded so negatively for the whole of my business life. No fool like an old fool springs to mind. It's not that I don't agree with all of the various things in terms of promotion/marketing individually, we are doing it's just that I really don't see an overall benefit to Exetel's long term's objectives. If we are to spend money 'selling' our services then I think I am not the right person to direct those activities....it goes against the very essence of the reasons I was involved in setting up Exetel in the first place and means, to me at least, that there is no real reason for Exetel to exist. Any way, getting back to the joint promotion 'opportunities' we were offered yesterday. Having mulled them over for some hours I have come to the conclusion that Exetel would have to give away too much of our 'intellectual property' in terms of our knowledge of how to approach the target marketplaces involved and while we are very much a 'no secrets/open book' company it did force me to realise that we do a number of things better than any of our competitors and we would be foolish to spell out those few 'secret' advantages that we do have. That could be pure self delusion/foolish pride but it seems to be true in a number of ways and as one of our suppliers remarked recently "you guys sell far more of 'product X' than our really biggest wholesale customers like Macquarie Telecom" - so we must have some 'hidden advantages/capabilities'....perhaps just our very low prices? Then again perhaps it is just our being foolish and our false self aggrandisement? Quite possibly - but I think we have 'opened the kimono' (to go back to marketing speak of the 1970s) quite far enough in terms of making our knowledge and research available as widely as we have already done - filling in the few remaining blanks for our few real competitors would not be in our interests. So I emailed the two enquirers from yesterday a few minutes ago and thanked them for their interest but said we had "too much on our plate" to consider anything else for the rest of 2009 which apart from being totally true is probably an understatement. In fact it wasn't until I reached this precise moment in summarising the issues we are currently dealing with vis a vis "promotional activities" that I realised how very over committed we actually are in terms of time, personnel and money to doing things we have absolutely no knowledge or experience of. I wish it were possible to go back to our web site only marketing approach - it took a lot less time, cost a lot less money and worked quite well. Wednesday, August 12. 2009HSPA Prices Need To Become Lower....John Linton ....unless you happen to be a mobile carrier in which case they need to stay the same or increase. I fell asleep reading this report last night: http://www.oecdbookshop.org/oecd/display.asp?sf1=identifiers&st1=9789264059849 and a couple of details are summarised here: http://www.itwire.com/content/view/26893/127/ ..at least details that relate to last year's HSPA pricing in the EU and the other OECD countries. I am currently looking for as much information as I can find on HSPA pricing as I do some preparation for our trip to the UK at the end of this month as I seem to be able to find out far more detail about the operation of HSPA from my contacts in the UK, and the UK technical media and 'conferences' than I can ever get from our Australian supplier. The pricing information in this report is already out of date (as you would expect) but the end user trend information is what is most valuable - at least to me. I will be doing my limited/personal use testing of how HSPA may have improved since we were in the EU last year by simply using the same service I used last year and comparing the performance in the various different coverage locations. That has real meaning other than to give some sort of rough idea about what the actual service is like as judged by a sensible user who has some sensible base comparison data. I am going to try to get some 'live testing' of LTE if I can manage it. I understand that my personal testing is of very limited value but it gives me a basis for understanding what might happen in Australia. I already have some current wholesale pricing which I obtained from 'standard' sources and I have discussed the rates with my acquaintances with whom we are considering doing business. The wholesale rates for data are roughly one half of the prices we are paying in Australia and the cost of Huawei 'sticks' are less than half even at the pitiful usage levels we asked the prices to be based on. For once the "Australia's huge distances" simply don't hold any water because the distances in the UK and the rest of Europe are similar as far as their highway systems are concerned and, obviously, in cities and suburbs there is no difference at all. There are many more users but that makes little difference and certainly can't account for pricing that is more than double in Australia. Australia's pricing, both residential and wholesale, is simply too high and is the deterrent to a faster take up and therefore a more balanced user type spread which of itself mitigates the current problems of providing a more usable pricing - and I understand that is a selfish view point of a tiny wholesaler and is irrelevant - but it's important to us. What are the chances of the wholesale pricing improving for companies such as Exetel? I would think not great unless we can build some much higher usage volumes and by "much higher" I mean a 30 to 50 times what we do today. My main purpose of looking at the HSPA opportunities in the UK is to get a much better idea how to position a wholesaled HSPA offering so that those sorts of volumes could be possible in Australia. I think if HSPA prices in Australia were lower then the take up would be tenfold but I have no idea of the actual costings of delivering the service and how possible the spectrum costs will ever allow that to be. I am going to spend some real time while I am in London to get a detailed (full day) technical briefing on the cost components of delivering HSPA services o that I can understand what issues may be involved in pricing a service in Australia so that I am better prepared to understand the current Australian pricing than I have been to date. I will have to go to Germany to do that but it will be combined with a hands on testing of LTE in a 'live environment' so it should be well worth taking the time to do. Our objective is to get the retail price of HSPA data in Australia from Exetel down to 1.1 cents per mb in a realistic time frame and I think the coming month in the UK will go a long way towards determining how possible that may be. Tuesday, August 11. 2009Is There Any Such Thing As A "Pre-Paid" Market?John Linton It may well be that I am simply mentally exhausted and physically even more run down than I have ever been but it is taking me a lot longer than usual to do some pretty basic 'administrative' things at the moment. I suppose many people feel this way as a long overdue vacation approaches but it seems a little more noticeable to me this year. I'm having a great deal of trouble understanding why I have not been able to work out what is going to happen in the pre-paid mobile data marketplace and what sort of people/marketplaces are going to prefer a prepaid offering to a post paid offering and is there actually any difference. The ABS gives some information but as it's derived from input from the carriers it is not all that useful. I read this article earlier this morning: and while it applies to mobile telephony and is about the US market it gave some sort of views that seemed as contradictory as all of the other views I have read and listened to. On the one hand I understand that some sections of the market for mobile telephony (parents buying mobile phones for children and wanting to protect themselves from huge bills I suppose is the prime example) but I can't see ANY such rationale for mobile data. I think this statement from the article sums up what is lost (at least by the vendor) when offering pre-paid: "Obviously postpaid offers annuity streams. It offers the ability to discount iconic handsets and put smart phones into people’s hands" and I have watched for twenty years while mobile carriers have made the give away of expensive handsets and long contracts of rip off call charges the cornerstone of consumer mobile services (and not to pull punches - the cornerstone of business mobile services). So why are these same carriers pushing pre-paid mobile telephone and now pre-paid data services so hard in some areas when there are virtually no benefits, if any at all, that I can see for them? Exetel's first HSPA offerings were based on a 'no contract/pay for your own modem' set of plans and they still account for over 70% of our sales. If there is no contract what's the value of a "pre-Paid"? None that I can see other than various permutations of pricing and 'special conditions' designed to deceive the customer and hide the true costs of the service being offered - a mirror image of the tried and true mobile telephony marketing deceptions. By removing any contract period Exetel, and others that do it, recognise that the ultra bargain hungers who therefore won't get a 'free' modem will choose another carrier/plan but really the mobile data product is not aimed at the cheapskate buyer (although it may very well develop into that if download charges reduce in the not so distant future). So Vodafone in the USA has delivered a better financial result while reducing the number of overall customers and increasing the number of pre-paid customers. Bad for market share but good for future viability because it seems to me to be a pitiful amount of money to have made in any case.($US17.2 million on $US307.6 million though significantly better than it made in the previous year which was truly woeful). It seems obvious if you stop giving away handsets you will make more money but that has been the case since the inception of that peculiar practice so it should elicit the comments that it did. This is cited as the reason Sprint bought the business from Vodafone - because of the contribution of the pre-paid offerings. Presumably Vodafone didn't have the same view and was happy to sell. Exetel have put in place some pre-paid HSPA plans and they have gone exactly as I predicted - they have generated almost no interest. I can't see a reason why anyone would buy them and that seems to be the view of the people who come across them who may be in the market for wireless data services. The only potential buyer for a prepaid mobile data service that I can see is the business person who travels a day or so a month and wants internet access for an hour or so each month and is too cheap to buy a $5.00 per month plan with a payu very low cost per megabyte used. What have I missed or what has my poor tired brain been unable to grasp? Monday, August 10. 2009I'm Sorry, I'm A Stranger Here Myself........John Linton ....I usually inhabit a more rational world where logic and some, basic, consideration for other people is more prevalent than here.... and without sounding too cloying - problems are what management are employed to solve not say that they are 'givens' and a cost of business that can't be changed.(I thought of using this line in more than 30 email replies I wrote over the weekend). Perhaps it isn't a given to many of the people who wrote to me over the past 72 hours that to become part of the management of a start up company that has managed to stay in existence for five and a half years and has grown to become able to provide services to over 100,000 users and earn revenues of over $A4 million a month you would, almost certainly, have to have some realistic knowledge of how to deliver ISP and other communications services to a wide range of end users in ways that would allow them to continue to consider your company as a supplier they would stay with because they found your services adequate (hopefully better than adequate) to meet their needs. This seems to be the case based on the number of emails I have received recently that start with the phrase: "I have worked for ISPs for the past n years and know....." or words to that effect. I, too have worked in the management of ISPs for almost as long as there has been an ISP 'industry' in Australia and, more than that, I have invested/risked a considerable amount of my own money in doing that so I, too, have some knowledge of the issues involved in running an ISP business - something I would have thought was obvious. I would be the first to admit that my knowledge is far from complete and that, as the ISP business changes all of the time, I certainly have many gaps in my knowledge. However I would also suggest that my knowledge and second by second 'devotion' to trying to better understand what is going on in the twists and turns and new developments in this area of commercial and technical life is better based and far more comprehensive than all but a very few people in this industry in Australia and far better than those casual criticisers who recently wrote to me. So for the "I have worked for a zillion years in ISPs" people let me spell out the facts of network provisioning life for you in a way that is different to what your "years of being involved in ISPs" should have taught you but apparently hasn't. A Network Should Always Be Provisioned To Allow For Greater Capacity Than Peak Usage Is Not A Sensible View - In Isolation Yes it should. However if that becomes the only criterion used then that network owner is never going to be able to deliver the service at the lowest cost to their internal or external end users and therefore can never offer a realistically priced service irrespective of how much 'economy of scale' is developed. ANY network owner MUST make every attempt possible to minimise both cost and just as importantly, WASTE, to ensure the network is operated as efficiently as possible. The ONLY way to do this is to make every encouragement to the network users to utilise any recurrent 'unused' times in the day, the week and the time of year. For instance, dating from the earliest days of commercial computer systems (before networks) NO commercial company would do their file back ups during the working day because of the negative effects that would have on the 'end user'. Today NO network provider does their 'network maintenance' during peak end user time (whatever that may be) for the same reason. Similarly the concept of 'peak and off peak time' came in to common parlance because most commercial computers and networks had relatively little use for large periods of the early morning hours. Now the network operator that just shrugs their shoulders and takes the view that there will always be a 'peak time' and by definition that means there will always be an 'off peak' time is foolish in the extreme because it means they have no real concept of how to manage a business beyond some very narrow experiences and capabilities - or perhaps a lack of intellectual capacity. On a network usage graph this is illustrated by a sine curve that has a dramatic 'peak' followed by a major 'trough' followed by a dramatic 'peak' followed by a......you get the picture. Depending on the degree of careless attitude of the network owner/decision maker this will mean that something like 30% (sometimes more) of the network capacity will be 'wasted because the peaks are relatively steep and short and the troughs relatively deep and long. If we were in the days of 'dial up' ISPs then there was very little that could be done because the users and their usage were based almost 100% on interactive applications and the number of people sitting at a keyboard at 3 am in the morning was a tiny fraction of the number of people who were sitting at a keyboard at 9 pm every night. Then automated downloads and ADSL were invented - and so was the ability to reduce the waste of bandwidth cost. For those of you that are Exetel users you will see that the single sine curve of bandwidth usage has now been significantly altered to almost the reverse and significantly flattened. The 'peak' usage is no longer 9 pm it is 2 am and the period 2 am to 12 noon that used to be the 'depths' of the bandwidth trough has now become much more completely used. This is because, duh, the network owner has provided 'incentives' for Exetel users to use this previously 'dead' time for Exetel users to move their heavy downloading to and therefore not only giving these users more download allowance for less (actually 60 gb for 'free') but has significantly lessened the use of the old 'peak' periods allowing more users to use the same amount of bandwidth therefore lowering the costs for all users. So, once more for the dummies, this in turn means that the network owner can provide all customers with more for less because the previous unused bandwidth costs are now reduced and therefore the overall cost of a gigabyte of download is reduced in cost which means that the cost of the service can be reduced. If NO action was taken to use the 'off peak' usefully the cost per gigabyte would be unnecessarily higher than a sensible management could, with some effort and pain, make it. QED: A supplier that claims there is no advantage in trying to 'flatten the sine curve' is either stupid or has wrought a miracle of end user usage balance.....or as appears to be the case in Australia - just uses a cost plus pricing model because they see no competition. Sunday, August 9. 2009
Higher Allowances? - Lower Prices? - ... Posted by John Linton
at
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Comments (13) Trackbacks (0) Higher Allowances? - Lower Prices? - More Freebies?....John Linton .....new options now abound with a single action....or maybe it's the thought that the annual break is ony 3 weeks away? Exetel's July was a very good month - on target or a bit above and August's first week was very strong so if we were a 'normal' ISP we would count ourselves fortunate, hoped it all continued on in the same way and do absolutely nothing - but we aren't like other ISPs at all so we almost certainly won't do that. Perhaps it's premature, but I feel that the time has come to reassess our residential ADSL offerings in light of the dramatic re-alignment of the bandwidth usage following the change to the 'off peak' bandwidth period and the vast improvements that has made to the efficiency of usage across the whole 24 hour period. If the trends over the last week are to continue (which logic suggests is more likely than not) then we have achieved the 'impossible' in terms of bandwidth usage reversing the peak period from 5 pm to 11 pm to 2 am to 3 am and then 7am to 12 noon. It has also allowed us to eliminate the usage of the Allot Net Enforcer (used to control P2P bandwidth) except from 9 am to 12 noon - 3 hours a day rather than at various degrees of severity for 9 - 10 hours a day. Of course, a proportion of this 'dramatic' turn around has come from the completion of the decentralisation of the network, the use of the different State/Territory time zones and the dramatic fall in IP bandwidth costs and some customer connectivity bandwidth costs over the last two months or so. I think I mentioned that these issues of themselves would deliver some savings in the costs of providing wire line broadband services by mid 2009 and this has proven to be the case.......although the likelihood of the $A staying at its current high level is not entirely certain. So with a 'gift' of 20% more network capacity together with additional cost reductions of close to 10% in service delivery there is some room to make a series of changes which is something I'm always inclined to do just before I take a break from the business and have some sort of holiday in a totally different and relaxing environment. I have been trying to find a rationale by which to accomplish this for the last two days but either my mind is too tired or I have lost inspiration but I haven't come up with anything very interesting - perhaps it's never having this much scope before that is making the job more difficult but, whatever the reason(s), I have no idea of what to do and, worse, I am having difficulty framing the overall objectives to be met. I've had a look at a number of ISPs who our current users churn away to but I can't see anything that appears to be better than we already offer and I think that a fairly large percentage of the 'churn aways' are to ISPs who either have ADSL2 in exchanges where Optus doesn't (though, just like someone turning off a tap - the churns to Telstra ADSL2 have stopped, at least for the moment) or are moving to TPG on one or other of their 'super special' attractive priced deals which are beyond our reach/pricing parameters. Balancing the spending of the money 'available' to be spent between current users and that to be spent to attract new users is always very difficult especially as we use the 'connection costs' on a continual basis to control the volume of new customers (putting the service activation fees up and down to increase or decrease the rate of new customers we add to the network) in any one month. Also for the first time in our 'history' we have left old plans in ace for the users who were on them when we changed plans over the past year instead of our previous practice of asking all customers who were out of contract to select one of the new plans or if that didn't suit them to churn to a plan that did suit them with another provider. so I have been dithering around getting nowhere trying to find a sensible 'across the board' basis for providing better value in the best possible way to all users of the different 'tiers' of customers old, older and brand new. So I suppose the best solution will be to increase the allowances on all plans and create a new low end plan in each service range allowing those customers who wish to do so to 'down grade' their current plan/allowance to the one below that wil now have a higher allowance or, in the case of the lowest plan users to downgrade to the new lowest plan. We can also then reduce the new customer activation fees which will be a double 'bonus' for new sign on customers for a few weeks as well. Perhaps, together with an increase in some of the add ons (plus the SMS cost reduction I already mentioned) will be attractive enough to make current users happy(ier) and also increase the attractiveness to possible new users? It is quite amazing when you think about what the change to the off peak start time has made - instead of considering increasing pricing by 3 - 4% to deal with something less than a thousand users have caused we can consider decreasing the pricing to 100,000 users by 5 - 6% - if only we had done this 5 years ago - what would we have achieved? Saturday, August 8. 2009A Week Is A Long Time In ISP LandJohn Linton A few hours more than seven days ago we made a change to our various broadband offerings to move the start of the 'off peak free' download period from 12 midnight to 2 am thereby reducing the time available for Exetel customers to use their 54gb/60 gb (depending on their plan) 'free download allowance'. This decision was made to address a problem that we had struggled with for over five years to resolve - the problem of too many people starting downloads at exactly midnight and making it very slow for people who were playing games or browsing or streaming video or audio for around 30 minutes. The results of doing this are very clear cut - the problem is completely resolved. If you're an Exetel customer you can see the dramatic changes by going here: http://public.mrtg.exetel.com.au/bwsummary/total-supplier-bandwidth.html and for those of you who don't have access to Exetel's bandwidth graphs (a surprisingy hig percentage) the daily graph shows that usage at midnight is around 75% of total capacity (compared to 100% the on Thursday of the previous week) and at 1 second past 2 am it moves to 90% of capacity before dropping back rapidly over the next hour to 75% capacity before gradually increasing to around high 80s before falling to around 50% at 1 second past midday. If you scroll down that page to the yearly graph you will see what Exetel has added in terms of bandwidth capacity over the previous 12 months where daily usage has increased from around 2 gbps in July 2008 to more than 3 gbps in July 2009 and current peaks at around 4 gbps for some 60 minutes of each day in August. You will also notice on the daily graph that for much of the day the usage is relatively low barely exceeding 60% for most of the peak usage period. Since we made this change many people have asked me why, if our "network is so congested", we simply don't buy more bandwidth? It seems to be a reasonable question, for the people asking it, and it seems to be a reasonable question to me. The answer is that Exetel almost certainly provisions more bandwidth than is necessary and almost always has and if you look at the MRTG yearly graph you will see that the average usage has increased by over 70% in the past year and I can assure you that we haven't increased our customer base by 70% - actually around 30%. However we still have less than 5 gbps of IP ingress/egress and customer connectivity bandwidth - and we have many, many tens of thousands of users. As you can see that bandwidth is enough (now) for there to be zero congestion at any time of day but 7 days ago between midnight and 12.20 am it wasn't enough. How can that be the case? The answer is that, in theory, at 5 gbps it could only take around 500 users using some sort of multiple sourced download program that achieves 10 mbps (easily done on an efficient ADSL2 service) to take the WHOLE of the bandwidth that is usually enough to give zero contention access to around 100,000 users. Following the reasonable question logic of the enquirer that would mean that Exetel (or any other ISP) would need to increase both its IP ingress/egress bandwidth and its customer connectivity bandwidth by a factor of 20 to ensure zero contention if that arithmetic was correct.....which it isn't (use the download speed achieved by P2P of your choice for your own calculations) but it demonstrates the 'scope' of the issue for Exetel which provides very large 'free' downloads and can support that amount of download if the actual downloading is spread over one or two hours but can't deliver it if it's spread over one or two minutes. The whole purpose of offering the free download period in the first place was to use the $A150,000 per month of 'wasted/idle' bandwidth as a bonus for Exetel's users - not to create an added cost to fulfil the requirements of a relatively few customers - so now the balance has been restored after such a miserably long time of failure. Irrespective of what arithmetic you choose to use (and the constant comments on the forum and in emails that "moving the start of free time back will only move the problem to another time period - (the MRTG reports show that is nonsense better than I can explain it) moving the start of 'free time' back 2 hours solved the issue and allowed various people within Exetel to use the 'thinking time' this freed up to deal with other important issues that have been relatively neglected. Friday, August 7. 2009A Supplier Alleges Exetel Has A Criminal Liar In A Senior Position....John Linton ....and it's going to cost us a lot of money to find out if this dreadful 'accusation' is really true? I read some of the background behind this 'story' last night: http://www.theaustralian.news.com.au/business/story/0,28124,25888897-36418,00.html and, assuming the reporting is correct, which of course it may not be, you have to come to the conclusion that there may be a particular kind of 'culture' within Telstra that is not what an averagely reasonable person might expect. I noticed the 'apology' at the end of the article to the effect that: "Telstra's humbling admission to the ACCC's allegations is in stark contrast to the combative stance the telco adopted under the tutelage of former chief executive Sol Trujillo. But with Mr Trujillo out of the picture, new chief executive David Thodey has moved to clear its legal deck of any embarrassing anti-competitive misdemeanors." You can see the tack being offered by Telstra summed up in these two sentences: "It was all that nasty Trujillo's fault but now he's gone we will go back to being honest and nice" Except of course that doesn't really seem to be the way it ever was, pre-Trujillo, if my memory has a slightly longer retention capability than a mentally challenged guppy. Well, at least not according to a Federal Court judge who seemed to find that Telstra went out of their way to act illegally for more than a decade before El Sol rocked up with his buddies to add their peerless insights to the Australian communications environment: http://www.austlii.org/au/cases/cth/FCA/2009/422.html It depends on an individual's view about how the actions of some employees, fully supported by their internal and external legal personnel, might have been completely unknown to any other personnel for such a very long period of time (over ten years in the second instance) and only represented some isolated 'maverick' behaviour of a few morally ambivalent employees rather than some deeper more widely spread 'cultural' implication. It's possible that none of the current Telstra management had knowledge of, or were party to, the illegalities alleged in these two court cases but, on balance, is that really really very likely - and of course these are just two legal actions that have made the headlines because of their size and/or longevity of practice. They were also mounted by the Federally funded ACCC in one instance and a multi-billion dollar company in the second cited instance - you pretty much have to have that sort of financial clout to sue an entity the size of Telstra....very few commercial enterprises, no matter how clear cut they believe their case may be, can actually afford the time and money to use Australia's legal system against a fiercely legally oriented 'opponent' with very 'deep legal pockets'. Who knows maybe these judgments were wrong and/or maybe Telstra will get the Optus one reversed on appeal - maybe Telstra's tens of thousands of employees rival George Washington for truthfulness and Gandhi for public probity and William Wilberforce for generosity of spirit and no employee of Telstra's in their history has ever told an untruth nor has committed an illegal/inappropriate act. To me, sheer logic makes that a highly unlikely scenario (as indeed two judges seem to have found to be the case so recently) but, then again, stranger coincidences have happened. Of course a search of the legal sites on the net would reveal almost all large companies in this and any other industry have a similar legal track record and for similar reasons - they all use the vagaries of the 'justice' system to out spend possible 'complainants' as a matter of course...... .....and it does illustrate that very large companies do have the capacity, or at least in these two incidences it appears to be the case, to insist on their version of the truth even when it appears equally true, at least to another party that the reverse is the case, and to insist their version of the truth is correct via their high priced legal teams and their huge financial resources....and unfortunately tiny companies like Exetel almost always have suppliers who are 'gigantic' and fall in to this category. Exetel has very little money and none at all when it comes to legal engagements but we are faced with no option but to take legal action to stop the death by a thousand tiny cuts that is our view of one of our supplier's wholesale billing systems and the processes that 'feed it' - at least as it applies to Exetel. One such billing system and its associated processes which seem to include (at least in Exetel's case) the contractual 'Red Queen' like ability to assert "if the supplier says it is the case then it is the case irrespective of what evidence may or may not exist to the contrary" are costing us a gradually increasing amount of money each month and that money is being obtained, in our opinion, by not very senior supplier employees being able to say words to the effect of "we say you're wrong - read the contract - case closed". The only other possibility is that the supplier is correct and that every single thing a senior Exetel employee says is completely wrong and a total fabrication - in other words he is a pathological liar with no morals or ethics and spends months of his time fabricating incidents and documentation for the express purpose of defrauding one of Exetel's major suppliers. To me, sheer logic, makes that a highly unlikely scenario......but the supplier insists it's the case...... ....so we will find a magistrate who will be able to make a decision on the 'evidence' rather than on the basis that in 240 separate documented instances a senior Exetel employee has fabricated, obfuscated and lied outrageously - rather than having to rely on the absurd, to me, statement by a not very senior supplier employee that such is the case. We have decided to respond to the perceived 'death by a thousand cuts' by using a 'thousand cuts' process of our own and seek repayment a few hundred dollars at a time via the magistrates courts around Sydney - apart from anything else we really do need to know whether one of our senior employees is a liar and a thief as, if we are to accept the supplier's view of 240 + different incidents is the only conclusion we can reach - and that is a grave cause for concern. Either we are relying for Exetel legal compliance with the various acts that govern our operations on a deranged lunatic with criminal tendencies and who is a pathological liar or a supplier is significantly overcharging us. So we gave the go ahead to our lawyers to file the appropriate documents today in both this situation and one even more serious situation (both, strangely, involving the same supplier). I don't now what is happening in simple commercial relationships when a tiny company like Exetel has to resort to legal action to resolve a common sense, blatantly clearly obvious, straight forward situation - that one of our senior people isn't a conniving, ethicless and morally bankrupt liar as alleged by the supplier. I will look forward to having this personal slur and gross slander resolved by a court as clearly common sense and realism is not going to do it. Thursday, August 6. 2009SMS/FAX/VoIP Via Broadband......John Linton ....some slightly better news. We had to increase the cost of our low cost SMS service a few months back because of the problems of one or more Australian mobile carriers making as much effort as possible to disrupt the non-Australian mobile carriers selling their SMS services to Australian SMS service providers that we use to in turn provide SMS services to Exetel broad band customers. For those of you who remember - we increased the cost of an SMS from 5 cents to 8 cents which, while still being much less than SMS from Australian mobile carriers is more than twice as much as SMS in the EU (where we source our SMS services). Many of our residential customers use SMS via their broadband Exetel service to send messages to their children's (or their own) sporting or social clubs advising of schedule changes or pick up rosters or.......all sorts of things and found the convenience of doing it from their PC's keyboard rather than using their mobile an added benefit to the lower cost per SMS. So many of Exetel's customers found this function convenient we bundled 30 'free' SMS in to many of our ADSL plans. Raising the price from 5 cents to 8 cents wasn't a positive thing to do but looking at the figures since the increase it hasn't stopped the growth in use of SMS via broadband. However it was something that shouldn't have happened here as it doesn't seem to happen anywhere else in the Western 'world'. Although we saw little opportunity of this problem resolving itself we continued to look for a better solution and we may have found one - or maybe the Australian mobile carriers have found some legal or other impediments to their efforts to block SMS from their international counterparts under their reciprocal agreements - I have absolutely no idea. Anyway it looks like it may now be possible to get the 'old rates' in the near future and go back to providing SMS at 5 cents per 160 character message - which would be good even though it is not a big income for Exetel and we don't make any money from providing the service but it is a widely used 'value add' service for Exetel ADSL customers and increasingly by business customers who use bulk SMS to advise their customers (or members in the case of the big sporting clubs) of events and offers. Last year when I was in the UK looking at, among many other things, better SMS rates the lowest costs I could find (on very large volumes of monthly messages sent) was less than one euro cent and I will be interested in seeing what the costs are early next month when I spend a few days 'catching up' first hand with what's happening in the UK comms industry. It isn't ever going to be a 'sale maker' for Exetel but it is a useful 'add on'. Just like the fax over ADSL it generates almost no income (let alone profit) but for the customer who needs to send or receive the occasional fax it is a saving of a fax line and a fax machine as well as the slight cost saving. It's also important in the ongoing move by broadband users away from using a landline to either a 'naked' broadband service or a wireless service to be able to send and receive the occasional fax and I know more than a few people who continue to rent a SEPARATE FAX line would you believe? More of Exetel's HSPA customers are using SMS and a growing number are using their HSPA service to send and receive the occasional fax which makes the need for a land line less necessary than in the past. With the various estimates suggesting that, particularly in the EU, HSPA is continuing to 'close the gap' in terms of wireless via wire line broadband take up having a fax capability is going to become slightly more important - at least for the next few years. Similarly being able to receive and send SMS is an increasingly useful function (particularly at a much lower cost) and then there is VoIP and FOIP over HSPA which completes the communications trifecta for the compelling case for HSPA versus wireline broadband for the lower download user. None of these are remotely 'main stream' services but they do add a great deal of convenience for a surprising percentage of Exetel customers. Wednesday, August 5. 2009If At The First, Second, Third.... Nth Time You Don't Succeed.....John Linton .....change 'the rules' and try again. For well over five years we have been trying to find ways of giving Exetel customers the maximum 'free' download allowances, over the longest possible period, for the lowest possible monthly cost without sending ourselves broke. For well over five years we have spent more and more money buying more bandwidth than we needed to try and meet an ever higher end user, very brief, 'peak' demand. For well over five years we have put more management and engineering time into trying to achieve this than we have in to any other aspect of the business. For well over five years we have failed to achieve this pretty simple objective. We gave up on trying to do this last Friday at midnight. I was bitterly disappointed that with all the 'thought' and 'knowledge' and sheer effort of persuasion we had put into this key aspect of our business we had never been able to sensibly achieve it - I don't think I've ever been more frustrated over such a long period of time in the whole of my life - I just could never find a way of doing something that was so basically simple but proved to be so ridiculously and impossibly difficult. So we gave up and solved all our problems by simply giving up on making a 12 hour period available. Instead of the beautifully symmetric, and very visually appealing, 12 hours we have had to settle for ten hours because we could never find a way of dealing with a relatively very small number of user's obduracy and senselessness. A galling failure over a huge period of time. Unlike every one of our competitors (or at least I assume this is the case) we have never been concerned about making as much money as possible from providing our services - we have always been driven by the objective of providing the best possible value. One way of doing this is to make use of the 'dead' bandwidth that exists on virtually very commercial network (though I have known of at least two exceptions) in the early hours of the morning. Typically on an efficiently utilised network such as Exetel's this costs us (at our current size) well over $A150,000 a month and the bandwidth is completely wasted. Simple solution offer it to your user base at no cost to them - how, over a five year period could you fail to make that work?.....giving away $A150,000 a month worth of services.....not a problem in the world. We couldn't do it - rather than using the virtually unused 3 am to 7 am period to set a schedule of downloads our user base insisted on starting them at one second past midnight EVERY night and, for over 90% of those users their downloads were completed by 12.30 am EVERY morning. Could they be persuaded to start their downloads after 2 am?......nothing we could do for five plus years could make that happen. It was, is, an humiliating failure of communication and a shocking indictment of my personal terrible inability to persuade people to do what is obviously in their own and every other user's best interests to do. So there now exists a significant loss of 'appeal' of Exetel's services caused by, by my estimate, something less than 1,000 users. For a business to lose a significant operating advantage and all of its other customers to lose a significant usage benefit due to the thoughtless and senseless actions of a relatively few users is a devastating condemnation of the management of any company that could allow this to happen - and I am solely to blame for this failure. So, the current change to 10 hours has instantly fixed the problem caused by 1,000 users if the results of the first four nights of the new scenario is to continue. We will make some slight adjustments over the balance of August to attempt to get the maximum improvements from the new times and then I'm going on holidays for a few weeks. We will track the results throughout September and if the current results continue we will have, finally, solved the problem that has proved to be impossible for the past five or so years. However we will have also accomplished something else. We will have developed the basis for returning to the 12 midnight to 12 midday 'free' download period by the start of November - assuming that the current usage patterns continue - but this time without the previous issue. It isn't a 'back flip' if in fact we can do that because to do it we would have had to go through this, to me unnecessary, period first. Of course, there'll have to be one minor change because I'm sure there will always be a tiny minority of people who will always try to screw things up for the majority because the ass**** factor is now a permanent presence in twenty first century life. One of the unprovable 'business school myths' (similar to the "every unhappy customer etc" nonsense) is that EVERY service provider would be better off without 1% - 2% (depending how unlucky they are) of their customers. Tuesday, August 4. 2009Automating Key Systems Is A Never Ending TaskJohn Linton Exetel has, from its inception, designed its methods of operation on automating as much as possible and, over the past five plus years we have continued to develop new processes and constantly go back and redesign previous processes to meet the over riding goal of operating the company's ordering, provisioning, billing, collection and support systems with as little manual intervention as we can make possible. From what I know of other similar companies operational processes, our five years of dedication to this process has produced an incredibly efficient company....and we now have more resources devoted to our automation projects than at any previous time. One thing that we have done better than any other company I have ever been associated with is our billing process that automatically blocks a user's access to their service if their monthly direct debit to their bank account or credit card fails. The block has the option for the customer to make a payment using an alternate financial institution which, if it is successful, will return the service within 20 minutes. We implemented this simple, and highly effective, process some four years ago and it has worked very well ever since with very few customers not paying on time and virtually no manual follow up required by Exetel and therefore no 'credit control' personnel when a customer fails to pay a bill. It is probably one of our most successful pieces of automation and a key part of allowing Exetel to provide the lowest possible cost communication services. However, in this nanny State world of the 21st century there are always the helpless and the argumentative and the just plain unreasonable people who consider that their personal failures and inadequacies of managing their financial affairs in a way that their known financial obligations are discharged on time is, somehow, Exetel's fault. Every month we get something around 1,000 customers whose debits fail and of those 100 people bitterly complaining that we have 'cut off' their service for the trivial reason that they haven't paid for it - "how dare you treat a loyal customer like that" (the other 900 or so just pay within a few minutes of seeing they have been blocked due, usually, to a new credit card end date which despite our many reminders they didn't bother to change). I won't list the other most common 'cries de couer' - they are truly pathetic for someone out of kindergarten to try and offer as a reason why they shouldn't be "inconvenienced just because they don't pay their bill" but most suggest we should telephone them to see what the problem is and then extend them additional time to deal with their financial issues....because they are 'special'. We obviously can't do that for all the reasons that anyone who has ever tried to call 1,000 people 'during working hours' would know....no-one ever answers the telephone. Similarly sending an email will only get a "never got the email" response...etc....etc. So from yesterday's billing run we have refined the failed debit blocking system by still blocking the service but now providing a second option besides the "pay now or remain blocked" situation that has pertained for the last four or so years. The customer can now restore their service without paying (this is for the 100 or so poor people whose personal finances are more complex than an updated credit card or using a bank account with no money in it). By taking this option they gain a 'grace period' of 72 hours of restored service (so they can use their internet banking to sort out their problems) and only if they fail to make a payment within that time will their service again be blocked - this time 'permanently' - or at least until they pay for it. I am going to be very interested to see whether this new process reduces/eliminates the bitter complainants who can't understand that it is their responsibility to manage their own financial affairs not Exetel's. I'm not holding my breath - I'm waiting to be surprised at the new wave of complaints of "what do you expect me to be able to do in a mere three days" type protestations. Perhaps this means that I'm far too cynical to play a part in managing a "customer focused" business - "customer focus" seems to me to mean screwing up suppliers, banks, personnel and your own sanity for the sake of not displeasing some unreasonable and inept person who couldn't care less about anyone but themselves. Roll on vacation time. Monday, August 3. 2009Making Major Changes To A Business Is Inevitable......John Linton ....even for the world's very largest businesses. Over 75% of my 'formative' years in the IT industry were spent with IBM (from my early 20s to my early 30s) and they were also among the happiest years of my working life. I still own shares in IBM (bought via their employee share purchase scheme - one of their many, many enlightened policies) and I still follow their progress with a great deal of interest. My youngest daughter went to work for IBM when she completed university and three of my oldest 'acquaintances' are from my 'IBM days'. So this article caught my eye earlier this morning and I think it sums up how IBM continues to do so much better (despite some stock analysts future predictions) than virtually every other company around the world during the current financially difficult conditions: http://online.wsj.com/article/SB124891414229992099.html Few companies (other than current US automakers I suppose) would have the clarity of thought to sell off a (very profitable) $US9 billion turnover business and then spend the proceeds paying top dollar buying up completely different businesses and no company of any size around the world could have put in pace such purchases so well that in the "worst financial circumstances in 75 years" they could actually grow their profits while their revenue shrank so appreciably. IBM has always coped with change (included that forced on it by the US government) with amazing prescience and consummate business planning. I learned nothing of those sorts of things at IBM (I was far removed from that level and sort of planning and execution) but I did learn the value of constant analysis of what was going on in the markets in which I operated and the need to plan for the future in detail and then constantly review those plans - pretty valuable lessons for a 'sales person' which allowed me to constantly over achieve my sales targets even in very 'challenging years'. So this coming year is set to be Exetel's most difficult year to date (and we've had at least two years which were 'life threatening' so far and a third that was more than 'life threatening' in a different sort of way. Not very many people have heard the name "Exetel" and those that have associate it with the provision of 'low cost' residential internet services. However, from only a month or two after we connected our first residential internet service we connected our first business data service and we have been connecting business customers at a slowly increasing monthly rate ever since April 2004. We had no 'business sales people' nor any other form of marketing or advertising and virtually all of our early users (and many of our current business customers) come to us because the IT Manager uses Exetel for his/her home internet connection. While our corporate business is now growing much quicker than at any time in the past it is still a small fraction of the size of our residential business - which was an inevitability as a start up and still tiny communications business is not going to be seriously considered by many businesses. More than five years have now passed and Exetel has a much larger number of business users than in mid 2004 and many of those users are quite sizable organisations. We began recruiting and building a business sales 'force' in March of this year and the first few sales people have successfully past their initial training phase with flying colours and are now carrying full sales quota responsibilities (having between them doubled our monthly business sales achievements) and we are now continuously hiring additional trainees with the objective, over the coming two years, of creating a sales force of 72 personnel (managers, sales people and engineers) with a separate annual revenue of almost three times bigger than Exetel's current revenue...an almost impossible task...but reading that article about IBM this morning one that I was a tiny part of achieving more than once while with IBM in the 1970s. Given that Exetel, in Australia, has only 30 employees the task of trebling that number over 18 months is quite daunting both in acquiring that number of very high 'calibre' people and also the training, supervision and management of them. On two previous occasions I have done something similar in scale to this plan but that was a long time ago and invery different circumstances. I have no doubts at all that what we are now setting out to achieve is the most difficult thing I have ever been part of attempting in the whole of my business life......... but then what would be the point of still being involved in something as trivial as commercial endeavour if that was not the case? (if only I can actually find the time). Sunday, August 2. 2009You Have To Wonder Which Universe Australia Exists In....John Linton ........when you read articles like these: http://online.wsj.com/article/SB10001424052970203739404574294673707660730.html Now I have never been one of those people who make those stupid "Geez the Koreans have unlimited 100 terabyte fibre so why can't Australia" comments but it's beyond my estimations as to when Exetel could offer streaming video on HSPA to anyone but James Packer and expect to get the bill paid. But I'm heartened to see that there are signs that, at least in the USA, the mobile data providers are moving away from mobiles as ways of making telephone calls to mobiles as ways to entertain and amuse end users because that means the amount of 'amusement per megabyte' will be massively reduced and the cost of using it will therefore reduce. With LTE and 4/5G the ability to move more data over mobile networks faster, and therefore at less cost will continue the current trend and the cost of establishing and maintaining a mobile network will reduce proportionately moving mobile data services ever closer to the costs of wire line or fibre data services. It is at these brief moments that I am glad that we decided that Exetel would invest its meagre 'risk money' in HSPA instead of ADSL2 DSLAMs 4 years or so ago and while we haven't got any sort of return from that decision (nor do we expect to for many years) I now believe, more firmly than ever, that what looked like a really stupid thing to do back in mid 2005 was quite correct....for us. Unfortunately for those people who need to make such decisions it takes a very long time before you know whether you were correct....if it ever does turn out that way. It certainly hasn't turned out to be correct so far and there are times when I think it would be nice to have a small ADSL2 DSLAM network in the major cities. I look ruefully at the numbers of our more optimistic estimates of the costs of delivering internet services over our own equipment and think how much further ahead we would be than we are now and think what a mistake I made in dismissing the risk as being too great and the technology held hostage to Telstra. I listen to what is said about the ROIs and growth that other companies have achieved and think that it was a really stupid decision not to go the same way. But the past is another country and regrets do nothing but make you reach for the Scotch so....move on. The upside is that we have been forced to compete with ISPs who, apparently, have a massive 'cost of goods' advantage over us and we have managed to not only survive but grow at a faster rate than they have while making a profit even though we are, apparently, paying far more for the components of our end user services. Why would that be the case? With the exception of TPG I haven't seen any of the ADSL2 DSLAM owners offer a really 'good deal' on ADSL2 so there must be something I'm missing but, whatever it is, it hasn't hindered Exetel's ongoing growth and it has allowed us to devote the small amount of 'new technology' resources on getting an HSPA service 'launched' and therefore beginning the long learning curve associated with delivering services over a new technology. So, before I sat down with a cup of coffee to write this, I 'ritually' disposed of the quite bulky documentation we have accumulated over the years on ADSL2 proposals from various providers and will never look at such things again. The future of residential data communications for tiny companies like Exetel is very definitely wireless. |
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