John Linton's Personal Musings

John Linton

........or some other effects of travel/diet/alcohol ingestion/different culture exposure is affecting my ability to understand what I used to think I understood very clearly.....which was why Exetel was in business and how we priced and offered services. It's as though you are looking at an image through a muslin cloth that is being affected by a slight breeze - you can pretty much make out all the details but everything is a bit blurred and sometimes the blurring intensifies and you can't quite make out a detail a moment or so ago you saw quite clearly. Alternatively its just boredom with doing the same thing for the 'millionth' time.

I continue to 'plough' through the myriad details required of ADSL plan revision and managed to revise/re-instate the ADSL2 PFWYU plans by COB yesterday which I thought were a pretty novel and very good deal but which the early feed back said were nothing special and as 'ho hum' as the changes I made the day before - pretty depressing reception to offering incredibly low priced plans for people who use less than 25 gb per month and easily the lowest cost ADSL plans available from any provider. Maybe Australia generally has lost interest in ADSL via the Labor Party's scam of an 'NBN2'? For whatever reason it appears that neither I nor anyone who has bothered to comment on the new plans so far has any interest in what we have tried to do.

I will make an attempt at revising the VA ADSL2 plans and the ADSL1 plans by the end of today but I have to say my enthusiasm for putting in that effort is less than was when I started this process - which wasn't very high in the first place. One other thing I've noticed since I returned to Australia is that ADSL1 sales have 'risen from the dead' and have, at least for the few days since my return been running at 2:1 to ADSL2 sales - a ratio I haven't seen for more than two years. Part of that is caused by the decline in new ADSL2 sign ups to the lowest level per day I have seen for I don't know how long but it is accentuated by a steep rise in new ADSL1 applications. What on Earth is happening to produce that 'skew' out of the blue?

I think that all this is telling me is that I have 'lost the plot' either during my 4 week absence or that the four week holiday has restored enough clarity of thought process to allow me to see what I have been to tried to see before I took a break and that someone less 'jaundiced' in outlook should be doing this exercise - almost 8 years of 'constructing' ADSL offerings from limited options is probably long enough to have exhausted any vestiges of 'creativity' that may have once existed.

(it probably hasn't helped either tenor or the coherence of this rambling that my note book has crashed twice due to over heating and I've lost most of what I have just written on two occasions).

So - what to do - as I can't just hand over this task to someone else and say "here, I'm too bored to finish this work - you do it." I need inspiration and typing similar thoughts three times is not exactly contributing to that process. I'm not sure what the rest of the day will bring in terms of restoring a flicker of creative thinking but I have my doubts that will happen. Perhaps the best thing to do is to leave it to another day/week/month which seems the most sensible option but I really hate giving up on tasks that have deadlines and it would not be good to leave the job only partly completed.

A solution would be to  simply change one aspect of the current plans radically but in such a way that it is easy to implement and while being attractive in itself to a new type of user who would see it as being just what they wanted without inconveniencing any other type of user including Exetel's current customers. I think I'll do that - pity I can't think of such a thing just at the moment but I'm sure it will come to me.

I don't think taking holidays is a good idea.

John Linton

.......and that has destroyed the benefits of 4 weeks very expensive relaxation in the blink of an eye. Perhaps I should be grateful they lasted as long as two days.

Perhaps it is the fact that I've been away from the office for almost a month but I can't seem to find anything appealing about my first two days 'back at work'. Not that I have done that much with the first day largely being taken up by the board meeting and yesterday taken up by trying to get the ADSL2 pricing plans re-done but only succeeding in revising Exetel's "No Frills" plans by the time the day ended. For someone who usually completes such a task in an hour or so it was depressing to be so hesitant and to only do one third of the work required. I eventually stopped working when I figured out that my inability to concentrate was being caused by my, if not anger, then annoyance at the actions of one of our suppliers that, as far as I could see, had in my absence made many of the actions taken by Exetel over the past year a total waste of time and, just as importantly had caused us to waste a great deal of money.

It made me wonder whether I really should continue playing a part in running a company where it looks as though I don't understand what is required to be successful in offering services to the Australian marketplaces in which we operate if I can get so many basic things so wrong....and feeling like this after 4 weeks of relaxation is not a good thing to do. Having such doubts is also counter productive to doing any sort of planning at all as it induces a "what's the point" element into thinking that definitely doesn't benefit from any form of self doubt. Because I am, at the end of the day, usually both pragmatic and sensible it is a feeling that doubtless will go away in time but it did distract me all day yesterday.

However, when I started work this morning I was still angry (not annoyed) and that concerns me as it indicates that the issue is not going to 'go away' as these things tend to. I will concentrate on making the rest of the changes to the ADSL plans by the end of the today, at least in terms of getting the internal work completed but then it appears Exetel is going to have to make some significant changes to its business plans for the balance of FY2010 and FY2011 which is absolutely not what any sensible person or company should do as it means they have massively mis-guessed some serious aspects of the marketplaces in which they operate. I have made many mistakes in my business and personal life so you would think I would have become used to being wrong but it always comes as a surprise to me to realise I have seriously misjudged a situation that I thought I had completely understood.

I thought the changes and additions to the 'no frills' plans were very sensible and used the benefits of much lower IP costs very well providing lower entry points and a 50 cent per gb excess charge....which as far as I know is the lowest cost for data ever provided in Australia.....by a very long way. However my cursory 'analysis' of the feedback was that our customers didn't think the changes were very useful to them and were all very 'ho hum'. Perhaps they have got used to their current plans being so good it is impossible to improve on them?

So I'm not sure exactly what to do in deciding whether any changes should be made to the 'full service' plans as they are already the best in Australia - for the users at which they are targetted. When I began to look at the sorts of changes that could be made earlier this morning I was having trouble making any progress which was unusual as early morning is usually, for me, the easiest time to think really clearly. However there is still virtually a full day to complete this work so it is too early to just find it all too hard and leave everything in place as it is.....I am tempted to do that though.

It just goes to show how damaging having your thoughts distracted by another issue is to making required and sensible decisions on vital aspects of the business in which you are involved.

John Linton

I completed my, reasonably, detailed survey of ADSL end user pricing yesterday and found that, as far as I could see, nothing had changed since I went on holidays or, if it had, it was via unpublished on web sites "special offers" via direct mail/phone calls to possible new customers by different carriers/suppliers. As far as I can see the next 'best' ADSL2 offer available at the moment (the best is still Exetel) is from TPG with their somewhat misleading 'headline' claim of $A49.95 per month for 80 gb a month (40 gb of which is available in either 1 am to 9 am period each day or in 2.30 am to 8 am period each day (two different plans at the same price). There are also similarly misleading plans for much lower quotas at lower prices with stranger splits of off peak/peak times.

As with all LSS plans they are also misleading in that they don't make clear that on top of the DSL plan charge any user will need to also pay another party for a telephone line rental and any calls they make on that telephone line - as telephone line rentals average around $A30.00 per month these days (and if the latest ACCC pronouncements come in to force will go even higher in the future) these plans aren't as good as they seem.....but then nothing ever is in a marketing dominated world I suppose.

So the TPG plan appears to be 40gb peak and 40 gb off peak (for either an 8 hour or 6.5 hour period for a monthly cost of $A80.00  a month ($A50 for the ADSL and $A30 for the telephone line). However, Exetel offers 30 gb peak/60gb off peak (with a whole lot more extras and a 10 hour off peak period) for $A75.00 based on the July 1 prices so the TPG plan is by no means the lowest cost plan in today's marketplace - unless you are stupid enough not to count the cost of renting a telephone line in the 'analysis' of what monthly payment is required to obtain an ADSL service.

So I remain at a loss as to what to do in terms of re-pricing Exetel's ADSL2 plans to ensure they remain the best value for money/lowest cost per gb downloaded in the Australian market and there are only less than three days to go to make such decisions. I suppose the best thing to do, assuming what I've just stated is actually correct, is to use the Powertel/AAPT provided exchanges to do something different (as those services are LSS as opposed to the Optus services which are ULL. Perhaps some simple "marketing" is required to make the comparison with the TPG 'flim flam' more directly obvious - the easiest thing to do would be to reduce the ADSL component price and increase the telephone line price for the Optus based services for instance.

Our problem, as always, is that our port costs, while competitive on the Optus services aren't as competitive on the AAPT/Powertel services and although the IP price drops have made it possible to provide lower pricing the charges AAPT make for port rental and bandwidth connectivity are far higher than should be charged at this time in the ADSL 'product cycle' - it has always been the case and has always been a problem. I am not finding anything very inspirational having mulled over the issue for a few days and as time is now running out I am thinking the best thing to do, while a cop out, is to do nothing - but that sort of 'cowardice' goes against my basic instincts in doing my part of running Exetel.

In thinking about the issue overnight, it seems to me that the best thing to do is to convince AAPT to reduce their pricing to us and to use the AAPT ports (not their wholesaled iinet ports) to provide a direct comparison to the TPG 'flim flam' and make some smaller changes to the Optus based services. I think there is probably some room to make that happen based on other business we are considering doing with AAPT which if it turns out to be viable will make a big difference to the costings involved.

Perhaps I need to let the relaxing effects of a holiday wear off as they undoubtedly will as the week progresses?

John Linton

....determine whether an AFL side that played 75 games over a three year period and won more of them than any other side in the history of the game is now "great" rather than "good"? If you read the Melbourne press or had to listen to the various on air and on screen commentators then you would believe that is the situation.....if you are a lifetime follower of what is exciting, compelling and satisfying about any game then you wouldn't give a toss....however, I imagine, that you would, like me if you had watched as many Geelong games as I have, be glad that Geelong won probably the ugliest game they have played over the past three years yesterday than lost it.....simply because it was important to them and their coach. Although conforming to Nick Hornby's protagonist's characteristics in Fever Pitch - Geelong's win yesterday hasn't, and couldn't, affect any other aspect of my life or my activities - perhaps that's merely a sign of old age.

I didn't attend the Grand Final this year for a variety of reasons. However I was offered 'free tickets' by several 'suppliers' which given the cost of 'premium packages' were very generous offers and I really appreciated being regarded as 'important enough' to merit the consideration. However it does strike me that such 'hospitality' offers over the years are almost solely based on attending important sporting events - grand finals in Sydney and Melbourne, Wallabies games, Major Tennis events, Melbourne Formula 1 and other key events. I don't recall getting offers for the Australian Ballet, Opera or even the theatre. It seems sport and selling are inextricably linked and that it is assumed that all Australian sales people and all decision makers are overwhelmingly interested in it.

There are many metaphors linking 'sport' to 'business' used by a range of stupid people even today. Back in the 1960s (my earliest association with sales operations in corporate businesses - NCR and IBM) sales/business analogies were beginning to 'intrude' in to sales meetings and annual sales 'conferences' - although the pernicious endlessly (and in my opinion totally inapposite) "team" references were still a decade or so away from infesting 'marketing speak'. Over the years I have formed the opinion that so much sports 'jargon' and analogy was/is because the assumption is that sales forces are comprised largely (back in the 1960s - entirely) of young(ish) males and the assumption was that sport dominated young male interest to the exclusion of everything else other than sex which is hard to fit into a selling context. I could be wrong but the love of 'marketing' people for sporting themes in every presentation has to have some explanation.

I thought of this yesterday after the game as various 'tribal' views were being expressed by various people who should know better and, as I was strangely not feeling the same, or even similar, enthusiasms my mind drifted to other thoughts. Selling/business is very much all about winning - not because it is something that is good to do but because if you don't sell (win) then you personally as a sales person don't have a job and if your personal lack of success is shared by other sales people within your organisation then the company goes out of business. Way back in my early days in sales at IBM,Vince Lombardi, the then famous coach of the then Green Bay Packers, had one of his coaching aphorisms taken over by an increasing number of silly "sales coaches". The phrase was "Winning isn't everything, it's the only thing". To an extent this is true in sales where only results count and no-one appreciates a 'good effort' - least of all the unlucky sales person who doesn't get the sale. Though this particular phrase was given a long run credited to Lombardi it wasn't original or even the best phrase with Bill Shankley's less well known statements being the definitive statements on football's and winning's importance in the scheme of things:

"Football isn't a matter of life and death - it's much more important than that"

"If you are first you are first - if you are second you are nothing"

I suppose on the assumption that all young(ish) males are really interested in sport and have some sort of 'relationship' with either following or playing for a team then it is valid to assume they will see the relationships - but I would have thought that you would also have to be pretty stupid if your income depended on your sales results that you would have needed that pointed out to you. However for as long as I have been part of or associated with sales results there has always been some idiot using sporting analogies. Perhaps I have been associating with truly stupid people all my life and I just never noticed? Personally I don't think that's true. Whatever the case may or may not be I have a different problem to address and have had it for quite a while - and I am pretty sure, based on my personal experiences as a 'buyer' that other companies have the same problem. What happens when a significant percentage of your sales force are 'girls/young(ish) females'? Do young(ish) females obsess about/relate to sport the way young(ish) males are assumed to do?

I would value any thoughts anyone might have on 'motivating' a sales force that is not predominantly comprised of young(ish) males.

John Linton

I began a serious re-examination of ADSL pricing from the 'top ten' providers yesterday and will complete the 'analysis' some time tomorrow. I had expected to see reductions in pricing from most providers or a significant increase in what was included in current pricing but so far I haven't found that to be the case. This has surprised me because several ISPs have made public statements to the effect that, for instance, that their use of the Pipe fibre to Guam would reduce their IP costs substantially. Similarly the recent ABS broadband report showed ADSL had reached a 'saturation point' which would normally indicate that support costs for ISPs would have fallen (no new and inexperienced customers wanting help setting up basic aspects of the service) and a need to compete harder for new customers to shore up their projected growth in customers and revenue announced in the annual reports.

I am surprised that there was absolutely no indication of lower overall pricing from the 3 ISPs I have now looked at in some detail and 7 others I have looked at in overview. Of course a web based analysis can't detect the 'special offer' situation that Telstra, and other companies, base many of its "promotions" on so it isn't really a 'locked down' fact finding operation and never can be. I have little doubt there are many "free" offers that the processes I use will never be able to quantify. Even so, I have been surprised at the apparent situation where there is absolutely now real 'evidence' of overall falling prices. My reason for saying this is that Exetel is a very, very small ISP but we have been offered a series of cost reductions for many of the base components of our services on a scale we have never seen before in the 5 + years of our existence.

IP pricing, and I am assuming that the imminent availability of the new Pipe offering has something to do with this, has now fallen to well below $A100 which is getting close to half the price it was at the beginning of 2009 (and bear in mind that is to a small company like Exetel - I assume the large/huge companies would be offered far less than is offered to us). Even this price is being further reduced by a number of innovative provisioning options that cover a wide range of 'new thinking'.

Similarly, both wire line and mobile telephone call costs have fallen significantly even in the time I have been away and are now at 70% of the really good new pricing we 'negotiated' only a few months ago. Doubtless this is due to the ever more visible impact of VoIP land line usage and increasingly mobile usage but even VoIP mobile call costs have fallen sharply. There have also been indications that HSPA per minute costs are beginning to fall and the ridiculously high prices of HSPA modems may have become fading memories. So something is clearly happening in communications land that has not happened before - at least in my time associated with this industry.

We make a practice of re-negotiating our supply contracts annually (usually by March 31st each year for pricing to come into effect by July 1st each year) and so our 'new' cost prices have only been in place for less than three months - and they, generally, delivered a very significant saving over the previous prices of around 30% for all but the ADSL1 port costs and end user to Exetel fibre costs. However, virtually since the day we agreed to terms on the supply contracts we entered in to we have been offered much lower pricing, particularly on IP and telephone and mobile per minute charges, resulting in 'on the table' offers that reflect a further 30%+ reduction on our already much lower costs now in place.

I think that there can be no doubt that if a company of Exetel's small size is being offered 30%+ cost reductions on a wide range of cost components then our much, much larger competitors are being offered/are negotiating even larger cost reductions and therefore, given the ABS report's indication of a no growth/slightly declining ADSL scenario there should be signs of lower ADSL prices from EVERY ISP even if those lower prices are not offered to current customers but are "disguised" as promotional offers to 'new' customers - but there is absolutely no sign of this that I can see. I will wait until I have completed the analysis before reaching any real conclusions but I am very surprised so far. Perhaps it just means I have completely lost touch with ADSL scenarios in Australia?

...and as this is Grand Final day.....and I have a significant interest in today's game....I will leave further musing on this unexpected situation until tonight.

John Linton

Yesterday turned out to be a non-day with the expected jet lag making it impossible to do anything but nod off every hour or so and thus making it impossible to do any sort of realistic work. Not unexpected and given that my aging body and mind doesn't deal with jet lag as easily as it once did the only sensible thing was to curl up on the couch and drowse away the day in a haze. It was still meant to be a 'holiday' day in any case. So equally unexpectedly when it came to time to go to bed it was difficult to sleep and then impossible to stay asleep as any jet lag sufferer knows so the new day starts with tiredness and apathy but hopefully that will be the end of it.

We have a board meeting later today continuing a pattern we established since our first month of operation of formally meeting and discussing and recording the key financial and operational aspects of our very small company. It was a bit ridiculous in our early days as we worked at the next desk from each other and continued to discuss the operation of the business at the end of each day so there was nothing new to discuss at a 'board meeting' but for various reasons we decided that we should formally document the problems we encountered and record how we dealt with them or intended to deal with them. Like many disciplines we instituted in our early days we have maintained this monthly meeting set against a fixed point agenda for getting on for six years now. Nothing very 'exciting' has been discussed at these meetings for several years now but that was not always the case with Exetel's three 'near death experiences' still quite fresh in my mind even though the last of those was over three years ago now.

However as I have not really paid attention to many aspects of the business while I have been on holidays (scarcely spoken to anyone over that time) and Steve has been attempting to find new IP solutions as well as finalise some future redesigns for the overall network there is more to catch up on than usual this month. One 'work' thing that did manage to intrude in to my yesterday's haze was a message on my mobile after I recharged the battery which had run out while I'd been away (I didn't take my mobile on holidays for all the obvious reasons) asking me to urgently contact the caller regarding an "irresistible" offer to buy Exetel. I deleted the message without replying to the person (I didn't recognise the name) and then went on to delete all of the other messages without responding to them - I figured there was little point in replying to messages left up to 4 weeks ago.

Sometimes, usually when I'm very tired, I give some thought to an 'exit strategy' for me personally from Exetel. I understand better than anyone else that I am not getting any younger and am unlikely to get any fitter or mentally acute as time passes and it is quite demanding running a small business in Australia. So it would make sense to consider selling the business to some entity that had enough money to pay cash and for the amount of cash to be acceptable to Annette and Steve (I really have no need for any more money than I already have for my expected life span) and have less demands in life generally and none of the stress of dealing with the never ending stream of problems being in business in the Australian communications industry inevitably continues to bring.

The other time I consider, however briefly, 'retiring' is on returning from a holiday where the joys and pleasures of doing absolutely nothing day after day for several weeks and indulging yourself in ways you would never dream of during your 'working week' remind you of what an alternative to working could be like. I guess I'm past the age when any sensible person should 'retire' and also past the 'wealth accumulation point' where continuing to work has any financial necessity or meaning - so I don't 'work' for those somewhat conventional reasons.

I won't be 'retiring' any time soon because I have been fortunate in my working life to actually get more pleasure and satisfaction from what I work at than I could envisage getting from any other activity. That's not to say that I wouldn't mind having a less demanding 'detail' work load as time goes by but I would not want to stop working until Exetel has fully achieved its objectives and there is nothing particularly new to work on. I realise that I'm very fortunate to have both the choice and the realisation that, given the choice of doing anything I want to, I am already doing that.

I wonder whether I will feel the same way at the end of today?

John Linton

We had an uneventful flight from Bangkok to Sydney meandering around the sky for 50 minutes until the curfew ended and the aircraft was permitted to land at 6.00 am and parked, as usual it seems to me, at the farthest possible gate from immigration ignoring the dozens of empty gates much closer. Beautiful day in Sydney except for the traffic which unaccountably at 6.30 am was stopped on the egress roads from the airport and the usual 20 minute trip from the airport to our home took close to an hour. Apart from that it is nice to be home and I suppose we can also be grateful that we didn't return yesterday morning as originally planned as the flight we would have been on got diverted to Brisbane because of the dust storm and didn't get to Sydney until 1.30 pm instead of 6.00 am. One more reason to be grateful for small mercies.

I skim read the industry news in the Australian and some of the overseas media and found nothing new except for a better reasoned set of comments on the current status of the 'NBN2' from Minchin in the Australian:

http://www.australianit.news.com.au/story/0,24897,26113906-5013046,00.html

All well and good and undoubtedly more accurate than his previous summaries but, at the end of the day, of no real interest to anyone who has to make decisions today for a small communications company. My view, admittedly after three weeks of R and R is that Krudd and co will continue to make a dog's breakfast out of any rational developments by the major carriers in Australia and that will not affect tiny companies such as Exetel as we will continue to buy wholesale services from whoever is able/willing to sell them to us at a realistic price.

I think the only major effect on Exetel of the current scenarios is that we will simply focus more of our efforts on developing other communications services and leave ADSL to continue along the paths that seem most logical for our circumstances. That doesn't mean not regarding ADSL as any less important than it has always been, or our ADSL customers as being any less important than they have always been. It means we have no influence on any of the decisions that may eventually be made and therefore we need to devote our scant resources to areas where the current government hasn't, at least yet, totally confused the major issues.

There are a few days to decide whether we can and should introduce a range of new ADSL plans based on different parameters than we use currently in time for October 1st but the time may be too short to do that sensibly. If that does prove to be possible then I think it will be the last ADSL changes we implement for some time - at least until the current uncertainties are resolved or, most likely, simply abandoned for the wild hype they have always been. I haven't seen the results of Steve's discussions with the various carriers so no progress will be able to be made until we have a chance to review any new pricing parameters that he may have obtained. I still favour the low base price plus a low gb data usage charge but remain afraid that the Australian buying public don't think like that in making decisions.

As always when you return from an enjoyable holiday the work issues you left when you took the break remain waiting for you when you return but I am still in the 'holiday' method of dealing with the days and I can't really look at the things I have to do today with either the intensity of analysis I know needs to be exercised nor even with any real level of interest in these first minutes 'back at work'.

I think it will all have to wait until tomorrow.

John Linton

.....and I'm really sorry to be going back to Australia after having had a wonderful three weeks of pure self indulgence and mental relaxation. However it's only the hard slogging work that pays for ability to have a holiday and hopefully the 'slog' content will begin to reduce over the coming months as more of the management and decision making processes are transferred to Exetel's developing management group.

One very positive sign was the August monthly figures that were developed while we have been on holidays which show a record profit for the month (by a very large margin) and the September forecast (with the month nearly over) indicate an equally good result. Exetel has never been run with profit in mind although we have made a small profit each full financial year of our existence - in fact we have made a profit each quarter since July 1st 2004 despite the incredible difficulties almost all small start up businesses face in their early years. As a company with an over riding business objective of providing any service offered at the lowest price/cost in the Australian market, Exetel will never make much of a profit from its base operations and it is a long way away from developing 'subsidiary' operations.

Our business planning to date has been based on meeting all financial demands as they fall due and to generate enough profit to pay cash for all equipment and other facilities that the company requires to operate efficiently. This has now also been applied to the office premises we operate in Australia. In this way we have operated the company with zero borrowings, of any kind, and therefore we have reduced our 'risk profile' in terms of our suppliers which has gradually helped us (at least with most of them) to get progressively lower pricing - probably better than our small size would normally allow us to get - paying your bills in full and on time for over five years is an unusual characteristic at the lower end of the Australian communications industry, and quite possibly, at the higher end of the industry based on some of the 'gossip' you hear along the way.

As we never plan to make much profit we have to be 'eternally vigilant' in terms of controlling all costs and that was recognised before we created the current version of the company back in November/December 2003. My personal experiences told me that people, no matter how trustworthy or how dedicated and competent, cannot be relied upon to do the drudgery day in/day out that is required to ensure that any commercial entity bills its customers correctly and, just as importantly, gets billed by its suppliers correctly.....this lead us to our never ending automation programs for every aspect of our business....which has served us very well to date. Automation has ensured our small company remains small in terms of administrative personnel and also has ensured we have not paid, literally, several million dollars in 'incorrect' supplier invoices.

Almost 6 years of unremitting attention to detail has resulted in a very, very strong operating company with exceptional operating efficiencies and, together with 66  months of unbroken monthly growth has now delivered a small company that makes solid profits each month and therefore, for the first time, gives us some sort of 'breathing space' to develop our business more rapidly - with one proviso.We need Exetel to take advantage of the efficient and profitable platform that has been developed by now growing much more rapidly than it has ever done in the past. To do that we need to recruit really good people who are not only capable of doing an 'immediate' job in a specific position but to be able to grow very rapidly into supervisory and management positions more rapidly than is generally prudent.

The major problems in growing for small companies is that all of the early employees work, of necessity, in an operational equivalent of a 'benevolent dictatorship' where the owner/operators make or 'review' all decisions from major to trivial and early employees are often/always constrained in their own development by getting used to that environment (of course if they find such an environment unsuitable then they leave). Exetel has been very fortunate with its employees in as much as almost none have left Exetel over the past almost 6 years and absolutely none who have grown into key positions with key knowledge. For Exetel to grow past the small company it is today (and in the new directions the current kerfuffle about an 'NBN2' makes essential) the current decision makers are going to have to let go an awful lot of control and involvement and find ways of keeping the company as efficient and as sharply focused as it seems to be today.

We need to recruit something like 36 net new employees in Australia over the coming 12 months (more than double the employees we currently have in Australia) and approximately the same number in Sri Lanka. The recruiting process itself will be extremely difficult but it will be relatively easy when compared to the ongoing training and management of the 'new look' Exetel. Personally, the only time I tried to do such a thing I failed miserably with disastrous results for all concerned - there were other circumstances but the major issues were my inability to make such a transition work. I look at what I have now got to participate in at Exetel with a great deal of trepidation if not outright fear - which is not an emotion I have any experience of - and is almost certainly an exaggeration of how a prosaic business process should be viewed.

So, it's time to pack and make our way to the airport with the relaxation and calmness that three weeks of idleness induce already beginning to fade.

John Linton

I was sent the TPG latest annual results which, unsurprisingly, matched the guidance they issued a few months ago and the figures were very impressive as can be seen here:

http://www.asx.com.au/asxpdf/20090922/pdf/31kvdctrxcmvmz.pdf

Very impressive numbers, somewhat spoiled by the flim flam of many of the claims that distorted the pure numbers which had no need for distortion. Also, I would have thought, that it made it perfectly clear that iinet's constant use of "iinet is the third biggest ISP in Australia" an even more embarrassing lie than it ever was as the numbers published in iinet's same period annual report here:

http://www.asx.com.au/asxpdf/20090817/pdf/31k3w5j5j1v9y5.pdf

show that TPG has much larger annual revenues than iinet and makes much more money - it also makes you wonder about iinet's claims of the number of ADSL customers it has based on having less revenue and the same 'ARPU'. Not that it matters - most of iinets claims have a lot of doubt about them from my obviously jaundiced viewpoint and inability to add and subtract or even multiply simple numbers. Clearly AAPT is much larger than than iinet in terms of being an Australian communications company and equally clearly TPG has a much larger revenue from ADSL and telephone operations. Maybe the ASX should advise iinet to stop making claims that seem, based on the published figures, to be simply untrue?

I really liked both the internal consistency and the, compared to iinet, straightforwardness (and brevity) of the presentation of the TPG numbers. The other thing I liked was that an ISP that stresses and offers true value for money does so much better than all of the companies that drone on about customer satisfaction and quality of service. TPG provides lots of downloads at much lower prices than anyone else (with the exception of Exetel which is far too small to be considered in such a comparison) and as you will see if you look at all the slides provides slightly more downloaded data at half the price iinet charges. So there not only is a place for Australia's third largest ISP to grow faster than the two ISPs larger than it but it is able to make a larger EBITDA profit even though charges much less and provides much more.

TPG provides a true contradiction to Telstra's, and its major competitors, constant over pricing and under delivering of "value to our shareholders".

So what's the difference that allows TPG to out perform the Australian communications market so significantly? (assuming that is the case). Not being privy to any of TPG's internal workings and decision making I have absolutely no idea. Having done two years consulting work a long time ago I have some views but my 'intimate' knowledge of how TPG operated was more than ten years ago and a great deal changes in a commercial operation every year let alone over more than a decade. I would hazard a guess though that some of the key major strengths I observed in my time working setting up TPG's internet and business data services haven't changed. These were all associated with TPG's owner, David Teoh, who was the best person I have ever met in Australian business in terms of the ability to understand future market trends and opportunities and the ability to hire, and fire, really excellent people who could help him make the most of those opportunities - he also exercised a level of financial control at a micro detail level that would make Ebenezer Scrooge look like the Rockefeller Charity Foundation.

Doubtless there many other factors and people who have contributed to TPG's overwhelming success over the years and I may be completely incorrect about the factors I observed from an 'insider's' viewpoint. One thing that is undeniable is that TPG is growing faster than any other ISP and is delivering more profit percentage than any other ISP in Australia. If this continues to prove to be the case then what sort of problem does TPG pose to the ISPs smaller than it, that have copied its decision to implement their own small scale DSLAM networks? If TPG continues to increase the number of exchanges it provides services from and if it continues to maintain a price per gb delivered price advantage over all of it's competitors then what is the short/medium term future of companies that are going to increasingly be seen as 'not worth the extra monthly cost'?

I'm glad that Exetel is far too small and far to timid to have to ponder that question based on the latest TPG figures.

John Linton

We got up in the morning at 5.00 am and left for the airport for our flight back to Bangkok hoping that the early flight would mean no problems with traffic and a speedy trip. It was a pretty good trip in terms of time but not in terms of mental well being with an instance of our driver missing a pedestrian who, literally leaped directly out into his path to try and cross the road to catch a bus and I have no idea how he didn't run him down at over 70 kmph. Within a few minutes of that incident we slowed to a crawl caused by a VW 'beetle' that had buried itself in the side of a bus up to the door jambs which was a pretty clear indication of the speed it had been traveling and the likelihood of anyone in the front seats still being alive. It isn't the first time we have seen this sort of incident on Sri Lankan roads but this was particularly sickening (from what I could make out the bus was turning into its depot from the opposite side of the road and from the look of what could be seen as we crawled past the VW must have been traveling in the inside lane and hit the bus as it was effectively blocking the whole road at an angle of 90 degrees. Although it was still pitch dark and the bus was painted a dull red it is hard to see how the VW driver didnt see it if he had his lights on.

After that re-introduction to the realities of Sri Lankan road travel we had an uneventful flight back to Bangkok and spent the afternoon looking at sapphires and rubies which, because of the International gem stone fair just finishing were at even greater bargain prices than usual - made even better still due to the appreciation of the $A exchange rate against the Baht since we were here a year ago. It always surprises me that gem stones in Bangkok are between one fifth and one tenth what they are in Australia. On the relatively short flight between Colombo and Bangkok I did some work on new ADSL2 plans that we are considering for October or, at the latest, November 1st. As it's 35 degrees at the moment I had no inclination to leave the hotel after participating in the afternoon shopping trip and left Annette to her own devices while I played around with some new numbers. Steve has got some new pricing from a number of our suppliers and we will be able to form a much better opinion this coming Thursday and Friday.

I understand that I have been away for over three weeks now and have become very relaxed (comparatively) as you tend to during a sensible length vacation but it seems to me that there are indications that the overall reductions in IP pricing and the general reductions in support and other key operating costs can result in both lower end user prices and significantly different delivery models to the ones that have been in place for the best part of the whole time ADSL hs been made available to Australian users. Whether I understand the various different ADSL buyer profiles is another matter altogether and I am pretty sure I don't. Having acknowledged that ignorance it still seems to me that for Telstra et alia to have remained fixated on providing base ADSL services with very low included data allowances the reality of the ACTUAL ADSL market is that a very large proportion of current users don't actually download very much at all - and that has been their custom for many years now - month after month. If that is the case then it re-enforces my belief that it is an exploitable opportunity as I commented on a few days ago.

Depending on what Steve has negotiated, and I haven't discussed it with him since I have been away, it should be looking like a cost of slightly sub 30 cents per customer gigabyte delivered during peak and around half that in off peak. An ADSL2 'line' (ULL) costs Exetel slightly less than $A20.00 (inc gst) and the associated telephone line costs a little less....in some particular cases it can be as much as $5.00 (inc gst) less. If these prices are correct than it seems a sensible thing to do would be to simply offer PAYU plans at a base cost for the ADSL service plus a base cost for the telephone service (if required) and then simply charge for data downloaded at a rate of $A0.50 peak and $A0.25 off peak - or something like that. I haven't looked at what other ISPs are doing in terms of passing on the benefits of the raft of cost reductions that are becoming more and more apparent over the past few months (all I have seen is the move by AAPT to offer unlimited off peak downloads on which I've previously commented) and we would obviously need to do that before making any decisions but it all looks very interesting.

I think something(s) are long overdue to happen in the Australian ADSL market as the 'meee tooooism' has reached a crescendo and if the ABS figures do continue to show that the ADSL market has peaked and may well start to exhibit negative growth then there will have to be some fairly significant changes. It will be interesting to see who is the first to 'break ranks' and offer a no BS plan that simply expects the user to pay for what they use at the lowest possible per gb rate possible with no 'smoke and mirrors'. Sounds simple - but as with "mobile cap plans" the buying public may not want to actually have simple facts to base their buying decisions on.