John Linton's Personal Musings

John Linton

......to achieve 'impossible' objectives.

We reached a 'mile stone' yesterday in our project to develop a business sales force to build our business revenue to 50% of total revenue by December 2010. When we commenced this project in February 2009 we knew it would be unbelievably difficult to get anywhere close to our target because, as everyone in this industry who has been involved in building sales forces would know, it takes 'forever' to acquire and train 40 top performing business sales people and find the management and engineering and marketing support that such a sales force requires - let alone having the products that would allow even a 'super sales force' to take to a set of intensely competitive markets. The magnitude of the difficulty of that objective is difficult to over state.

However, like all major objectives, it is really only a matter of deciding that it is in fact possible (no matter how difficult) and then to plan in detail how to achieve it before you start. Once you start then it is only a matter of time as to whether you are going to achieve the objective by having sensible measurements in place to see if your progress is tracking to plan. Very simple when described like that. Or the simple numbers were that it would 'only' take 40 sales people selling an average of 20 new business connections each per month to develop a customer base of 10,000 customers which if the average spend was $A1,000 per month it would mean that you would have a business revenue of $A10,000,000 a month which is comfortably far larger than our planned monthly revenue from residential customers would be in 13 months time.

We recruited our first, straight from university, 'trainee' in February and we recruited our ninth trainee in September. In October these nine people (whose average time in the data communications industry is 5 months and whose average age is 23) sold 54 Ethernet or SHDSL connections - an average of 6 per sales person with every one of them making a contribution to those results roughly in line with their time with Exetel). Our first major 'mile stone' was to sell 50 services in the month of October which was achieved shortly after 4 pm yesterday.

It is, of course, just the first small step along an incredibly difficult path but it is simply that the first step has been achieved that is the key deeply satisfying aspect of yesterdays result.

In my career in IT (that seems now to stretch back through the mists of technology time to the primeval ooze of the first computers ever seen in Australia) I have been a part of such a program as the one now being undertaken by Exetel 5 times in different ways. The first stretches back to the early 1970s when I built what was then regarded as the best new business sales team that IBM Australia had seen up to that time - of course I had no part in selecting the members of that team - that was a function of 'Personnel" as HR was called in those long ago days. However it was my first experience of developing a team from 'scratch' that outperformed, by far, every other sales team within IBM Australia three years in a row. My second and subsequent experiences built on that first experience gradually developing what I had learned and with the first major challenge in that I selected all personnel from my next position onwards and continued to participate in one on one training and development and, of course, learned to appoint successful 'sales managers' and then branch managers to make it possible to handle multiple sales teams and the support and engineering services necessary in multiple locations. Over that time I think I have learned the 'secret' of recruiting effectively and the 'secret' of training people effectively with a 100% success rate.

Each of those achievements, in their very different ways, gave me a great deal of pleasure and satisfaction at the time and each one of them taught me a great deal about managing sales personnel. The current 'project' is of infinitely greater importance to me because it will be the last time I attempt something of this nature and magnitude and a great deal of any future success enjoyed by Exetel in the residential markets we address depends on it being done perfectly and on time. Achieving the first mile stone was therefore a very significant event for me personally as well as to the members of the sales team and their manager who performed so well, both individually and as a team, to make it happen.

Whether we can continue to recruit and train as effectively as we have over the past eight months is, of course, unknown and the group dynamics of the sales team will now begin to change more rapidly and will, by necessity, have to become in almost every way quite different in the second year than they have been so far over the first 8 months of the first year. But that is what generates the excitement of participating in ambitious projects and the satisfaction if the ambitions are met.

It will be difficult to reach the next significant mile stone of 150 monthly sales at an average of ten sales per person in March 2010 with the December/January 'slow down' but anything planned and executed well enough is always possible.

John Linton

Anyone who was around in the early days of the introduction of mobile telephony in Australia would be unsurprised at the predictions by the Telstra CEO reported here:

http://www.commsday.com/node/631

Perhaps the only question would be whether his quoted time frame is too conservative. While the percentage of the market that sees internet as only being something that is used to massively download other people's property as fast as possible and who decry HSPA as "too expensive" and "too slow" for their needs, they only represent a relatively tiny percentage of the market places that use internet as an essential tool for the education, personal or business lives - the figure of "over 1,000,000 HSPA users (in less than 2 years) compared to 2,500,000 wire line broadband users (in more than 7 years) is an adequate validation of that view.

Perhaps, one of the reasons for the ABS reporting a marginal decline in ADSL users concurrently with a steepening increase in the number of HSPA users is that the awareness of of the benefits of HSPA are now growing more rapidly - particularly in regional Australia (as well as the more obvious trends in business usage for travelling users). Irrespective of the ABS reports that make the growing use of HSPA very obvious there is the plain fact that (like mobile telephony back in the early 1990s) the sheer convenience of HSPA plus the ever lower costs of using it is producing a more rapid take up of a technology than has ever previously occurred in Australia and I suspect anywhere else in the world.

The 'entry cost' is still much too high (if not for the end user then certainly for the provider) with modem prices in Australia still 4 - 5 times more expensive than the EU, the USA and most parts of Asia and the per gb costs more than double - but that is beginning to change. The modem price will be 'solved' some time in the first half of 2010 as more note book/laptop manufacturers build the HSPA chipset into their products and as the cutting edge router manufacturers do the same. Exetel, which has been looking for a router/ata/hspa chipset product for around two years has seen the prices for such devices fall from over $A500.00 to around $A250.00 to the latest price offered this week of $A150.00 and doubtless it will continue to fall as well as the functionality increasing - as has been the way with technology since some bright spark ten thousand or so years ago 'invented' the wheel.

Exetel's efforts to build our HSPA business has proceeded much slower than we had planned for several different reasons (mainly my stupidity - but not entirely) but in October it will reach around 20% of total broad band applications for the first time and, if we correct some of the stupidities on my part, it may well continue to grow more rapidly from now - if only because of the trends noted by Mr Thodey in the cited article and if the next ABS report shows a continuing overall rapid growth. One of the key drivers for an even more rapid 'up take' of HSPA than is currently being achieved relates to the use of VoIP over HSPA (which has driven our desire to source a 'magic box' for under $A100.00) because if VoIP can be implemented cost effectively over HSPA then the line rental cost can be done away with for all but the intensely cautious users which gives an extra $30.00 or so dollars 'saving' by using HSPA which even at today's high data rates provides an additional 3 - 4 gb of monthly downloads.

Irrespective of what Exetel manages to achieve in the next phase of our attempts to move a larger proportion of our residential business from ADSL to HSPA the efforts by the mobile carriers themselves will ensure that HSPA continue to grow as rapidly as they can deploy the infrastructure to cater for the demand. As Telstra now notes, the ability to deliver the fibre back haul is a key proviso not only for the HSPA carriers but, as even I pointed out some two years ago, it affects the nonsensical 'NBN1' and now 'NBN2' nonsense being pursued by Krudd and co. A 7.2 mbps HSPA service ANYWHERE in Regional and Rural Australia in sight of a mobile tower 'TODAY' at around $A30.00 per month for 5 gb makes an 'NBN' of whatever number pretty unnecessary.....for a huge slice of the marketplace.

HSPA remains, for the vast majority of rural and regional Australian users the best possible option for today and the coming years - and taxpayers don't have to provide one cent for that to be the case nor do the end users have to wait who knows how long to get it.

Meanwhile those ISPs who borrowed heavily to install their own DSLAMs in Telstra's exchanges can, as Harry Chapin once observed (slightly modified personal pronoun) - "They watch the metal rusting, they watch the time pass by".

John Linton

I read this with some amusement yesterday:

http://www.smh.com.au/technology/biz-tech/were-overpriced-telstra-ceo-admits-20091028-hk9a.html

As I have previously commented (based on Telstra's last annual report) it was obvious that Telstra had zero growth of ADSL customers in the first half of this calendar year and, along with the ABS figures subsequently published showing zero growth for the whole ADSL supplier agglomeration seemed to indicate that new ADSL connections may in fact be declining. My prediction that this scenario would result in a round of price decreases (totally obvious of course to anyone who cared to think about it for a second or so) as the companies publicly committed to "growth" find that not only is there no growth but their customer base is actually declining. Presumably all of those other companies had already worked out what was going to happen and had/have already put in place the appropriate pricing changes.

I guess Telstra has been benefited from customer inertia/laziness for so long and they have been able to control the ADSL market so completely that they have never before been confronted with a semblance of competition from the rest of the ISP suppliers. It was less than a year ago that Telstra was pronouncing themselves delighted with their growing ADSL market share and Justin Milne was making aggressive comments about how far above 50% Telstra would drive that market share. They would have also been cushioned' from the effects of their ludicrously high prices by the decision of Optus (and some smaller suppliers) to stop reselling Telstra ADSL1 services and effectively 'abandon' their ADSL1 bases which have consequently largely migrated to Telstra giving them a 'one off' market share boost over a period of a year or so. Then again it could be for completely different reasons unrelated to what I have just said.

For the Telstra CEO to state that their ADSL prices are too high to his shareholders is an unusual event in itself but in the context in which he did it (indicating that Telstra would be "imminently" reducing prices) is also unusual because, depending on how nit picking the ACCC is they could construe that as attempting to 'damage' competitor sales of ADSL via promises of future lower prices from Trelstra....not a situation that I have ever seen Telstra put themselves in before which I found quite remarkable and wondered at what devastating figures Mr Thodey had recently become aware of that caused such an unguarded comment. I suppose 'imminent' must mean before the end of this week - for a November 1 start?

I was amused by the comments because Exetel has completed its, admittedly cursory, annual review of pricing we get from Telstra and got the predictable (the same every year) response that Telstra is unable to reduce any prices for Exetel - which seems to be contradicted by the cited comments on Telstra's pricing being too high by the company's CEO. Never let it be said that Telstra would ever resile from its Red Queen attitude to public speaking.

So we are still in the process of putting the finishing touches to Exetel's new October 1st plans and have been waiting for the 'smoke to clear' before making a final decision. It's now time to do that with November only a day or so away and I was hoping to see the end results of the various competitor's announcements before finishing that task. I am glad to see that TPG has been panicked into making changes to its ADSL2 plans by the actions of other ISPs and it must cost a fair bit to remove all their recently put up advertising of 40 + 40 on buses and signs around Sydney with their hastily upgraded 50 + 50 new plan. Someone at TPG got their strategy very wrong and will get a slap over the wrist for wasting all that money.

I still think the AAPT 10 pm to 10 am is the absolute best of the 'new' round of marketing/pricing initiatives and am very tempted to do something like that - though it still goes against the grain to copy someone else's idea. It also raises the question of just what other companies will do to address a slowing/falling ADSL market if that is in fact the case. Clearly TPG, like Telstra, have had to quickly change their thinking as the first quarter sales results and almost one  month of the second quarter begin to show what their first half progress, or lack of it, will be. I am, as I said, very happy with Exetel's first quarter which was a new record for the company by quite some margin in many respects and October is already well past a 69th consecutive record month. I would like to see what iPrimus is going to do before applying any 'final touches' and now that Telstra has so clearly stated it is going to make changes it might be prudent to wait and see what they will actually do. So there will need to be ongoing changes, I would have thought, to most of the price/plan positioning by many suppliers especially those who simply try and stay some percentage under Testra's pricing as their policy. If Telstra does in fact do something sensible with their ADSL2 pricing, which I cited the timing and reasons for more than two years ago as it was so patently obvious, it will be interesting to see what then ensues.

As I said during the results season - it is going to be a very challenging year for people who rely in any way on ADSL sales growth for their and their company's financial health.

John Linton

....and the 'variable' education standards over the past 50 or so years and the semi illiteracy it has produced among a much wider group of people than you would think possible makes a choice of words very difficult at times.....even more of a 'problem' when, as I am doing now and every morning for the past two plus years, writing without paying any attention to moderating my word selection and clumsy syntax....clearly illustrated by the length and construction of this heading....so this musing is for those, kind, people who want me to describe Exetel in more 'grandiose' terms.

I am constantly reminded of this issue by people who write to me having read one or other of these ramblings taking me to task for constantly referring to Exetel as a "tiny" or "very small" company. I do that because it is the correct description of Exetel in the context of the Australian communications industry where the largest company turns over more than $A25 billion in the last financial year compared to Exetel's less than $A50 million. In terms of magnitude how do you 'rate' the size of a company that is one five hundredth of the size of another?.....the word "tiny" comes to mind. Alternatively you could 'rate' the two companies on employees where Telstra has over 50,000 employees and Exetel has around 70 - making Exetel one seven hundredth the size of Telstra....in terms of rating the word "tiny" again comes to mind.

They are facts - and facts should not be played around with as liars and dishonest people try and do to try and make something appear to be to different to what it actually is - a terrible condition of so many Australians (and I'm sure people in other countries) who seem unable to accept circumstances as they are and, for their own self aggrandisement, try and portray themselves and their organisations as being more important than they are or, in many cases in this twisted period of Australia's history, as being completely different to what they actually are. For that reason, from the first month of Exetel's existence and then every month since then, we have published a 'history' of Exetel which has 'tracked' the company's progress. As far as I know no other company has had the 'courage' to publish such a record. It can be found here:

http://www.exetel.com.au/news_main.php

I could, if I tried and had no respect for the intellectual or ethical capacities of anyone who read my words, describe Exetel differently to "tiny" but that would be stupid and make me look as stupid and dishonest as people who do that - something I have no need to do at this 'contented' stage of my life. If you don't believe how absurdly easy that is I could describe Exetel as being:

1) The fastest growing data communications company in Australia - an average of well over 30% per annum over the past three years

2) The Australian data communications company with the least debt - zero

3) The most efficient Australian data communications in any business ratio comparison - Revenue/employee, Customers/employee, etc

......but what would be the point?....I'm an adult and business relationships are, mostly, between adults.

On a less grandiose note I could use simple facts to 'inflate' the importance of Exetel in such ways as:

A) October 2009 will be the 69th consecutive record revenue month for Exetel stretching back to the establishment of the company and that growth has been entirely 'organic' i.e. we haven't bought other businesses to produce the results we have attained.

B) Over the past few days we added new IP bandwidth that, in total around Australia, means that Exetel now provides over 5 gbps of IP bandwidth to its Australian customers.

C) Exetel owns all the real estate from which it operates in Australia and will shortly pay cash to double its floor space (we plan to hire around 50 additional people over the next year) by buying new premises in the Sydney CBD to cater for its planned Australian revenue/personnel growth in 2010.

All of the six points above are true - at least to the best of my knowledge they are - and I could, with very little thought come up with several more. None of them change the FACT that Exetel IS a tiny data communications company and even if we succeed in our plans to double the size of the company over the next 14 months - nothing will have changed - we will still be tiny in comparison to Telstra.....and there is absolutely nothing wrong in using that, factually correct, word to describe a start up company after six years of its existence.....

.....and that simple 'fact' of 'history' opens up a whole new range of "we are better than them" claims...."after six years of operation Exetel is larger in terms of revenue/customers/PoPs/bandwidth/profit than ANY of the ISPs (not carriers) that are currently bigger than us today.

So for all the kind people - there you go - ours is bigger than theirs!

PS: you know, those descriptions sound so impressive I might do a bit of work on them and make those claims on the Exetel web site so if you see any errors/anomalies/outright untruths in the above - please let me know.

John Linton

.....you never know what you are going to get.....assuming, like Forrest and Mrs Gump, you don't bother to read the piece of paper that has little depictions of the design on the top of each type of chocolate with a brief description of what it contains. If you do 'read the instructions', and interpret the depictions correctly in making your selection, then you know exactly what you are going to get....unless of course the particular box of chocolates you have selected doesn't come with 'instructions'. Then again.....the point of that is simply that if you make decisions without ensuring you are as well informed as you need to be then you may end up with a bad taste in your mouth - depending on how precious you are.

So I was actually quite unprepared over the past three working days to receive approaches from 4 ISPs - three smaller and one much larger than Exetel. Over the years of Exetel's existence contacts with other ISPs have been perhaps one or two a year and evenly divided between offers to investigate buying Exetel and demands for retractions of personal comments I have expressed - none of which were of any use to either party. I am not someone who has ever considered any form of competitor with Exetel as being an entity with which to enter into any sort of dialogue - the concept of a "friendly competitor" is beyond my ability to understand. So to get one approach was unusual to get four such approaches seems to indicate market changes of cataclysmic proportions.

The four approaches were split - two wanted to discuss Exetel joining them and a "select group of other ISPs" to buy HSPA hardware (one HSPA modems, the other HSPA routers) and the other two wanted to buy IP bandwidth from Exetel. Perhaps it is just the fact that four different approaches occurred in such a very short space of time that surprised me. Perhaps there is something occurring in the marketplace that I haven't noticed. In any event, after asking for details of exactly what products/service they were thinking of buying/selling and at what prices, I advised each of the 'enquirers' that Exetel was in no position to enter into speculative buying with unknown parties using 'contracts' over which we had no control and had no interest in 'wholesaling' services that we bought wholesale and suggested they approach the suppliers of such services themselves.....although it was obvious that they had already done that and had failed to reach a suitable agreement.

I didn't really think much about it, other than to wonder whether there was some reason for the sudden 'rush' of 'fellowship' and good will towards all men as it seemed, even in this commercial age, to be much too early for Christmas. But, unlike Forrest and Mrs Gump, I don't like surprises and I'm wondering whether there is something I'm missing.

Now there never would be any sort of circumstances where a small company like Exetel would take the financial risks of selling to ISPs even smaller than ourselves (when we started Exetel I was always very grateful to the early suppliers who provided Exetel with services on  credit - which we have repaid with almost six years of 'supplier loyalty' - but it has been obvious that so many start ups like Exetel didn't end up paying their bills) - so those were easy approaches to reject. What was vaguely interesting was how much above the current market rates the two small ISPs were prepared to pay for IP bandwidth - around 80% more than the current offers we know about....another reason not to think of supplying to them....goodness knows how they would be able to make a profit if all of their costs were similarly inflated above what is commonly available.

The two offers of hardware were similarly unappealing on the pricing being suggested but, at least in one case, I think that was because the person making the offer thought I was a moron with no knowledge of HSPA modem pricing out of the PRC. The HSPA router price sounded appealing, at least on price, but when I questioned the specifications it became apparent that the box would not meet the requirements we believe are essential. The company concerned was also among the scummier organisations associated with the Australian data communications business - as judged by me.

I will try and find some commonality in the approaches over the next few days - if in fact there is any other than a very strange co-incidence....I wouldn't want to bite into a marzipan one.

John Linton

.....of where the nanny State ends up....or what some people will do and say when they are completely unaccountable.

If you are vaguely involved in some aspect of using telecommunications services you would have undoubtedly read/listened to/seen one of these sorts of reports:

http://www.news.com.au/story/0,27574,26257131-1702,00.html

I am only using this example because it is electronic and the one I really wanted to use was on page 9 of Saturday's Financial Review. However it will serve the purpose of illustrating my point of where nannyism ends up under the stupidity of all such self serving examples of governmental nonsense. The one statistic that struck me was the claim by Ms O'Donnell that telecommunications services were plunging into the abyss because complaints to the TIO increased from 268,645 to 481,418 over the past year which she was at pains to emphasise (presumably for the innumerate) was an increase of 54% over a twelve month period. Now, even a terminally stupid public servant would have to have taken pause when presented with such a set of numbers before opening her mouth to 'pronounce' on what they mean.

Now Ms O'Donnell, presumably having an IQ above the mid 50s, could have considered whether an increase of 54% in ANY set of numbers could be simply attributed to one simple root cause - in her case the root cause being that the the whole telecommunications industry having become 54% more incompetent over the past 12 months. Now being the sort of person she is (inarguable because of her title) the head of a government entity only has one objective in life - more power, authority and, most of all, more people reporting to her as the principal evidence of her power and authority. Perhaps that is unkind but only the totally stupid person would use such figures to reach the conclusion that Ms O'Donnell reached - and bear in mind in reading her own words in her report she doesn't mention any other reason as contributing in this increase. Of course Stupid Stephen (who didn't get that appellation because he was a Rhodes Scholar) leaped in to add his full support that the telecommunications industry was a disgrace and that the 'gubmant' would "legislate" if massive improvement was not seen immediately. Who knows....perhaps he can make that happen as effectively and as on time as he delivered the 'NBN1'?

So a mid range public servant and the third dumbest member of the current cabinet have unequivocally stated that the telecommunications industry is a disgrace and may require government intervention to fix the current, terrible problems (now - where have I heard that before?). Personally, I wouldn't have thought any human being out of kindergarten would ascribe a single reason to any dramatic change in figures produced by a self serving Australian government entity. Surely, in the event that there was no other reason, the possible reasons that might occur to a person with an IQ of at least Ms O'Donnells level, would have been listed and given a line or two of why they weren't in fact relevant? I can suggest a couple if Ms O'Donnel's very large staff and, of course, her own interrogation of the figures which she must have done before making her emphatic public statements, have failed to reveal them:

1) It entirely in Ms O'Donnel's interests to publicly state how important it is for her 'department' to receive more funding and more personnel - she, therefore, cannot be accepted as a person with a sensible view on why figures change.

2) Over the past year the TIO 'front line personnel' have been specifically instructed to increase the number of 'complaints' they receive by breaching the major premise under which a complaint can be lodged with the sole objective of increasing the revenue received by the TIO.

3) TIO personnel are so inadequately trained they have no idea whatsoever about any technical aspect of any service and accept what they subsequently agree are totally absurd and impossible "problem scenarios" stated by complainants as being 'true' when they subsequently agree that they couldn't possibly have occurred.

4) TIO personnel have become/are so uncaring and irresponsible that they often say "I know I shouldn't have opened a fault but I'm too busy to actually read the complaint".

5) TIO have now resorted to opening Level 2 complaints within 24 hours of opening a Level 1 complaint on the basis that "I took too much time opening the Level 1 fault and as you didn't respond in the time (a customer TIO complaint is dealt with within 30 days of TIO receiving the complaint) I automatically open a Level 2 so my paperwork complies with regulations' - that one really takes your breath away.

There have been such a rapidly increasing number of these issues over the past 12 months that Exetel has sought legal advice on suing the TIO for gross breaches of their own legislated procedures.

So, like all statistics they are closer to adhering to the old saw (there are lies, damn lies and then there are statistics). Ms O'Donnell's figures are worse than "damn lies" they approach total fiction.

PS: I was disappointed that Exetel's TIO complaints increased over the past twelve months by around 38% but I am VERY sure that our complaint handling procedures and speed of handling improved over that period....but then I scrutinise figures on all reports I receive or create with a diligent and questioning mind before taking them in to consideration as providing useful information.

John Linton

..........at least as demonstrated by Optus latest "sweeping changes".

I re-read the various press releases about the latest Optus HSPA pricing perambulations for the third time earlier this morning, a summary of which can be found here:

http://apcmag.com/optus-pulls-a-swifty-with-new-mobile-broadband-plans.htm

Despite the pointless and misleading headline (there is no attempt to deceive the prospective buyer) the facts appear to be a '12 month' promotion rather that an 'up front' heavy discount of modem hardware and 'free' months - so nothing different for a carrier that follows Telstra in trying to sell at high prices with 'sweeteners' to ameliorate the high costs. In this instance there are no high costs because, despite the 'bleating' in this and other articles there is no 'deception' the prices are fixed for twelve months and after that (November 2010) who knows what will happen in terms of what will be available to HSPA users and who cares about something so far in the future? It has absolutely no relevance.

What is important, of course, is the impact on today's HSPA buyers and current users and what Optus has really done and, if you're into that sort of analysis - why are they pricing as they now are. The first thing is that the modems have 'fallen' in terms of the retail prices they are 'apparently' offered at. They 'appear' lower in cost but really they are at an even higher profit than they were before the new plans were announced. Ex factory price of the E160 is less than $US15.00 and its landed cost in Optus warehouse would barely be $A20.00 (if that) as an example. So much of the 'new lower' pricing is being recovered 'up front'.

The monthly plan prices themselves are a little, not a lot, more attractive than Optus Retail's previous prices but only now match the prices from Vodafone and '3' and aren't any sort of major 'break through' in either pricing or delivery terms. What they are is probably only relevant to Exetel and the one or two other Optus Wholesale customers who buy Layer 2 HSPA services at whatever prices have been negotiated and then 'package' the end user plans based on those wholesale prices. We have always struggled to offer a sensibly priced product in this market and Optus Retail's latest end user price decreases will just make that even harder. No change there then.....we will do what we always do and negotiate a set of price reductions and find new value to add to the end user service that is not possible for a carrier to provide.....the reason that wholesale customers exist for big retail oriented carriers.

So, we will now have to have a chat with Optus to see what we can do about modifying our current contracted buy costs and then what we can do about repositioning our HSPA offerings to the different markets we address. As a very small customer we have no real 'bargaining position' and will therefore have to find, as all small companies always have to, some other way of delivering an HSPA service better than the large providers. We have one or two good ideas, or at least what I consider to be good ideas, and we are used to dealing with this scenario which has, of course, existed since we started in business.

Sourcing the modems from a non-Optus source would be something that might help and finally getting the 'magic box' in to deliverable form and eliminating the need for a separate modem is still the major thing to be done in developing an HSPA product set. Putting a lot more effort in to selling only the sim to be used in a mobile telephone is an obvious 'additional path' and interestingly our sales of mobile phone services using Vodafone have shown small but growing signs that more of those users are buying them for their data services which are at much lower cost (to us at least) than the ways Optus insist on charging for data usage on a mobile telephone service.

We also need to find a way to deal with using two mobile telephone providers (if we do go ahead with using Optus for mobile services which is, at least in my opinion, highly problematical because of their pricing 'models' based on volume resellers of their retail plans). Vodafone offer far more flexibility and far easier to deal with data costs and we have more than five years of building a relationship with dealing them which has built a very strong mutual trust plus the fact we have always paid our bills on time and without the deceptive quibbles that lead to all the undesirable outcomes of mobile telephone relationships between suppliers and resellers. We have found an 'adequate' solution and were expecting to release Optus based mobile plans on November 1st but I am coming to the conclusion (due to two recent 'events' and now the latest Optus Retail HSPA prices) that there is some doubt in continuing to try to maintain a 'strategic' relationship with Optus - I don't think, after almost six years of trying, that Exetel will ever become a company that "does things the Optus way" and that it may, after all this time, result in a 'parting of the ways' at some future time.

I believe that we have outgrown all of the other start ups that existed shortly before or after we started Exetel because we have adhered to the only unbeatable long term business philosophy that relates to our industry and marketplaces - have the lowest end user pricing and have the lowest operating cost....everything else doesn't matter. Even as a start up we managed to get 'decent' supplier pricing (except from Telstra of course) and because we paid our bills in full and on time and always bought more each quarter we have a gilt edged relationship with all our major providers (except from Telstra of course) which enables us to get some sort of 'preferential pricing in most instances. Good pricing from our suppliers plus exceptionally low cost internal processes and procedures means our cost of delivery to an end user always allows us to d better than less well managed competitors. It is an exhausting management regimen but it has allowed us to first survive and then grow faster than any other start up in the last 8 years.

What would life be without constantly looking at costings and pricing and trying to work out how to address an ever changing set of marketplaces and supplier ramifications?

More enjoyable for everyone concerned?

John Linton

Most weeks in business are interesting but this one was particularly so. While nothing 'Earth Shattering' occurred a whole raft of different things either changed or showed signs of changing. The most obvious thing that happened was that we finished making most of the changes to the ADSL plans which we began at the start of this month. There are still a couple of considerations but all of the major re-positioning work has been done. It is obviously too early to tell exactly what these changes will bring about but the signs over the first three weeks being very positive with a likely record month of ADSL applications and new connections.

The strange growth in ADSL1 applications/connections continues and will be a record of its own if the last week of the month continues to be as strong as the first three weeks - I have no explanation for this very odd phenomena and I have not spent any more time looking in to it since the first week I noticed it. It doesn't appear to be caused by other ISPs "abandoning the market" as the overwhelming majority of the ADSL1 applications are from 'new' users not churns and the one obvious thing is they are mainly from NSW country which could be the answer - that our HSPA advertising has spilled over to making people in NSW regional areas aware of Exetel for the first time. As I said - I simply don't know.

We got new offers for bandwidth during the week from two different companies which were 'Christmas Promotions' but we won't be doing anything about those offers as we have already placed orders for the additional bandwidth needed between now and the end of January and the 'promotional pricing' was only marginally better than the new pricing we have in place. It was interesting to see that our new 'rock bottom pricing' has lasted less than a month before slightly lower pricing becoming avaialable. It makes you wonder what the prices will do throughout 2010 though I do accept that the most recent big price drops were a combination of idle capacity and the big move of the $A against the $US.

There were also signs that there might be some reductions in costs of ADSL2 ports but the information came in at the end of Friday afternoon and I didn't have time to work out what was really being offered so I'll look at that again on Monday.

The 'interesting thing of the week' were some pretty exciting 'promotional offers' from two of our business service suppliers which, unlike most 'promotional offers' were very, very exciting and, although my memory can't be trusted these days, were probably the best 'promotions' I have ever seen - certainly in my Exetel days but probably at any time in my 'career'. Those offers should make our very young business sales force very, very happy between now and the end of January and I know if i was a sales person I would be very sure that Christmas had come very early this year. Of course the offers will also have been made to the two suppliers other wholesale customers and it will be interesting to see what they do with them so we will have to be very quick off the mark to make the most of these amazing discounts - and without being boring they really are amazing. I can only wonder what has lead to this, in some cases, almost 50% price cuts on a service that is already very easy to 'sell'.

I have been delighted with the rapid development of the business sales force over the past 8 months and hired a tenth graduate last week. Of the nine graduates already hired six have already passed their probation period quickly and one more is within shouting distance of doing the same while the other two show every sign of doing so before Christmas......this latest amazing offer should make that a certainty. Our plan is to grow the business sales force to around 42 by this time next year but that plan was heavily dependent on the innovative recruiting and training processes proving to be successful and the very aggressive sales success benchmarks being achieved which everyone I spoke to telling me they were impossible. (to pass probation for instance the trainee had to make ten business data sales; 1 in the first month, 2 in the second, three in the third and four in the fourth). Totally unrealistic I was told - the first 6 trainees all made that target in around three months with the quickest being 2 months.

Whether we can produce the same sort of results another 32 times is of course an unknown quantity but I am more confident of being able to achieve this having seen the novel selection and training program we put in place work so effectively to date. It is in fact essential that we do get it right and make the targets we have set happen because, as I said yesterday (and so many tmes before) the current actions of the Labor government have caused chaos in the residential  marketplaces already and will cause even more as Labor gets ever more desperate over the coming months leading up to the next Federal election.

So an interesting week. I'm going to finish breakfast and head of to Canberra now - I'm not sure I will be able to post a blog tomorrow as I'm not sure I will have access to the internet.

John Linton

....has worked better than he could ever have hoped for.

I read this yesterday evening:

http://www.zdnet.com.au/blogs/twisted-wire/soa/NBN-should-be-free-says-economist/

not with any degree of real interest (you can find some time serving academic at any time or place ready to make whatever crackpot statement you can scare a head line out of) but as an indication of what happens when the people the electorate has given access to the public trough are megalomaniacs. I  realise that the 'electorate' almost certainly doesn't understand anything about anything and therefore they perceive no differences between the two main political parties in this country (each being, in their different ways, just avatars of some sort of sporting team their parents 'followed') but I do understand a little about Australian communications and this 'NBN2' madness is going to cost the country dearly and I believe there is a possibility it will cost me personally almost everything I have tried to put aside to allow me to, one day, stop having to work to pay the bills if it works out as badly as it may do.

It's not that some sort of d***head actually articulated a crazy point that communications should be a government handout (like the dole and all the other social circuses that continue to be part of the way to trough access and then maintaining it) it is that Krudd's ego is so grotesquely large these days that it is a possibility at all. Together with this:

http://www.smh.com.au/business/telstra-in-a-tizz-over-the-irate-hum-of-its-parts-20091022-hbdj.html

and, I can't be bothered to find the reference but it was reported, the statement by Barnaby Joyce that the Nationals may split from the coalition and vote with Labor on splitting Telstra before Christmas I, personally, look at the near future with utter dismay.....and please remember that I have no desire for Telstra and its monopoly remaining the way it is - although the Sol (wholesale customers are parasites) Trujillo is no longer looting the country there are no real signs of change at Telstra that I can see.

Krudd, the cargo cult devotee, can only "split Telstra" (with the objective of resuming the Telstra network into the 'NBN2') by paying Telstra's shareholders the money they, or the original holders of the shares they subsequently bought, the SAME amount of money that the original shareholders paid for the shares less a slight discount for the Telstra retail operation. (not some value based on today's share price). There is NO doubt that Telstra itself will take this to the High Court and win if the Krazy Egotist tries to compulsorily re-acquire the assets its predecessor sold off to the public at any price unacceptable to a shareholder's meeting. Krudd will do this because he also can't face the thought of 1.2 million Telstra shareholders voting against him in the election that follows him paying anything less. So - all that will take three years to play out unless Krudd caves in immediately and pays the $30 billion that Telstra will have to ask for out of due fiduciary responsibility. Either way it has totally f***ed the Australian communications marketplace for the foreseeable future.

Of course there are years before the end crunch of this Krudd grandstanding ends up in whatever disaster is going to eventuate and there is still enough money to be paid by the various communications users around Australia for most current suppliers to remain in some sort of business over that time but what point is there in 'investing' in any alternate infrastructure developments until certainty, of whatever kind, returns to the communications marketplace? Ony mobile? Quite possibly - though I would have no idea how either Telstra or Optus would be looking at their current residential wire line telephony and data income streams as my only concern is for Exetel's shareholders and customers and employees.

Krudd's back of the bus ticket nonsensical 'plan' to save himself from his own lies when his original 'NBN' collapsed and was seen to be the nonsensical farce it always was has now generated a life of its own and even ignoring the lunatic recommending free comms access to every Australian home and business the ambit of destruction of the current communications industry has reached quite overwhelming proportions already and the proportions are continuing to grow. The only thing that Krudd, like every charlatan that has ever existed, is now contemplating is how much money of the $A30 billion asking price he has to print and how much can he pay in terms of 'share scrip' in the 'NBN2' to buy off Telstra and as importantly (more importantly to him probably) Telstra's shareholders.

Did anyone seriously vote to give Krudd and his ill educated bunch of union thugs access to the trough in the expectation that they would wreck the Australian communications industry?

Alarmist? If you choose to think that - but then do you have all of your retirement money invested in a small communications company and are responsible for the well being of 70 employees and some quite essential services being delivered to over 100,000 customers?

If you don't then, right at this moment, I would prefer to be you. As I don't have that choice I need some inspiration......there has to be at least one thing that can be done to 'fire proof' the future....which is a path that we started on back in February and we are definitely making progress but I am now wondering whether the hyper aggressive target I originally set is aggressive enough.

John Linton

.....in almost every area of providing ADSL2 services....and I'm beginning to wonder why.

I am a lousy 'commercial negotiator' in almost every sense of that term as I was brought up and educated in a period when/where such things were despised in terms I can still remember, one of which was along the lines of "such practices should remain where they belong - in the back alley bazaars of Cairo". Having been made aware of such disdain by then very influential people, from such an early age, plus my innate impatience and boredom with detail, I suppose there was very little chance that I would ever develop the ability to conduct backwards and forwards price "negotiation". This has always been re-inforced in subsequent life by the degree of 'sliminess' I associated with the type of people who involve themselves in such practices.

I have always taken a 'take it or leave it approach' to buying and selling in both my personal life and as a natural flow on in my commercial life when I became "senior" enough within an organisation to become involved in buying products and services. So the past year or so has presented new 'challenges' to me in that so many of the products and services that Exetel needs and buys seem to have no real 'price' with any 'proposal' we receive almost always containing either the spoken, or increasingly written, proviso that "the price is negotiable". Perhaps its always been the case and I just never noticed until it has become so blatantly 'up front'.

One of the most expensive 'building blocks' for tiny companies like Exetel in offering ADSL2 services has always been the monthly rental of the exchange port which, as an example, in the case of Telstra's ADSL1, often comprises 90% of all costs in providing the service.  Over the three or so years that Exetel has been providing ADSL2 services there has been some reductions in ADSL2 port costs but they have not been much and they have not been frequent (a euphemism for very infrequent). With the current port capacities on an increasing number of exchanges reducing (at least to companies like Exetel) there seemed to be little chance of this major cost reducing  but that now appears not to be the case via unexpected sources. If this proves to be the case then even this 'set in stone' pricing may change downwards by a, relatively, significant amount in the not too distant future.

In the mean time, just as I thought that Exetel had obtained an extraordinarily good price for our latest and future IP upgrades - along comes a new offer that is almost 15% lower than the latest price which was itself more than 25% lower than the, what I thought only six months ago, was an exceptionally good price at which we contracted the major share of our IP buying. So in far less than 12 months the price of IP has fallen by over 60% and now gives every indication of falling further. My guess is that the $A's continuing rise against the $US is a major contributor to these rapid changes but that wouldn't seem to explain it completely. Whatever the reason it allowed us to pass almost all the benefits of these lower prices on to our customers.

It's hard to see, at least it is for me, where end user 'average usage' is going. Part of the reason is that Exetel has been providing very high 'off peak' download allowances and over a very long time our relatively stable user base has adapted their habits to use the off peak period very extensively for major downloads. We have been 'so successful' in doing this that the old 'peak' time is now almost the lowest usage time of the day with the new peak being 2 am in the morning. This initially prompted us to suggest to our bandwidth providers that they should use a two tiered pricing 'model' with "off peak" bandwidth priced at a much lower cost than "peak". We received three proposals along those lines around the time I was due to take holidays so we left the decision until I returned by which time this 'new' pricing had begun to appear and by the time we were ready to make a decision the 'free off peak' pricing model had been 'blown away' by the new general IP pricing.

The net result for Exetel's customers has been lower plan pricing, more downloads for the lower pricing and, finally, the restoration of the 12 midnight to 12 noon 'off peak period' which we had to move away from less than three months ago! An amazing turnaround caused by an amazing set of price reductions.

I think it means that I should go away more often and for longer periods as quite clearly other people in Exetel are much better price negotiators than I am.

John Linton

.....catch up with you.

I wrote yesterday about some of the ludicrous 'facts' surrounding a
company I utterly despise - Eftel/aanet. I was amused to see how that
brief few words caused that despicable company to react. While I have
no real interest in the inevitable demise of Eftel/aanet the incredibly
horrible and dishonest actions of aanet in April 2005 (yes, I know its
a long time ago but I have a very long memory for personal attacks)
perpetrated by that piece of arrant nonsense (Lorraine Rose) and the
subsequent buyers of her bankrupt aanet company (Eftel). I have only
one interest in that apology for a company and that is to see it end up
in the only place it deserves - non-existence.

For those of you
who can remember the actions of Lorraine Rose in April 2005 you will
remember that she, and her cohorts, attempted to put Exetel out of
business by the most unethical set of actions I have ever seen employed
in my time in business. She, and her cohorts, totally failed in that
attempt but it was a deeply concerning 4 week period in which Exetel's
few personnel worked amazingly long hours (to the point of exhaustion)
for almost 4 weeks to 'save' Exetel (and its customers) from demise
and, although we lost several thousand customers and all business
momentum for the next 12 months the result was that Rose and her
pernicious cohorts went bankrupt and Exetel survived and after a year's
hiatus resumed growing quite strongly and, of course is still in
business today and still providing services to a surprisingly large
percentage of the customers we had at the time of Rose's and her
cohorts attempts to ruin us.

To say that I dislike Eftel/aanet
would be an understatement but I dislike them because of their actions
and their attempts to harm Exetel not for any other reason. I therefore
take some notice of their crummy company (not really a real company but a kluge of failed ISPs like
aanet with no purpose for being in business but to make money for a few directors - something they have monumentally failed to do) and I do go out of my way to do any harm I can to the people who
have sought to benefit from harming Exetel's customers and my family
particularly. If you, a casual reader of an obscure 'blog' think that
such feelings do not belong in commercial business then, you are wrong but then you also have the option of not bothering to read any further.

Several
people who read this random set of postings have sent me links to a
thread on a third party forum called Whirlpool in which John Lane
(allegedly the 'CEO' of Eftel) has responded to my mild musing yesterday
alleging that it contained "no facts". I was surprised by that claim
because I thought that I had only quoted facts. Apparently not. So I
thought I'd clarify the facts that relate to Eftel and their lying
claims.

I actually quoted the cited sources yesterday so I am not
going to bore you with them again - if challenged I refer to the two
documents submitted by Eftel to the ASX described as:

"Preliminary 2009 Final Report"

and

"Full Year Presentation"

Now despite John Lane's comment here:

http://forums.whirlpool.net.au/forum-replies.cfm?t=1303172&p=15

"There is hardly a fact in that screed. He didn't intend there to be any. It is pure marketing noise."

I
only used the "facts" in Eftel's own documentation as posted on the ASX
site. I am not sure what how my comments on another company can be in any way described as "marketing" nor how written words can be described as "noise". In these documents, submitted as true records of facts to the ASX:

Eftel states that "Eftel is a Top 10 ISP" (presumably in Australia).
Now for a tiny company such as Eftel (FY2009 revenues reported as less
than $A40 million (which happens to be much less than Exetel's 2009
revenues which we think ranks us around 14/15th in Australia) is very
definitely NOT "a top 10 ISP" it is way lower than that and by a
huge margin. So why would they choose to lie about such a self evident
(their own figures) nonsense?

In their figures submitted to the
ASX they had to report their revenue in terms of how it compared to the
previous 12 month period and that shows that Eftel, in what was a
pretty good year for communications companies, reported less than 5%
growth when every other company reported ADSL revenue growths above 15%
with some (like Exetel) closer to 30%.

While every other communications company reported healthy profits - what did Eftel do? It reported a LOSS
of over $A5.7 million on its tiny revenues of less than $A40 million -
a new record low result but, and bear this in mind, there is another
$A20 million of losses yet to be written off as the only way they can show solvency is to carry a huge amount of "good will" which will have to be written off in the near future.

So, if indeed these
are not "facts" they are the statements and figures submitted to the
ASX by Eftel so what are we to make of John Lane's claim that they are
simply "marketing noise"? They aren't my words or figures so it seems
that Eftel is submitting "marketing noise" to the ASX.

Eftel is a
company that has lost money in every year it has been in existence by
pursuing its insane policy of acquiring companies that have already
gone broke or about to go broke. It has borrowed against optimistic
claims (as its own filed balance sheet shows) and it has desperately
tried to borrow enough money over the past few months to stave off the
demands by Huawei and others to pay back what it has borrowed - now
that is supposition but it is supposition based on its own published
figures which shows a chronic discrepancy between its current assets
and its current liabilities....and other germane figures....just look
at the balance sheet and p and l submitted by Eftel to the ASX.

Right
now, at least as far as I can see, NO other ISP is putting up prices
(how could they when so many costs have reduced over the past year and continue to reduce at a faster rate currently?)
and ALL other ISPs (except Bigpond) have increased download allowances
for no increase in end user pricing. ONLY Eftel is putting up prices
(Exetel, for instance, recently reduced most prices on its new plans
using the cost reductions we, and everyone else with half a brain, have
received).

Far from not "quoting facts" I ONLY quoted the 'facts'
published by Eftel. My surmise that they added up to a company in deep
financial trouble with nowhere to go is - surmise - but it is based on
the 'facts' and figures published by Eftel....if they aren't "facts"
then perhaps the ASX should ask for Eftel to resubmit the real
situation?

I have met the two Ehrenfelds and John Lane - in
my opinion they are people without the ability or knowledge of how to
operate a data communications company in this or any other period of
Australian communications history....all they 'know how to do' is to
copy, badly, other people's ideas.....and they also know how to lose
mega money every year while assuring their shareholders at the start of
each year that "this is the year we will make money".

In case
it isn't obvious - I dislike Eftel/aanet and the people associated with
it more than I have ever disliked any other person or group of people
in my life to date.....and with very good reasons.

PS: I see from an email overnight that John Lane is still selectively quoting from and excising my blogs to misrepresent what I say - so the actual full quote of my "apology"  almost two years ago can be found here:

http://johnl.blogs.exetel.com.au/index.php?/archives/2007/12/14.html

That post noted the local newspaper report of the antics of the Eftel board of directors calling each other crooks at a public meeting and the fact that the auditors qualified Eftel's accounts by saying their audit had revealed that the company may not continue in business because of its financial situation.

John Linton

http://www.itnews.com.au/News/158524,aanet-to-raise-adsl1-plan-prices.aspx

and this:

http://www.news.com.au/perthnow/story/0,21598,26229791-5017962,00.html

While anything stated by Eftel seldom even vaguely relates to what could be
called 'truthful' (their successive annual reports are my favourite annual
fiction being prime examples) these two pieces of arrant nonsense (once you try
and sort out what is really being said) tend to illustrate just how difficult
the current ADSL marketplace is at the moment - if not for everyone, then
certainly for the lunatic fringe players like Eftel who persist in thinking the
laws of business can be defied indefinitely.

Eftel/aanet continually make ludicrous claims about their size and
importance while remaining a tiny company (even tinier than Exetel which makes
no bones about how small it is). This typical claim is from the last piece of
Eftel fiction I read in their 2009 annual report presentation:

"Eftel is an Australian Top 10 Internet
Service Provider that has invested $8m over the past 2 years establishing its
Broadband network which through its its
own infrastructure and partnerships has given Eftel the 6th largest
broadband footprint.”

What a total load of cobblers.....and the same piece of fiction announces a
FY2009 revenue of $A38.2 million on which the company managed to lose $A5.7
million after tax. A top 10 ISP? What a joke.

However the two 'announcements' made yesterday, in conjunction with their
desperate attempts to raise money from whatever source is gullible enough to
provide it to stave off imminent bankruptcy over the past few months illustrate
that losing money year after year has to end sometime - no matter what you try
and persuade yourselves will happen in the future.

For ANY ISP of any size to attempt to say that prices are increasing in ISP
land at the moment is a nonsense. Apart from the dramatic falls in IP costs
generally (falling by more than 50% in less than a year) the costs of equipment
have fallen by 40% (courtesy of the $A exchange rate) and the costs of 'cross
connects' has fallen by over 30% while interest rates for those companies that
borrow money (and Eftel is, for its size, a massive borrower) have fallen
dramatically. So, all in all, the costs of running an IP business are much
lower than they have ever been particularly, for the larger ones, if you take
economy of scale of a growing user base in to consideration.

Of course these simple facts only really apply if you are competent enough
to deal with tough and changing marketplaces well enough day to day so that
your business doesn't lose money - which the Eftel/aanet management have never
been able to do in the five or so years I have been aware of their existence.
In the case of Eftel they were also so totally stupid that they borrowed money
to fund a tiny ADSL2 network and have failed to pay for it since the first deferred
payment due date....hence the frantic attempts over the past year to get
'forgiveness' from Huawei and then three attempts to raise more loans to make
some token payments to defer the inevitable for a few months longer. Not the
case? How could I possibly know that?

Well of course I don't know that via indisputable documentation but this is
a small industry in many ways with most companies using the same suppliers and
dealing with the same media and the same ex employees (as they seek new
employment). But, in my case, I also read the industry media fairly
comprehensively as well as the financial press and have good 'sources' within
the industry.

So here are two things that strike me as being contradictory to the Eftel
statements:

1)The announcement of the PAYU ADSL2 offering is a crystal clear indication
that Eftel have got nowhere near the take up of even the lowest level of ADSL2
ports on their vendor financed ADSL2 DSLAMs and are having to 'give away' those
ports to get some semblance of usage. This is in stark contrast to the ADSL2
network suppliers that Exetel deals with who continually run out of ADSL2 ports
and our 'knowledge' of at least two other ADSL2 network suppliers who also
struggle to expand their exchange ports to meet demand.

2) Eftel keeps claiming to be Number 10 in this aspect of business and
Number 8 in some other aspect of business etc so you would have to assume,
unless such statements are total fiction, that there is some semblance of
reality behind, what appear to me, to be simple lies But if in fact such
statements are true then do some simple arithmetic. Like - How many ADSL1
customers would the tenth largest ISP in Australia actually have? Well Exetel
is something like the 14th or 15th largest, by number of customers, ISP in Australia
and it has around 40,000 ADSL1 customers. You'd have to think that Eftel, who
claim to be much larger than 14/15th would have many, many more - a lot more.
So taking the smallest likely number, say 50,000 and multiply it by $6.00 (the
stated amount of the increase) and you get an extra revenue of $A300,000 a
month. Does it really cost that much to add a few support engineers? Exetel
provides 7 day x 16 hour a week support at a total cost (personnel, floor
space, utilities, equipment, network, telephone etc) of $A25,000 a month so it
seems unlikely to me that any company would have to ADD $A300,000 a month to
its already established support operation to add a few extra hours.

Of course any possible reality of Eftel's 'numbers' claims are completely
destroyed by the one number they are forced to disclose - their annual revenue
which clearly shows that they have nothing like the numbers of customers they
claim and never have had.

All that can be interpreted from Eftel's last annual report (apart from the
very low annual revenue and its almost zero growth from the previous year), its
desperate money raising attempts over the last few months, its 'announcement'
that it had deferred some current debt to non-current debt and the nonsensical
announcements yesterday is that it ran out of money some time ago and has to
now turn a monthly profit in a desperate hurry to satisfy its new 'covenants'
or simply close up shop via a fire sale to some predatory competitor....if
anyone is still in the business of buying up failed ISPs.

There is little doubt that raising ADSL1 plan prices on the one hand and
dropping ADSL2 prices on the other hand (though by charging $A100 to connect to
the new plans is an even more obvious give away that they desperately need
money as the cost is far less than that) is an amazing dichotomy that simply
signals blind panic.

Or that's what it looks like to me.

John Linton

......it would be nice to think that someone knew what it was all about.

The international communications media hasn't been very interesting in terms of new developments or trends since I returned to Australia and the local media just regurgitates stale views on the 'NBN2' fiasco and the AFACT court case. If anything else is happening in Australia it is buried beneath endlessly uninformed speculation about those two non-events. The only reality of actually running a small communications business, at least as it applies to us, is that we signed a contract with one of our suppliers late last week to begin the reduction of our 'clear' international IP bandwidth costs by a further 25% which, because of current contract obligations, will take until Q4 2010 to 'flow through' and by that time we would expect that the price will have dropped much further.

We will also install the next level up Akamai cluster later this month/early November in one of the Sydney PoPs which has been delayed while we re-configure our current two Sydney based PoPs into three - using our own 'data centre' in the purchased premises we moved to on June 1st as the third location. Once this has been done we will begin the trial of a new iteration of caching in Sydney to replace the PeerApp P2P caching that we have used up to quite recently in Sydney. Meanwhile additional links and capacities continue to be added to each of the other six PoPs and, if all goes well, we will complete the 'de-centralisation' of the network before the end of calendar 2009 - something we began well over three years ago. All this is quite 'mickey mouse' compared to the network deployments and changes much larger communications companies are involved with but it does tend to remind you that even in 'quiet' times it takes a great deal of time and money just to 'stay where you are'.

The ongoing developments in Sri Lanka are of a similar magnitude in their different ways with the constant acquisition of new personnel (and the unfortunate and reluctant letting go of personnel who didn't work out as expected) and the consequent training and development of new personnel which has resulted in Exetel having as many people in Sri Lanka now as we do in Australia - and the Australian numbers are only as high as they are because of our building a corporate sales force for the first time which now has ten people  - almost one third of our total Australian personnel. While we have a very long way to go to fully develop the Sri Lanka company to the point that we can be totally happy with the scope and ability of the services we provide to Australian customers from that facility we have made significant progress over the past 9 months and there are encouraging signs that progress in the coming months will at least retain the current momentum. I am, personally, happy enough that we have been able to move virtually all of Exetel's "back end" personnel and processes to Colombo within the time frames we originally planned and have now begun to improve on the functions in Sri Lanka to a point where they will become better than the services previously provided from Australia.

I'm not sure that I can remember what I expected Exetel to "be" almost six years after we made the decision to create the current company - I'm not even sure I had intended to be still involved with any commercial enterprise at this stage of my life. The last 5 plus years have passed in the proverbial 'blur' (so fast that I'm still saying "5 years" when we are less than 3 months away from it being "6 years") with so much to do at any given point in time that it is only the financial plans and their constant reporting and updating that keeps any semblance of 'order' in my daily business life. There are almost always so many things that to be done at any second of any day that there really is no time to think much beyond the immediate future except for the time put aside each quarter to try and make more strategic decisions based on the best knowledge and facts you manage to accumulate for those times.

I'm pretty sure that back in December 2003 I personally had no plans to operate a $A60 million a year business with a national data and voice network, operations in two countries (and it went within a 'whisker' of being three countries last month) with over 100,000 customers and all our personal available money invested. These things tend to creep up on you when you are so deeply involved in doing so many different things in so little elapsed time. I am, by no means, suggesting that what we have accomplished with Exetel is any way remarkable - just that it has made life quite different to what I would have expected to be doing now if I had considered that question almost six years ago. Whatever Exetel has achieved is nothing at all in the scheme of things.
To put it in perspective the Labor Federal Government is aiming to build a $A40 billion
communications company in the same time frame of 5 or 6 years (based on capital invested) which is a
sobering reminder of how trivial anything we have done is.

Somehow - I think that life should be better planned than this (both by Exetel's directors and the current Labor Federal Government).

John Linton

.....but not quickly enough.

Actually I am only using the head line of this article rather than the following more detailed explanation because it would be nice if it were true:

http://newteevee.com/2009/10/17/is-p2p-dead-not-so-fast/

I usually manage to get my hands on the Arbor Networks report by now which I read because the trends in the US are reasonably indicative of what happens in Australia and it is useful from that viewpoint. It isn't really relevant to Exetel because of not only the differences in location but the difference in our tiny user demographic compared to an aggregation of a 100 or so ISPs in the USA. Nevertheless the overall analysis will be interesting to see when it becomes available.

The current AFACT/iinet law suit and its subsequent inevitable High Court follow up is currently focussing attention on the major uses of P2P which is the illegal transfer of copyrighted material between thieves. The cost of that ongoing theft to the various copyright holders is quantified in many media sources but I have no knowledge of what the actual figures might be. Whatever the loss is, it is sometimes characterised by being a 'profit' to ISPs who carry the thieves traffic on their networks and because of the volume (40% of all US traffic 2 years ago or whatever figure is suggested by some half way reputable source) which such commentators equate to profitable business for any ISP. I am supposing that such views are based on the simple arithmetic of "if the thieves didn't use 40% of an ISP's bandwidth then the ISP would carry 40% less traffic and therefore would be 40% smaller. I suppose, given the intellectual abilities displayed by the 'supporters of copyright theft' this makes perfect sense to them.

I have done work, in various capacities, for five ISPs over the past 14 years and have some knowledge of the costs incurred in providing an internet service to an end user. Doubtless my knowledge is incomplete and clearly the costs of providing internet services have changed radically over that time frame. However to make an assumption that ANY ISP's profits somehow can be equated to the volume of traffic it carries is not correct in any way. The reality is that if there was no P2P virtually every ISP would be more profitable is simply not the case. While bandwidth (IP and to a lesser extent customer connectivity) is a tiny fraction of the cost of what it was 15 years ago and IP is even now half the cost it was one year ago every other cost of providing an internet service to a P2P user has risen - and in some cases risen quite sharply.

The perfect customer of any ISP is one that never uses the service (and by definition therefore never needs any other aspect of the service which means they never incur any cost to the ISP other than the rental (or internal amortised cost) of the exchange port. Of course such a customer is unlikely to exist in the residential marketplaces though quite a few do in the business marketplaces. However I make the point as the starting place to illustrate that only usage costs the ISP money that isn't a fixed known cost to the business and the variations in usage caused by P2P increase the overall costs of running an ISP business disproportionately to all other types of users - though if the information in the leaked Arbor Network report is correct then youtube may have repaced P2P in that prime position.

The point is that steaming video and its equivalents (including P2P) demand more bandwidth at any point in time on any network than any other protocol - fair enough - that's what happens in any developing technology. However if there was no P2P then for the past 4 - 5 years no ISP would have required the amount of bandwidth they deployed over that time and their costs would have been less.

Now the arguers of more downloads equal more profit because the heavy down loader's plans cost more is a fallacy for at least three reasons but the first one will suffice to make the point. When you see an ISP provide a plan with major amounts of 'peak' downloads they do that by using the 'savings' associated with the plans used by low volume down loaders to 'give' those unused downloads to the heavy down loaders. The most profitable plans for ISPs are low usage plans - the least profitable (and most trouble causing plans) are high included download plans. The math should be obvious but if it isn't take a notional cost of 1 gb of Ip bandwidth and 1 gb of connectivity bandwidth and multiply the peak downloads in any set of ISP ADSL2 plans and make your own decision - the actual costs you select will make no difference.

Depending on the court's eventual rulings on the merits or otherwise of AFACT's case a win for AFACT will significantly benefit all ISPs.

John Linton

......so many more endangered fauna, flora and avia could be saved from extinction.

Annette, Steve and I and a number of other Exetel people attended the Australian Geographic Annual Awards last night at the Sofitel in the Sydney CBD. Exetel contributes to the sponsorship of the conservation awards as part of our program of assisting Australia's 'non-human' inhabitants. I am not a very social person (a long life of dealing with irrational and just plain dislikeable human beings has made me very cautious of who I spend my non-work time with) but yesterday evening was quite exceptionally enjoyable apart from being an exceptionally run 'event in its own right - fresh and flavoursome hors d'oevres, almost drinkable wine, speedy and efficient service and better than just edible food served hot and promptly to all 250 attendees.

I had two highlights, apart from listening to the always enjoyable Sorrel Wilby who was a masterful and erudite MC. The first was to present the "life time award for conversation" to someone who recently celebrated his 100th birthday but spoke in a strong and well articulated voice lucidly and interestingly about a 75 year in protecting and developing the NSW Blue Mountains and other regions of NSW. I had the equally enjoyable pleasure of presenting the 2009 award for the most outstanding contribution to conservation in Australia to the long term organiser and leader of one of the first projects that Exetel directly funds. Ray Thomas sat at our table and it was a privilege to spend time talking to such a dedicated and effective person. Some details about the Regent Honey Eater and of Ray's work over the past fifteen years can be found on Exetel's and the project's web sites:

http://www.exetel.com.au/fauna-regent-honeyeater.php

http://regenthoneyeater.org.au/index.php

The evening was not only highly enjoyable but it was also highly inspirational to listen to the eight award winners briefly talk about what and why they did it preceded by Ms Wilby's informative introduction of each person and why the award had been given often together with slide and/or video footage (I wonder whether that word will ever become centimeterage?). A great note to conclude the 'working week' on.

While Exetel funds a majority of the Regent Honey Eater project's annual budget (and will continue to do so for as long as funding is required and we are able to provide it) the Federal Government cut its contribution by 50% as soon as the ex pop singer became minister for the destruction of the environment (Exetel made up that shortfall at the start of this year) and seems likely to cut it completely at the end of the year as he pursues his policy of "total environment not individual species" nonsense that only a person of his total lack of mental capacity could declaim without then needing to commit ritual suicide for mouthing such cr** in a public place. Exetel has a limited capacity (limited by the small profits it makes and our abilities to encourage more of our customers to financially support various conservation projects) to help people like Ray Thomas but perhaps in winning this award his project will become better known and better supported by his local community in Victoria's North East.

As we drove home I briefly thought about the paucity of what a tiny company like Exetel has been able to do to assist such dedicated people whom we had met and/or listened to over the previous few hours and how much more could be done if more commercial entities donated a tiny amount of their annual profits to people in local communities who work tirelessly to protect or rescue Australia's unique species from extinction. It's a far more worthwhile way of spending any person's time than simply trying to make more money for themselves and their shareholders - but then I don't aspire to a PA, large office, more expensive car, executive jet or the rest of the meaningless trappings of corporate life - any one of those toys would save any number of unique species from oblivion.

Anything anyone can do to persuade their employer to donate funds to real people in their local communities who have viable conservation projects would make a difference - if a lot of people did it - it would make a huge difference.....and a huge difference definitely has to be made.