John Linton
I just finished responding to a long email from one of Exetel's long term, but not very large suppliers with whom we have had some discussions regarding a new hardware device that, at least until quite recently, we had been interested in acquiring and have spent some considerable time investigating over the past year. The email exchange had started when I politely advised him that we were no longer interested in the device as the circumstances under which we had contemplated purchasing had changed dramatically in the time that I had been away. He was 'annoyed' about wasting his time and pressed me for a better explanation than the "thank you for your time but no thanks" email I had sent.
I sent a 'fuller' explanation that effectively said that the marketplaces in which we had planned to operate had changed over the time we had been trying to source the device and that the current 'climate' in the residential data market was going to become increasingly difficult over the coming twelve months with more and more people attempting to use HSPA revenues to attempt to keep their sagging wire line revenues from becoming too much of a problem to their growth objectives. We believed that this, together with the uncertainties of the Labor Governments actual actions was not a time to be gambling with large expenditures on untried hardware.
We exchanged emails on the HSPA market generally and his company's plans for various new hardware devices and I explained my thoughts on how HSPA offerings had changed and my views on how they would change over the coming months especially in late November of this year. My view is that I no longer believed that Exetel could sell the volumes of HSPA servces we had planned and therefore we couldn't risk any further significant investments in 'novel' HSPA hardware as we had done with the very low cost long distance aerial.
My other view is simply that a tiny company like Exetel cannot compete in any discount residential market like HSPA and has therefore had to change its previous plans to accept the realities of the current situation. I suppose our poor planning was based on an assumption that HSPA would follow the ADSL 'model' in terms of customer appeal but its clear that the same scummy tactics used to sell mobile telephones are predominantly the way that HSPA is being offered by the less ethical of the HSPA providers.
If you have any doubts about the new lows in ethical marketing (though that is probably an oxymoron) that are being reached a glance at page 17 of today's Sydney Sun-Herald will dispel such a view. Some samples:
"Consumers are making up to 350 complaints a day to the TIO about the high cost of owning new generation phones for what is known as "bill shock"
"Sam had a $49.00 capped plan and his first two bills were for $7,102 and $3766 respectively"
"Mrs C used global roaming while in India for 3 months, she checked her internet usage regularly as advised by her provider but the charges weren't updated - after 3 months she had run up a bill of $4,500."
"My daughter said she just used her phone to update her entry on Facebook on the way home but here I have a bill for $700."
It seems we have returned to the bad old days of 2002 when people on Telstra's then brand new ADSL service with its super low included download allowances and its gigantic excess charges were in the headlines for getting multi-thousand dollar monthly ADSL bills. (Annette reminded me when she pointed out that article that we had got a thousand dollar plus bill in those days when we used Telstra's ADSL because of our children's downloads). But it's not going to go away and the reality is it's going to get worse as the fight to retain revenues becomes harder. My view is that the truly scummy operatives in the market, fully supported by the carrirs wholeslae account managers will destroy any semblance of 'ethical' marketing of HSPA services. There appears to be no place for a tiny company like Exxetel in this scenario.
Although the first three months of this financial year (subject to seeing the final profit calculations for September) have been on target for Exetel, and in several areas well above each of the monthly targets we set back in June, I feel some very 'chill winds' blowing that make me think that our business plans need to be reviewed very carefully and revised downwards in terms of growth targets in several areas - not just in HSPA projections. In making that statement I'm not being pointlessly pessimistic I am merely looking at the facts as I can find them and then try to make intelligent decisions based on what seems to be the case.
It seems to me that there is no/little place for a tiny/small company in residential data markets any more - the advantages of in depth knowledge and therefore the skills to make things happen better than the larger companies have reached the end of the road and are being overwhelmed by the sheer weight of marketing give aways and other money based methodologies. No big deal - that has always been the way of commerce in 'mass markets'. Our issue is to 'protect' what we have worked so hard to develop over the past few years and find a way past the problems that change always creates. Again, nothing new in having to do that - just sometimes you would like a less complex scenario to deal with.
The person I was corresponding with this morning also advised me to stop writing this blog.....he said it gave too much information to people who shouldn't have the benefit of it.