Wednesday, December 16. 2009So - Once Again - It's "Back To The Future"........John Linton ......... and I have to repeat the same quote as I did the other day .....the more things change etc. It's board meeting day today - obviously the last for 2009 and it's a reminder to me of just how 'regulated' your life becomes when you become 'immersed' in running a small company. 'Billing', 'Board Meeting'. 'Plan Review', 'Product Review x 10' "days" become permanent calendar entries each month and you try and fit everything else in your life around those activities. There are also the permanent daily review event schedule that starts with a two hour 'review' of the world technical press and the RSS feeds from favourite commentators and writing this musing before you get around to driving in to the office. Developing a new business has always involved a fairly 'punishing' daily, weekly and monthly regimen and in very 'dynamic' times it seems that there is very little time available to anything very creative - though perhaps that's simply a sign that I have less mental capacity than in the past. One of the issues that continues to present a problem in these more interesting times is the pricing offers of our major carrier suppliers (Telstra and Optus). We have had no problems with AAPT/Powertel yet though their unlimited 12 hour innovation on ADSL2 was something that is difficult to deal with. Of course there is no way for a company of Exetel's size to deal with Telstra's marketing practices and their recent changes to their ADSL1 and ADSL2 pricing for retail customers was simply something that monopolies do - live with it or do something else. I was annoyed by Optus reducing their wireless broadband end user entry pricing to below the wholesale pricing they provide to us but then, again, all you can do is shrug your metaphorical if not your actual shoulders and move on. Perhaps we have grown mentally lazy over the past few years as it had become easier for us to avoid making a loss in our small business and will have to go back to the old disciplines of finding ways to stay in business on the slimmest of margins while our suppliers try and recover from their stupidities of the past two years. When all is said and done it simply illustrates that there never can be any period of 'easy living' for a small company and that you will always have to face up to the fact that larger companies, particularly suppliers who operate wholesale and retail operations, are always capable of pricing you out of the market whenever they need a pay rise for their executives. Times are clearly much tougher for our large suppliers than they have become accustomed to - presumably their 'planners' didn't realise that the ADSL market had a finite limit and that wireless broadband would become as competitive as mobile telephony - either that or the planners they do have are so stupid and uninformed that you might as well have none. In a week or so Exetel will have been in business as a data communications services supplier for 6 years....and we find ourselves facing the same supplier pricing uncertainty and ambivalent supplier attitudes as we did back in January 2004. We are a far stronger company than we were six years ago and we have the twin 'protections' of no desire to make much profit and far better operating efficiencies across every aspect of our business that six years of constant process automation development will deliver to any organisation with strong enough management to insist there are no barriers to its creation - our systems are so much better than each one of our providers (who are our major competitors) that there simply is no comparison. Having said that we have only survived the slings and arrows of outrageous suppliers because we have been prepared to sell at little or no profit across our whole range of services for considerable amounts of time. Balancing the losses on some products/services with the slim margins on other services has been a constant 'tight rope act' for almost all of the time we have been in business with the exception of the last 12 - 18 months. Our other 'protection' is that we are no longer dependent on residential ADSL for 100% of our revenue (and small profits) as we were back in early 2004. While still in the very early stages of development (although I suppose it has taken five years) our business data link revenues are growing very quickly month on month and we are starting to see the 'returns' from our business VoIP offerings start to make a meaningful contribution to total monthly revenue. In many ways Exetel is a very different company than we once were and it will be a challenge but we will make the transformation from a supplier to mainly residential users to a supplier mainly to business users in the not too distant future without the need to put undue emphasis on growing our number of residential users beyond 100,000 or so to balance the use of the bandwidth utilisation and therefore ensure the cost of IP is kept to the lowest possible $/mbps ratio. It seemed to me as I, very reluctantly, reduced the price of our entry level wireless broadband service to 'break even' late last night that we were going to have to re-run Exetel's first 4 years all over again...but I was very tired then and, at least for me, dispirited at the thought of wasting so many years of my life dealing with people and issues that produced so little in return. As always, the dawn brings a different and brighter perspective and we will have to find ways to change Exetel to deal with the current issues and then move to more sensible business parameters. I guess today's board meeting will be a place to begin that process....yet again.
Tuesday, December 15. 2009The Problem With Networks.......John Linton ....is they never stop needing to grow; even 'small' networks. We have one of our US hardware suppliers in Sydney this week to install the new, much larger, version of the caching engines we have been using for over two years now - not because we aren't competent to install large disk arrays ourselves but because the new software is very different to the versions we have been using and all engineers, no matter how experienced and competent always benefit from significant time spent with a supplier's engineers. Hopefully the new hardware and software will be installed by Christmas and we will be able to more accurately gauge what difference it makes to the speed and capacity of the Sydney switching centres. Currently the switching capability in Sydney is around 4 gigabits/second (over 3 gbps direct and another 1 gbps split between Akamai and local peering) and we are hoping the new caching will increase, in raw terms from the current approximately 80 kbps per user to around an average of 100 kbps per NSW user if the new caching engines meet their targets. Back when we started in January 2004 we were deploying approximately 25 kbps per user so the increase is likely to be around 4 times greater than that original capacity. We will continue to refine the new ADSL1, ADSL2 and Wireless broadband offerings for January 1st and Steve and I discussed how to complete the offerings yesterday in two discussions (one in the office and one in the 'privacy' of a local restaurant). Exetel remains a very small company but we have gradually built up a quite large network capability and over the last two years we have slowly changed the topology of the network from a 'star' to a 'fully de-centralised' topology with a much larger 'per user' bandwidth and routing power capability than we originally thought we could possibly afford some six years ago. If the new caches prove effective then we will deploy them in Brisbane and Melbourne and smaller versions in the other four locations over the first few months of 2010 lifting the capacity of the Australia wide network to close to 8 gbps by the end of June 2010...a fairly large growth from the 20 mbps we deployed when we activated our first broadband customer in mid February 2004. So our meetings yesterday were to make some 'final' decisions on whether we were now in a position to move to 'unlimited' plans for those of our customers who may be interested in such offerings so that we could simplify our 'options' to one 'light user' plan and one 'family user' option per ADSL1 speed and per ADSL2 option type (Including phone rental, phone with another supplier and no phone/naked). It is a very hard call especially in the current 'turbulent' pricing times we expect to see from now through the end of this financial year. We decided to wait to see what the actual results of the trial were going to deliver but if they were within our expectations then there would be no reason not to offer a 'family' unlimited plan to our current users who fitted the 'family usage' profile....whatever that is when we get around to defining it. I have little doubt that many ISPs already use various versions of caching to improve their cost of delivering data and already make the savings that are capable of being achieved. Some do it seamlessly so it is never noticed but there have been more than a few occasions in the past where a surprising number of ISPs have 'bungled' the implementation and negatively affected their customers. We don't see caching as being a major contributor to our 'bandwidth mix' but if it can add to the current Akamai and local peering then it does change the overall cost of providing the end user service by around 12 - 15% which is a very big saving. Anyway - based on our previous experiments (which we ended some months ago) we expect the new, improved versions to mke a significant impact on both speed and cost. So, assuming that the new caching will deliver another gigabit or so of 'bandwidth' at a cost of something like $A30.00 per mbps and we can continue to spread customer usage across the full 24 hours as we have now been able to do for over 12 months we believe that it is possible to provide 'family' users with unlimited download plans which would be something that we would see as being appealing to the family 'market place. If we are able to continue to drive down the cost of 'IP' to the levels we believe are possible over the coming year then we will be able to deliver an 'unlimited' ADSL broadband service at a relatively very low cost - to family type users. A lot of ifs at the moment but we will replace the 'ifs' with actual figures once we test out the new caching and get a confirmation quote on lower cost 'direct' IP from more than one supplier. I think the pricing 'turmoil' in wire line broad band pricing will continue throughout the coming months as those ISPs whose 'market share' is being eroded by the actions of Telstra and other more aggressive providers re-act with their 'reactions' and so the 'circle of death' will continue - whether it stops at a sensible point will remain to be seen. Monday, December 14. 2009Wireless Broadband Continues To Gain 'Appeal'John Linton Having spent some time over the weekend looking at ADSL and wireless broadband prices it seems to be pretty much as any one with half a brain would have expected it to be at this time. I won't repeat my previous comments as to why the ADSL marketplace will continue to become a blood bath as the various contenders try and make their FY2010 projections/business plans 'come true' - which at least the majority of them will fail to do. It will be interesting to see what happens in the balance of December as the true awfulness of the current repositionings by Telstra and TPG pan out but it is all pretty predictable and a bit scary in some ways......bearing in mind all this is going on before any attempt by the 'gubmant' to try and convince the population that the 'NBN2' is actually going to be built in any meaningful way. I had turned my attention for an hour or so to re-vamping our wireless broadband offerings which are more important in 2010 to us than they were in 2009 and, I think, will be more important to Telstra, Optus and Vodafone over the coming months than they have been to date. I have kept my own records of how wireless broadband prices have fallen since their introduction which don't quite tie up with the ones published over the weekend here: http://www.itwire.com/content/view/30007/127/ in which it makes this assessment: "In the three years Venture Consulting has collected data the cost per Now, ignoring all the recent changes to the ADSL $A50 per month price point offerings, (with over 100 gb of downloads now becoming "standard", it needs to be remembered that the vast majority of broadband users (of all types) actually prefer to pay around $A30 a month and use less than 2 gigabytes of downloads a month with over 40% using less than 1 gigabyte a month. (a telling example in our small world is that the average usage of our wireless service is just on 1 gigabyte of downloads plus uploads per month). The reality, as far as I can determine after being involved with residential ADSL for almost nine years is that the overwhelming majority of broadband users simply don't download the mega quantities that constantly get the 'headlines'. To put it in perspective TPG has been offering internet services since 1996 (over 13 years) and after that time has accumulated a user base via its own efforts of around 400,000 customers - a not inconsiderable effort and a great commercial success albeit with a 'market share of around 5% of the total broadband market - and almost all of that market share at the highest end usage level - and all of its high speed 'growth coming in the past three or four years. Compared to: The growth of wireless broadband that has grown from no customers to over 2,500,000 customers over the past three years and, subject to the next ABS report which will be gathering statistics this week for publication in February 2010, looks like it will be over 3,000,000 users with a continuing steep growth curve. I'm only using those figures to compare how much faster the 'lower end' of the broadband market is growing compared to the higher end - and before you dismiss the wireless growth as being additional usage to ADSL in the same homes let me tell you that, as far as Exetel's customers are concerned that is not the case. Undoubtedly there are customers with both a wire line and a wireless service but, at this moment, they are the minority and although that may well change in the future it isn't relevant to today's scenario - it will only make tomorrow's scenario worse. I have no way of knowing how the various markets will actually grow but it seems inevitable that wireless broad per gb prices will continue to fall over time and deliverability will continue to increase in speed over time. So, Telstra's recent announcement was that it 'had seen the light' and now considered 2 gigabytes as a low end user requirement (up from its stupid 200 megabytes it has clung to for so many years). I believe that is correct - something over 60% of all ADSL users never download more than 2 gbytes in a month. Which is not good news for ADSL, where the cost of bandwidth is now less than 50 cents a gigabyte but it is good news for wireless where 'bandwidth' is much more expensive and makes a wireless offering for 'low end' users a better financial deal and if they are brave enough to use VoIP for their telephone services it brings wireless broadband to an unassailable financial advantage.....removing the need for the telephone line rental and the still very high wire line telephone call charges. So after the hour or so I had spent re-checking the various wireless broadband offerings I had gained a fairly sensible view of just how much progress wireless had made over the past year in becoming more financially attractive than ADSL1 and at a lower price (without using VoIP) and how immensely more attractive it is going to become in the first half of 2010 - if not from Exetel then from some other providers. Generally wireless broadband will suit a growing demographic's needs for broadband far better than the current wire line offerings and much faster than the wire line broadband suppliers apparently think. Sunday, December 13. 2009TPG Must Be The Poster 'Putter Upper's' Santa Claus.....John Linton ....over the past three months they have plastered the back of every bus and goodness knows how many billboards around Sydney with their constantly changing ADSL2 offers: September - 80 gb (40 + 40) November - 100gb (50 + 50) and now less than a month later I guess they are going to have to change them all again to 120 gb (60 +60)..... and I assume the same happens in the other cities around Australia. It could show that TPG hasn't got a clue as to what is happening in the ADSL marketplace (no-one would believe that a carefully planned quarter would result in three such changes, and such large changes, in three months). But it would be unreasonable to single out TPG as making ad hoc pricing decisions 'on the run'. As anyone with any knowledge of the ADSL marketplace could see as long ago as February this year (and still can see) the 'saturation' of the ADSL marketplace itself, the inroads at the lower end of wireless broadband, the 'unlimited' initiatives of AAPT and now the change in pricing by Telstra have all contributed to a plan re-positioning frenzy caused by only one thing - sales have either stagnated or fallen and look like falling further. I claim no particular knowledge of these marketplaces - the apochryphal "blind Freddy" could see what was happening for the last eighteen months and particularly the last 12 months. While it's true we do keep a, literally, minute by minute, watch on what happens in every part of our business I have little doubt that other companies use more expensive methods than we do to do similar analyses of what is changing in their results versus their business plans. However - perhaps they don't. I suppose it's possible that several of the ISPs that have made a series of 'knee jerk' changes to their pricing and plan structures over the past six months have been so used to the ADSL market increasing month on month since 2001 that they have lost sight of the fact that EVERY product reaches a market saturation point and every MARKET reaches a point where there are too many providers of products that are too similar. A fact that every offeror of ADSL services is going to have to deal with is that it may well be the time in the life cycle of ADSL when it has reached its zenith and it will never get any bigger than it is today. All of the larger ISPs used to provide dial up internet services and they would be able to track, from their own direct experience, just how quickly a service that showed no signs of anything but steep, continuing growth suddenly stopped growing and then plunged to effectively zero in a very short space of time. While ADSL hasn't reached it 'plunge point' right now, it may well have reached its zenith and that means that for any ISP to retain any semblance of growth that growth has to come at the expense of a competitor and, almost certainly, at the expense of their own 'bottom line'. As I said way back in February when I first wrote about this - good news for the customer - not so good news for those ISPs relying on significant growth. TPG's latest move which represents, at least in marketing terms, offering 50% more than it did 2 months ago (via two changes of offer in that time) for the same end user price tells the vaguely aware observer that: 1)TPG's costs didn't suddenly go down, three times, and being the noted philanthropists they are they decided to pass on those benefits to their customers 2) TPG would only have 'reduced' its prices because it had to - not because it wanted to. 3) TPG's cost structures can absorb some portion of the increased offering but not entirely and not if they are 'forced' to continue to match the ongoing reduction in prices of their main competitors. Of course, the same holds true for all of TPG's competitors. I have been carefully watching Exetel's daily sales results over the past 6 weeks to see what trends I can see in our own figures and I see nothing that would have caused us to increase our offerings by 50% to our customers - they were/are sufficient to run at a lower churn away rate than for October and have shown an almost 20% increase over November 2008 with December maintaining that growth percentage so far. So clearly Telstra and TPG have both seen things that have caused them to make major changes to their pricing per gb supplied 'models' and in TPG's case they have made three changes in a short space of time to maintain the amount of growth superiority they have enjoyed over their competitors. I wonder if they will make the move to 24 x 7 unlimited access prior to the completion of their Pipe acquisition? Something the 'NBN2' "research (and I use that word lightly) has 'thrown up' is going to be a barrier to doing that though. Although TPG has quite rightly established $A50.00 a month as a good price point for some market sectors it is still $A10.00 to $A15.00 too high for the vast majority of the market and an ongoing strategy based around that price point may be problematic. I wouldn't know but my view is that below $A40.00 is likely to be a much safer price point in 2010 than $A50.00 is going to be. I don't think it's going to pleasant to be an ISP that is locked into delivering high ADSL customer growth in 2010. Saturday, December 12. 2009Before The Devil Knows You're Dead.......John Linton ........the lawyers will be offering you their advice on how to alleviate your eternal damnation. One of our employees received this via email yesterday afternoon: "John Fairbairn (Partner) and Timothy Webb (Senior Associate) from Clayton Utz who represented the IIA at the iiNet trial will be holding a briefing for ISPs on the issues raised in the case and lessons for Australian ISPs. They will discuss the key facts behind the case, the Applicants' allegations and iiNet's defences, the position taken by the IIA andJustice Cowdroy's judgment, the likely path going forward, and the implications of the case for Australian ISPs. It will be a highly informative, topical and interactive discussion.This exclusive briefing is essential for ISPs in managing their responses to rights holders. Date: Thursday 17 December Time 5.00pm - 7.00pm (presentation commences 5.30pm) Venue: Clayton Utz, Level 34, 1 O'Connell St, Sydney,
Apart from the oddity of commercial lawyers apparently seeking to provide "free advice" and the strangeness of lawyers actually still working on an evening a week before Christmas there is quite a bit to speculate about in receiving such an invitation. Unless it has completely escaped my attention, Justice Cowdroy has not made his decision on the litigation itself so I am assuming the reference to "Justice Cowdroy's decision" means the lawyer's view of why the judge ruled the IIA irrelevant to the court action.....so I'm not at all sure what that part of the 'briefing' might mean. Obviously I don't have any idea of to whom this email invitation has been sent and I would have thought that the bulk of ISPs most likely to be interested in 'free' legal advice on copyright issues are not in Sydney so the location also puzzles me a little. I have zero legal knowledge (we like all small commercial enterprises rely on outside law firms to protect our interests and advise us when the need arises) so I can't begin to speculate on what this strange invitation means (I wonder if they sent it to iinet?). However it would be 'safish' to assume that would be part of a strategy by AFACT/their lawyers to use the current hiatus to further their interests in some ways that are beneficial to their client rather than as a 'spirit of the festive season' good will gesture to provide expensive 'expert' legal advise to their client's "enemies" - unless you really do believe in Santa Claus. I will get some advice as to whether anyone from Exetel will attend this 'event' from our legal advisers who handled our responses to the AFACT demands that ended up with iinet's embarrassing performance and their multi-million dollar legal bill (so far). I think, personally, that Exetel should not, in any way, involve itself with the IIA's tainted views as expressed by their cat's paw iinet and embarrass ourselves by appearing to be as stupid as iinet has been. In general terms (backed by what we believe to be competent legal advice) we have always held the view that it is possible to act legally and ethically in dealing with AFACT's or other "rights holders" requirement and to do what iinet did (at the IIA's behest) was just plain stupid. We have no intention of being drawn into a childish 'gathering together ' in mutual protection from the 'boogey man'. My guess is that iinet/IIA lawyers have reached the view that AFACT are going to win their current case and iinet is screwed and, irrespective of any appeal, the whole ongoing scenario is going to be unpleasant and these parties want company on their personal Ship Of Fools.
Friday, December 11. 2009A Pleasant Surprise In The Fax Machine This MorningJohn Linton Exetel has its monthly management accounts produced by an outside accounting firm for prudential and other security reasons. They, being accountants still use print and fax for providing these documents and they inevitably send through the monthly figures in the early hours of the morning - perhaps they subcontract the work to their families back in Eastern Europe? Anyway we received November's accounts today in readiness for the December board meeting to be held on Saturday and when Annette scanned them she said "what a pleasant surprise" before letting me see them. It was indeed a pleasant surprise as they showed the largest monthly profit, by far, since we have been in business although we reduced the prices in November of over half our plan prices (ADSL, SHDSL and Ethernet) - some quite significantly. So a very bright glow surrounded breakfast this morning adding to the already bright and sunny Sydney day. One month's profit is pleasant but means nothing in terms of the full year's operation but having had a record, by far, profit result in the first quarter of this financial year (and November's month profit exceeded that three month profit) it is very encouraging as we have reduced many of our prices three times since July 1st....the third round of reductions coming over the last few days so they are not reflected in the November figures of course. It has never been our intention to aim at making as much profit as possible (at least that's one thing we have been consistently good at since we commenced operations!) as such an objective doesn't figure in our reasons for 'creating' Exetel in the first place - so it's a 'disappointment' in terms of financial planning but it's good for our other objective of increasing our support to endangered species in Australia. We finished all of the work on adding new high end plans to the ADSL2 offerings earlier this week and completed the adding of higher end ADSL1 plans and revising the 'positioning' of the lower scale ADSL1 plans late last night. We will look at what we do with 8192/384 plans today and over the weekend but I am concerned about the performance of an increasing number of those plans in terms of speeds which, according to an increasing number of Exetel users of those speeds report a constant decrease in the top speeds achieved from over 6 mbps to a claimed 1.5 mbps - it's anecdotal but the number of complaints have increased significantly over the past three months. Personally I don't want to introduce 8192/384 plans with high downloads and then find the typical users of those plans 'barraging' us with complaints about speed issues so I am very, very hesitant about doing that until the full effects of Telstra's latest ADSL1 strategy to re-dominate the ADSL1 and ADSL2 market plays out - it has to have some effects and they look like they could be significant if Telstra is successful. We have also done most of the work on the revised business and corporate wireless broadband plans which I think are really sensible in terms of both the pricing and the administration and control features we offer and have taken a lot of care in developing for both the customer's engineers, operations and accounting personnel. We have begun to provide our business and corporate customers with some of the automated controls and reporting that we have developed over the past 6 years which have been so effective and efficient for us. Depending on the early customers reactions (and suggestions for improvement) we will rapidly increase the facilities we offer to increase the differentiation between the services we offer and those of the companies with which we compete. Over the first six months of 2010 we aim to integrate many of our 'unique' automated processes into the various business offerings we have been slowly building for more than five years not only as a differentiator but to ensure future initiatives are better protected from being 'interfered with' in the ways that ruined at least two of our 'initiatives this year. So a bright start to an already bright day and after completing some more pricing analysis its off to the Exetel Christmas party for cocktails, magic, fortune telling, caricaturing and top class 'finger food' and then an hour or so of craps and then roulette to lose anything I may have made from playing craps thus quickly spending my 'Christmas Bonus'.
Thursday, December 10. 2009Exetel - Saviour Du Jour?.........John Linton ....at least based on the increasing number of offers we receive to 'take over' or 'buy out' very, very small data communications companies that would seem to be the case. Over the past 4 or 5 weeks the number of direct approaches and approaches that have been made to us by the owners or agents of very, very small companies enquiring about our interest in buying/acquiring their operations has reached the highest level I can remember, more than double figures, after being very 'quiet' for many months. Perhaps it's near the end of the year and people are looking at the current year and deciding they'd prefer not to go through that again - there are clearer signs of that in the UK and especially the USA as can be seen from this article: http://online.wsj.com/article/SB125978866772073393.html which seems to indicate that the data communications business will be worse next year for small companies than it has been in the past 18 months. Exetel will never have the money to buy any other company as our basic premise when we set up the company was that we will not ever buy anything unless we had cash in the bank to pay for it and that if we couldn't grow the company to whatever size we planned then we had clearly failed in making our services attractive enough to do that and therefore it wasn't a sensible aspiration to continue to hold. In the case of the approaches we have had over the past month it's a very easy decision to make as the 'offers' are for companies in serious financial trouble which we can definitely do without. For such companies, or their agents, to even consider approaching a small company like Exetel as a potential buyer seems to be an indication of their desperation - we are in absolutely no financial state to be in the 'saviour' of failed commercial ventures business. We have been reviewing our business and financial plans for the Australian company over the last few days as we do at this time every year having completed the Sri Lankan company review in late November. When we constructed the business plan for this financial year we expected that the ADSL1 and ADSL2 markets would turn out to be more 'viciously competitive' than it had been at any time in the past because of the 'saturation' in demand for those services. That has been pretty much how it has turned out and the current spate of plan 'improvements' sparked by AAPT's initiatives and now Telstra's attempts to protect its eroding customer base together with TPG's need to continue growing to meet its public forecasts. We have managed to deal, very well as it turned out, with handling the first six months of that problematic situation for which I think we can count ourselves very fortunate - having a record first quarter was a surprising bonus but it has significantly tightened since then as 'reality' has sunk in resulting in the changes in plans made by so many ISPs since October 1st. We have failed so far to generate the revenue we planned from our investments in promoting wireless broadband (entirely my fault for being so stupid) and our ADSL new orders have begun to slow though the churn away rate which had been climbing in the first four months has fallen significantly since November 1st. We had spectacular growth in our business Ethernet sales in October and November which helped keep the overall growth of the company on track so far this quarter and we will try and maintain that level of 'over achievement' for that part of our business over the "Christmas Break" and then build it to double in the new year and then double again. Of all the 'opportunities' we currently see the business markets seem to us to be the most likely to produce the best 'return for effort'. Of course most aspects of providing data communications services to both residential and business marketplaces are quite volatile at the moment and there is no way for us, with our extremely limited 'research resources', to really fully understand what is currently happening let alone what will happen over the coming months. We will complete the revisions of the ADSL1 plans later today or tomorrow and that will be the end of ADSL plan changes until late in the first quarter next year as we have already put in place the bulk of the changes we had planned to make and reduced end user costs quite substantially. We will try and solve our wireless broadband and wire line broadband pricing issues with Optus but I hold out little hope of doing that in any reasonable time frame (the last 'offer' we had from Optus was to INCREASE our ADSL2 buying price!) and will have to 'dust off' our Plan B and see if it still makes sense after all this time. It will be an interesting couple of weeks and I can genuinely say I really have no idea as to what changes we will make to the second six months of the FY2010 business plan which will be a first in the coming up to six years of Exetel's existence.....in the past I seemed to have a much better idea of what was going on than I do now. Wednesday, December 9. 2009Telstra Still Determines The "Me Tooism" In ADSL PricingJohn Linton For those who aren't familiar with the old term - "Umbrella Pricing" refers to setting a product's (or service's) price using the dominant supplier's pricing and discount from it. Such a pricing policy allows ease of setting because the 'copyist' doesn't have to do any thinking for themselves in terms of what to offer or how to price it - "what they do less 10%". The latest typical example of this was the pricing announced by Internode yesterday which is as unimaginative an example as could be found. It has been a part of 'competitive marketplaces' for at least as long as I have been aware of commercial pricing strategies and, presumably, will continue to be around for the foreseeable future. You can expect iinet to trot out the same examples of "new" umbrella pricing over the next day or so and, doubtless, Optus will do the same - the imagination bereftness of these companies continues to be mind numbing. Based on a phone call I received yesterday evening - Telstra has begun a new marketing campaign to sell its "new" ADSL plans to its data base of other ISP users but it seems to be as unimaginatively based as the previous scripts given to the ultra-stupid telephone canvassers as previous campaigns. I tried to tell the caller that my current ISP already offered me much lower prices for more downloads on ADSL2 than he was offering on the "new" Telstra plan only to be told there was no such plan offered by Exetel and that I should read the ts and cs more closely. I said I ran Exetel and presumably as someone who had set the plan I might know more than he did about its basic offering at which time the line went dead. However presumably Telstra will now call every non-BigPond ADSL user and via the sort of inaccurate statements made to me will "persuade" some of the dumber people to change suppliers - otherwise why else would they do it? Just goes to show that PTB's advice to hucksters to "never give a sucker an even break" is alive and well a hundred years later. When we modified our own ADSL plan pricing starting in October we reduced our pricing and increased the various download options and the "new" Telstra pricing, and the "new" Internode umbrella discounts from Telstra's pricing are still far higher for less than Exetel's "old" pricing but as I mentioned previously we will look at 100 and 200 'anytime' plans as well as what else can be done over the next few days. Bandwidth prices continue to fall and caching solutions continue to become more effective as our user base grows. Akamai and peering now regularly delivers a growing percentage of IP traffic with the new PeerApp boxes due to be commissioned over the coming weeks which are expected to double the current caching traffic and therefore reduce the cost of IP further in the new calendar year. It fascinated me to read these comments in Internode's 'announcement' of new pricing, at least as they were reported here: http://www.itnews.com.au/News/162361,internode-lifts-lid-on-wholesale-internet-costs.aspx In the first instance the statements of "$200 per mbps" to deliver internet via Telstra versus "$110 to deliver it over ADSL2 via Internode" makes no sense whatsoever for anyone in the industry that knows what Telstra Wholesale charge for ADSL1 and ADSL2 back haul. I'm sure that Internode don't pay Telstra any more for ADSL back haul circuits than Exetel does, almost certainly less, and I know, for an absolute fact, that it isn't $A90.00 per mbps and I would also know, for an absolute fact, that Internode's ADSL2 back hauls don't cost zero. So not a very credible statement ipso facto. Then again, what public statement reported in the press is ever anywhere close to reality? Maybe the reporter misunderstood what was being said? I was also fascinated by the statement that Internode buys Optus HSPA connectivity at "$A3,100 per mbps". That would mean that Optus are charging Internode a lot less than they are charging Exetel for HSPA connectivity and provides us with a very useful publicly stated fact to approach Optus with as it seems to me that Optus have outrageously lied to us about the pricing they have provided to us and obviously will now have to provide us with some massive credits and reduced pricing going forward. Then again perhaps I am using the wrong arithmetic. However it does seem odd to me that Internode, based on the published figures, seem to be charged much more by Telstra and much less by Optus than we are being charged for the same services. I somehow doubt that can be the case - but then I seem to be wrong more often than I am right these days. We'll complete adding the additional ADSL2 plans to the web site today and do the ADSL1 plans tomorrow and also complete the business wireless broadband website and pricing by the weekend. Oh well, as some French writer whose name I can't be bothered to look up once said: "Plus ca change, plus c'est la meme chose"
Tuesday, December 8. 2009It Appears To Be Slowly Dawning On Krudd And Co........John Linton ......that you can make yourself popular making promises but it's a lot harder to deliver them. I have lost count of the 'back of a bus ticket' election winning "promises" made by this particular bunch of politicians that have subsequently disappeared but it is clear that Krudd's lying strategy is beginning to become obvious to even the dumbest of people. His emissions trading nonsense was the latest of his lies to the Australian voters that got 'disappeared' last week which was his greatest piece of grandstanding con to date. The sheer stupidity of locking Australia into a gigantically expensive tax a few days before the rest of the world will decide to do nothing was monumentally ridiculous and was, without a question of a doubt, simply one more ego trip for that vacuous fool. If he really believed it was anything but grandstanding there would now be a double dissolution. As it is, Australia can make a decision at the end of the next two weeks based on what the rest of the major countries in the Western world decide. Even a five year old knows that whatever unilateral decision Australia made would not change any aspect of the global climate at all - it would have damaged Australia's industries and Australia's citizens to an unknown extent and, certainly, we would all have been poorer. So he dodged a bullet courtesy of a set of odd circumstances not of his making. One bullet he won't be able to dodge and the 'cylinder' is moving under the trigger pressure of his own finger is his back of half a bus ticket lie he whipped up for an 'NBN2' which was done to cover up his ludicrous election lie of an 'NBN1" after it was shown to be total nonsense. Apart from the growing amount of media comment that an 'NBN2' simply cannot be built the media, in the way of their kind, is beginning to receive Krudd's spin spivs 'informationals' that suggest that the Federal government will make the ludicrous costs now becoming more obvious of actually building a new Australia wide fibre network acceptable to end users by "subsidising" the costs of monthly usage. Well......words would have failed me but Krudd has introduced such a new standard for lying every time he opens his mouth that you can never be surprised by what he says. Doubtless he will announce an apology to someone or other before Christmas if he is in Australia long enough to attend such a meeting. Krudd's current 'NBN2' problem, totally of his own lying making, is that he keeps slipping his promised start date for the "Tasmanian NBN" that he tried to cover up the lies he insisted were true by its "announcement" made with the original 'NBN2' lie. Now he PROMISED that the 'NBN2' in Tasmania would be live well before he needs to go to an election. Now if he tried to actually do that he would have to also say that the cost of even the tiny Tasmanian 'NBN2' was so incredibly expensive that 'the government' will have to subsidise monthly costs by at least 50% otherwise no-one would buy it. While he will construct a new house of cards of outrageous lies along the lines of "the small size/hasty build/Tasmanian errors in planning etc" have driven the costs out of proportion he will in fact be forced to call a double dissolution a month or so before it becomes obvious to more than just me that the 'NBN2' can never be afforded but look at what those Liberals are doing to the environment. The 'leaked' paper shown to me yesterday estimated the cost of an 'NBN2' Tasmanian monthly charge at North of $A100.00 per month with an initial subsidy of $A55.00 a month offered to 'early adopters' for a period of two years until "the economy of scale" of the wider 'NBN2' build out "kicks in". It also suggested that the subsidised price would limit usage to 10 gigabytes with excess charges if that limit was exceeded. It was impossible to determine the origin of the 'paper' so it can be given no credibility; but it makes sense based on the little that is known of the cost of running fibre to new building sites in the various housing projects around Australia and then adding the likely costs of having to do that post construction - even if you did try and run them via overhead wires. So Krudd will use the next rejection of the just as crazy ETS as an excuse to be "forced to the polls" (only a few months early) before the costs of the 'NBN2' become public pulling down the whole lying nonsense. Anyone want to bet I'm wrong?
Monday, December 7. 2009HSPA Networks Continue To Get Faster And 'Denser'......John Linton .....'NBN2' continues to get discussed. I've noticed that I get 7.2mbps down signal strengths in an increasing number of locations around Sydney lately as Optus continues its upgrade to its network. It doesn't mean much to me operationally as anything above 1 mbps I simply don't notice as my almost exclusive use of wireless broadband is email and intranet access with some web browsing - I am a typical business user. However it is relevant to the increasing number of residential users who have opted to use wireless broadband to replace their low end usage wireless broadband either because they don't plan to stay in their current residence for a year or because they really don't use very much download. Of course Telstra claims that they offer much faster speeds than Optus and Vodafone/3 also make claims that they are upgrading the speeds of their current network but I can never seem to work out what that actually means - perhaps I'm not looking in the right places. As someone who was a user in the very, very early days of mobile telephony I remember how rapidly both coverage and call clarity improved over my first two years of using a mobile phone and how rapidly mobile call costs declined from 1990 to 1995 (or thereabouts). The same has happened in the usability and cost of wireless broadband services over the past two years with 2010 likely to see further improvements in the three key aspects of the service - cost, speed and coverage with Optus now saying that they provide wireless broadband to 97% of the Australian population and Telstra doubtless saying they do more than that. So while "discussions will continue" this week on how best to deploy and 'NBN2' both Telstra and Optus have already done it by building a commercially sound network that will only continue to get better in terms of coverage density, speed and cost. In terms of residential users and small businesses it already does deliver a solid broadband service with only the cost for a 'heavier' user remaining a barrier to wider usage. The new ABS figures will be available some time in February which while not being definitive always provide a 'guide' as to what's happening in the broadband marketplace. The last two six monthly reports show very fast growth in wireless broadband and it will be interesting to see whether wireless broadband has continued to grow as quickly as in the past two reports.....and also whether wire line broadband has recovered from its apparent 'ceiling' shown in the last report. The level of interest in wireless broadband by both business and residential users seems to only be increasing and it seems only a matter of time before wireless eclipses wire line as the most popular broadband service - and yes - I do understand the two services will be used for different purposes with many users having both a wireless and a wire line broadband service. Right now I have both, or I suppose I have three counting my office connection, and I think it will become the 'norm' for most business people to have both a wireless and at least one wire line service (home, office, on the move). I also think that many residential users will have two services though I think the residential 'renting' demographic may only end up having a wireless broadband service for all the obvious reasons. The people I speak with, either in business or via Exetel's fora or this blog, always stress the cost per gb as a major barrier to more widespread wireless use which is undoubtedly true right now in Australia - but in other countries in the EU and in the USA the cost of wireless broadband is much lower than it is here at the moment and there is little doubt that the cost of Australian wireless broadband will continue to fall over time. I would think that the testing of LTE in Australia by Optus later this year will give a fairly solid indication of what wireless broadband can realistically deliver in terms of speed and to what percentage of the population that speed can be made available and at what, at least, initial costs. If it's anything like what the Europeans are achieving it will be a massive boost to wireless broadband use and contribute to the faster 'wind down' of the use of wire line services in at least the major Australian cities. However that is later in 2010 and many things will happen in the meantime as both wireless broadband roll outs and density upgrades continue and new economies of scale are reached as wireless broadband users go past the 3 million user mark in the not too distant future. Does anyone remember how long it took to get to 3 million mobile telephone services being used in Australia? An awful lot longer than it will take wireless broadband to get to 3,000,000 users:
Sunday, December 6. 2009Providing "Support" Is An Interesting Activity.....John Linton .....not least because it is almost impossible to define what "support" actually is or how good it is. A long time ago in a company far, far away and after listening to various experienced people talk about what "support" actually meant in the context of supplying broadband services I suggested that a broadband suppliers obligation to its customers in defining where "support" ended was in the provision of an at designated speed service to the customer's 'network boundary' which, for the purposes of that definition would mean an ability for the supplier to ping the customer's modem at an agreed acceptable speed of return. This was in the days when most customers had to install a 'software client' to connect their crude ADSL modems to their ISP's service and that client was opsys dependent and modem hardware dependent and was more difficult by a large margin than today's plug and play devices so it was decided that actually helping the customer configure their interface (hardware and often software) would move the boundary point back to getting the customer to be able to ping a nominated site at an agreed return speed would be required. I have never changed my mind that a steady "link light" was all that was required and that 'touching' the customer's modem (let alone anything the 'other side' of the modem) in any way or assisting in the configuration of the modem itself in any way was not within any realistic definition of providing support for a broadband service. In practice I never saw these guidelines adhered to as almost all support engineers have an engineer's innate characteristic of demonstrating their engineering knowledge by going far beyond such an arbitrary (if totally reasonable) boundary and most customers know how to 'plead piteously' for additional "support"....particularly female customers. As modem hardware became more sophisticated and 'software' add ons became things of the broadband stone age this stricture should have become easier for support engineers to adhere to but it didn't prove to be the case. Over the years, and that is now well past nine, I have given up on attempting to 'enforce' that very reasonable definition of what constitutes a broadband supplier's responsibility of providing support to a customer and I don't see anyone else in Exetel making any effort to restrict "support" to only ensuring the customer is connected at the correct speed. So, over the years, I have slowly changed my personal, and in Exetel's case, the company's view of what is included in support for the broadband services we provide. I have talked with a number of broadband providers, both in Australia and in the UK, about what support 'boundaries' they employ in providing telephone support to their customers and have found no consensus in any aspect of doing that. There don't appear to be any actual boundaries set down in black and white beyond everyone I spoke with having objectives for both call answer times, call abandon times and quantities and for call talk times. I haven't found any company that measures customer satisfaction with the experience of their calls; not because they don't regard it as important but because they haven't found any meaningful way of measuring it (beyond the mechanistic aspects of wait times, resolution times etc). As a person brought up in business life with quotas and targets it is an inevitability that I will think of any aspect of Exetel's performance in terms of black and white numerical measurements. When we transferred the residential support functions of Exetel to Sri Lanka we realised that their would be a knowledge loss and other issues to contend with that we believed could be ameliorated in the medium term by deploying larger 'numbers' of people and that would mean we could offer longer support hours and shorter wait times in the shorter term and the knowledge loss would be addressed over time. To a large extent that has proven to be the case: 1) Support on week days has double form 8 hours a day to sixteen hours a day 2) Support is now avaialble 8 hours a day on weekends and public holidays 3) Call wait times have reduced by 40% As the number of support engineers has continued to increase the average number of 'months on the job knowledge' per engineer has obviously not increased (a mathematical impossibility in a rapidly growing 'head count') but it is now beginning to increase as the number of support engineers that have been with Exetel in Colombo for 12 months or more to increase. So one of the issues we addressed while I was in Colombo for the November review was how we would set the expectations for support in 2010. The simple to measure call wait times, number of abandoned calls etc are not difficult to plan for and we will continue to aim at reducing those times/amounts along the path we put in place at the start of operations. How to measure the improvement (assuming there is any) in the quality/effectiveness of the support provided still eludes me; as does 'controlling' the breadth of the support provided on topics that we should not be addressing. So, any ideas on how such a thing can be done would be welcomed.
Saturday, December 5. 2009Business Wireless Broadband.......John Linton .....one 'last' area in today's communications marketplaces that the bottom feeders can't screw up? I have no idea of the market size for Business Broadband compared to 'residential' broadband but I don't know anyone in business who doesn't either use a Blackberry or have a data capable mobile handset and also has a wireless broadband capable laptop/notebook. So my rough as guts ball park estimate is something like 600,000 'business' people currently use a mobile wireless service at the moment or something like one third of total wireless broadband users. Of whatever the real number really is I would guess that 70% use Telstra, 15% use Optus and the remaining 15% would be split between Vodafone and 3. We have spent some time developing a 'business', really 'corporate' wireless broadband offering and will begin marketing this offering in the week before Christmas and then through to the end of January to prepare for a major marketing effort from 1st February through to the end of the financial year. Our objectives are to sell to one thousand 'corporate' customers over that period based on 'an offer that can't be refused' and, much more importantly, an offer that can't be easily copied by the scummier operators in the communications market having re-learned some of the more obvious lessons from our Country Broadband project. AS PTB once allegedly said - "never underestimate the stupidity of the average American" we learned to - "never underestimate the duplicity of the scummy end of the communications reseller operators". From the 'investigations we have carried out we believe that the main characteristics that business users need (which can't be provided by the bulk resellers of the mobile carrier's retail offerings) include: 1) Fixed IP's for easy VPN implementation 2) 'Fleet' Plans for usage optimisation 3) 'Fleet' control in the company's hands to deal with allocation and re-allocation of devices and sims nd usage control. 4) Lower costs than 'retail' plans "adapted" for 'business' use 5) Engineering support rather than 'shop assistant/residential help desk' support 6) Future price decrease protection There are undoubtedly other 'labels' that other investigators might use but my view is they are either covered within the six categories listed above or they really aren't relevant - I could be wrong about that but from what we have looked at and investigated with a number of 'successful' business users of wireless broadband and several 'unsuccessful' users the real needs are as described above. (I made reference to some of our investigations in a previous musing. As far as I'm aware none of these characteristics can be met by the Layer 3 bulk resellers) and the few Layer 2 Optus 'partners' would be unprepared to make the pricing available even if they had the desire and ability to sell and support wireless broadband products in the business marketplaces....again I may be wrong but based on what we have looked at to date it seems to be a correct set of assumptions. When we talked with the ten or so companies that had either bought from us or had bought from Telstra or Optus all of them had bought 'residential' wireless broadband packages from retail stores in the case of Telstra or from 'partners' in the case of Optus, Vodafone and 3. Even our two business customers had bought from our web site at residential rates though they quickly found their way to dealing with us on a person to person basis. I am assuming that the much larger companies (like CBA) bought their services direct from Telstra Corporate but I'm not sure how that operates. We got good information from these investigations and have developed some corporate pricing that is, at least currently, unmatchable in today's published offerings: http://www.exetel.com.au/corporate-hspa-pricing.php Apart from the very low pricing, in today's terms, another key component that the new Exetel offerings addresses that was a major point of unhappiness by every one of the corporate users we spoke with is the 'no contract' period. Each one of the people I spoke with while doing this research was 'fed up' (other words were actually used to express their unhappiness) that they had entered in to, mostly, two year contracts and were forced to pay prices that were double or treble what current market prices were. Price protection is a key element of the Exetel business wireless broadband offering....which the various carrier resellers can never address. I fully realise that you are always most happy with your planning before you actually submit it to the test of marketplace acceptance but, after my errors in the country broadband promotion, I do think I have ensured the lesson learned from that expensive experience has been fully dealt with in developing this new initiative. I guess time will, as always, determine the accuracy of that belief.
Friday, December 4. 2009Fun With Dick And Jane.........John Linton
I had a discussion yesterday with an acquaintance about the general state of the the communications industry and the possible 'strategies' of some of the larger companies over the coming few months. We had a similar discussion a few months ago and, by and large, my observations about various companies had been more in line with the situation today than his had been - at least in some respects. We mainly talked about TPG yesterday and the ramifications of its offer to buy Pipe and how/if that would affect other companies with whom TPG competes. We had very different views. His overall view was very enthusiastic emphasising the obvious success that TPG had enjoyed over a very long period of time and the recent acceleration of that success underlined by its increasing market share gains (56,000 increase in ADSL customers in the first two quarters of 2009 and 29,000 in the third quarter of 2009. Excluding the acquisition of the 50,000 or so ADSL subscribers in the 'take over' of Soul last year the growth of TPG's ADSL customers since the start of 2007 by percentage has far exceeded that of the other 5 largest ISPs by more than double and in actual numbers is only exceeded by Telstra over that three year term and this year has blitzed every other provider, especially Telstra, whose net subscribers have hardly moved at all - if at all. It has undoubtedly been a remarkable achievement. We had different views on what the Pipe takeover will mean (assuming it does in fact proceed). His view was that it gave TPG the ability to provide unlimited broadband via its growing DSLAM network. His further view was that the profit made by Pipe would more than cover the interest on the money TPG would need to borrow and the actual money borrowed would be repaid in less than five years out of the increased profits that "free" IP would allow TPG to make from a continuing rapid increase in ADSL customer numbers. That would fit neatly into David Teoh's company buying track record of buying companies at prices low enough to ensure that their future profits funded the cost of acquisition within a very short time frame even if, as apparently the case with the Pipe purchase, he is paying a premium rather than buying at a discount. As my acquaintance put it - it makes a lot of sense and delivers TPG a competitive advantage than NO competitor can get close to - not even Telstra should it ever decide it needed to go down that path. It does all make sense and it would look good in a company strategy and to the shareholders and market analysts. Except for one or two minor issues that spring to mind. The first issue, and I don't know the actual figures so it is only by way of a 'small dark cloud on the horizon' at this stage. Pipe's current revenues (and profits) come from a mix of direct sales to commercial customers and sales of dark fibre and lit fibre to the larger ISPs with whom TPG competes - even small ISPs like Exetel spend around $A50,000 a month with Pipe and I would imagine that other ISPs spend much, much more than we do. If TPG's assumptions are that it will use the profits from its acquisition of Pipe to drive its ISP competitors out of business then I would have thought that those ISPs wouldn't be willing accomplices in their own commercial deaths and will simply cease buying from Pipe. As I said, I don't know what percentage of Pipe's business is with ISPs but I would think it will end up as zero when it becomes clear that is in fact TPG's commercial basis for the acquisition of Pipe. I would have also thought that TPG was itself a Pipe customer, and of some magnitude, so beware 'the double counting' where profits are allocated. The second issue of offering unlimited broadband plans is the exchange back hauls of which TPG states that it has greater than 400 and continuing to grow. I, of course, have no idea of what current bandwidth is in place between those 400+ exchanges and their hand off points but I would take a reasonable bet that they are mostly 1 gbps with perhaps some 10 gbps links for the more heavily populated exchanges. Now I also fully realise that the cost of 10 gbps switches has fallen in Australia but 100 gbps switches are still very, very expensive and re-dimensioning the current TPG network to make unlimited broadband a reality is not going to be a trivial cost - a guess would put such a project not far South of $A100 million over a short period of time. The third, not so important consideration will be what a TPG takeover of Pipe will do to the current 'free fall' in IP pricing, not from the duopoly so constantly referenced by Pipe in it's publicity, but from the new carriers entering the Australian market NTT and Tata as well as the continuing presence of Verizon and AJC and the future intentions of Telstra with its Endeavour capacity. The IP market is not a duopoly it's currently: Southern Cross, Telstra, Verizon, AJC, NTT, Tata, Pipe and, if you like, Vocus as Pipe's reseller to some markets. Prices for IP (excluding the fact that over 30% of IP is now delivered by even a small company like Exetel from peering and Akamai caching with new versions of PeerApp expected to move that percentage closer to 40% by early 2010). "Free IP" funded by the profits made from selling IP and cross connect services to competitors may not yield the returns a first, or even second pass, 'analysis' might indicate. Then there's TPG's WA DSLAM roll out which will greatly disturb iinet's/Westnet's user base in that State which will also certainly mean that TPG's 'free run' at acquiring churn ins from the larger ISPs will face some resistance for the first time in three years with Telstra now on 'red alert' to stop the decline in its customer base and other large ISPs recognising that TPG's buying Pipe is more dangerous to them that it may have looked and that they should consider whether or not they assist TPG take their customers away or whether they should do something about that scenario. Thursday, December 3. 2009Reaping The Rewards........John Linton ...........of decades of parental irresponsibility, poor education and bad examples everywhere you look in public life. I suppose it's a basic characteristic of the human species that it is instinctively combative which is why it has become the dominant species on the planet. "Civilisation" over the past 200 or so years has done little to actually "civilise" the human species either in tribal relationships (between 'nations' and would be 'nations') and certainly not in 'person' to 'person' relationships. It seems to me that 'human beings', no matter how happy their personal state of affairs may be, are constantly looking to "kill" another living being and spend almost the whole of their lives in such pursuits. Apart from the insanity of 'national leaders' like Obama deciding that even more US troops are required to keep on killing the citizens of another country (using the same illogic as his predecessor for killing the citizens of another country and despite his pre-election promise "to bring our boys home from that unwinnable mess" - the same as another of Krudd's ludicrous pre-election lies) the majority of the human species devotes its time to surrogate murders via watching/supporting football games and other sporting 'contests' either at the suburban, city or national level or, decreasingly, playing some sort of competitive support where there is a 'winner' but much more importantly there is a 'loser'. Apart from 'sport' this pernicious characteristic is seen in every, and I make no exceptions, every aspect of 'human existence'. It makes me constantly ashamed to be, through no voluntary action of my own, a member of the 'human' species and I recognise that I carry the same life negating inherited characteristics of every other 'human being' which while recognising that it is an inevitability doesn't do anything to ameliorate the self disgust it induces. Why bring up such an unpleasant and pointless view of life? Well, no real reason other than the my observation of the self destructive nature of several incidents over the past 48 hours of how humanity's need to pointlessly 'compete' produces negative results for the individual almost every time. Exetel have rented an apartment in Colombo for 18 months at the asking price stated by the owner on firstly a twelve month lease and then an extension six month lease. Note that we paid the asking price which, because we were dumb Australians, was at least twenty per cent higher than we should have paid but because our time to 'negotiate' was strictly limited and we had so many more pressing things to do we let it go. When the time came to renew the lease we just said we would continue to pay the rent at the agreed rate for a further six months (which we paid in advance as we had paid the first twelve months). The lease came up for renewal again at the end of November and we indicated our willingness to pay for a further six months although we knew that the apartment building remained (after 18 months) more than half empty and we could get a better deal. So what does our 'landlord do? Instead of being grateful for getting a substantial premium from a perfect tenant that pays six months in advance as well as a one month bond she decides we are so stupid that she can demand a 12 month period and ask us to pay all legal costs for drawing up a new lease. Predictable result. We approached the owner of the building and got a larger apartment with a better views for 20% less than we were paying without the need to pay legal costs and only one month in advance. As the apartments are let fully furnished there was zero moving inconvenience. The lady concerned will have a great deal of trouble even finding another tenant and will certainly not get the same rent or the same payment terms (and certainly won't get paid in $US). Twice this week I have had to deal with different residential customers who used the most appalling abuse to two different Exetel employees. The language was grotesquely awful and the threats were unbelievable. An investigation of each incident subsequently showed that both incidents were entirely the fault of the complainant and when this was demonstrated to each of the customer's concerned they didn't apologise but said it was Exetel's fault for not finding out what they (themselves) had done wrong sooner and that if we didn't employ non English speaking "monkeys" in a foreign country they wouldn't have had to say the things that they did. Ignoring that both Exetel employees speak better, and more clearly annunciated English than I do, these two pieces of human detritus illustrate the reasons I hold the opinions I do about 'humanity'......even when 100% demonstrated to be in the wrong so many 'humans' continue to insist they are the 'injured party'. For so many it's always someone else's fault that they are inconvenienced - irrespective of how incorrect that view is. I could go on about a number of incidents over the past three days but if those three, in their different ways don't make my point then adding further examples isn't going to help....and as is obvious it is 'human nature" to act the way so many people do so there is nothing that can be done about it. I did do something about these three incidents - I think it would be in the general community's interests for more people to adopt a zero tolerance attitude to the world's ****holes.....or at least the one's you come across and can do something about.
Wednesday, December 2. 2009If There Ever Was A 'Recession' In Australia.....John Linton ...I personally only benefitted from lower interest rates, cheaper petrol and an appreciating Australian dollar - and Exetel benefitted from taking a cautious approach to business for over a year because of all the hype in the media as well as falling prices of many of the things we buy. In December Exetel has had its 70th successive record recurrent billing month and 5 of our 10 'business units' achieved all time records in November. We also finished November with a record amount of money in the bank after paying every cent of every bill sent to us resulting in zero unpaid bills. This was despite lowering our ADSL1 and ADSL2 prices and drastically reducing the revenue we get from excess usage charges by raising the 'off peak' download limit and re-instating the 12 hour uncharged period for some 25% of our current users. There has never been a time, in the almost six years that we have operated Exetel, that we have ever been in better 'financial shape'.These results are despite Exetel adding 50% more personnel over the year, absorbing the costs of moving offices and, and for a modest company like us, an expensive new office fit out plus the significant costs of fitting out a small data centre in the new office. So what was this 'recession' that so many column kilometers were devoted to and so much money was frittered away to avoid? If I was inclined to self congratulation I could say it was because of Exetel's diligent management's tight financial controls and perceptive analysis of the ways the markets we operate in would move and our astute micro management of our product and service pricing. However, with the exception of the $3.00 account surcharge on then ADSL plans introduced some 12 months ago we actually didn't change anything we did other than to increase our personnel and from March 2009 onwards and continue our policy of passing all savings on to our customers by continuing to lower our prices (without any account surcharge). We actually followed the reverse policy of seeing a doom and gloom scenario as being the time to expand business while the overwhelming majority (with the exception of TPG) appeared to take a much more conservative views of business life - a recommended practice for small and 'agile' companies. We had a record profit result for the September quarter, by a long way, and now find ourselves a little above our planned revenue growth for the first five months of the FY2010 financial year. So that was my five minutes of 'all is right with the world' reflection. I have noticed that the ADSL business is tougher than ever and I would expect that it will get even tougher as Telstra tries to recover from its customer erosion and the other ISPs, in turn, try to deal with the reversal of the free ride they have had while Telstra maintained their ultra high pricing. However we have spent more money increasing bandwidths (IP and connectivity) and routing power over the past 3 - 4 months than we have done in any single 12 month period to date and have transformed the topology and resilience of the network completely over the past year to a point I never expected to see - this was only made possible by the huge reductions in cost of both IP and high end equipment brought about, at least in part, by the strength of the Australian dollar plus the periodic shift downwards in pricing due to the deployment of new technology by a number of carriers and providers. We took the financial gambles early in 2009 of deciding to invest in buying our own premises, hiring and training a corporate sales and support force in Australia and doubling the number of support people we had in Sri Lanka as well as investing in the creation of a wireless broadband business. In 'good times' this would have been a 'brave' set of initiatives but in the 'depths of a recession' it would generally be judged as very unwise. We took the view that, although we personally couldn't see any sign of recession in our business, it didn't really matter because if there was going to be adverse threats from recession we would benefit rather than lose and if there wasn't going to be a recession then we shouldn't remain cautious and miss the opportunity to increase the speed our development. As it turns out there was no recession and we managed to grow our business in new directions and still end up better off financially than we were at the start of 2009 - by a fairly large amount in all measurable areas. So it's now the time of year when we re-examine our current financial year business plan and make decisions on how/if we revise our financial year plans and objectives. Our review of the Sri Lankan plan which we completed in November was to increase our investments there and to continue to grow the number of personnel beyond what was planned. In reviewing the Australian plan we have more options and some hard decisions to make on both 'products' and organisation and personnel. We also have just about outgrown the new office space we bought and only moved in to on June 1st (one very concrete sign of our lack of planning ability). It will be an interesting period in Exetel's 'life' and making the correct decisions is going to be more important than at any previous time because, probably for the first time in six years, we have many choices where in the past we pretty much had either none or very little. Never a dull moment in the data communications business in Australia.
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