John Linton's Personal Musings

John Linton

....but when that January record, albeit by the slimmest of margins, is broken the following day.......you have to consider just how wrong your assessments of the ADSL marketplaces really are.

Then again the main premise we used in determining 2010 ADSL numbers was that the ADSL market had stagnated and will decline is borne out in today's press:

http://www.theaustralian.com.au/business/media/nation-goes-wild-for-wireless/story-e6frg996-1225818578791?referrer=email&source=AIT_email_nl

Perhaps my ability to read the most obvious signs have atrophied so much over the past years, or perhaps I just never had any, either of which might as well be the case as I certainly haven't considered that Exetel's ADSL sales would increase over 2010 - I thought they would grow very slowly in net add terms but if the current level of order in takes continue then I might as well ditch the current recently revised operating plan and use one of Krudd's spare bus tickets to run Exetel......if that estimate can be wrong after six years what else have we got badly wrong?

Being 70% out in your estimate of sales of two major services is a level of error that I have never made in my life and while it is only a very short period it's so wrong there is no basis for re-assessing what the future figures should be. We had our monthly board meeting yesterday and I briefly mentioned the problem but had nothing to contribute as to what the causes may be or what the current surge meant in terms of the balance of this financial year or even the balance of this month and that was before yesterday's orders were higher than the day before.

I suppose, if you look on the bright side, it means that we don't have to put any effort in to constantly monitoring the ADSL markets as we can assume that even if we did nothing for the next five and a half months ADSL sales would meet the modest targets we have set for them in the current version of the plan. We don't have any 'inventory ramifications', and because our purchase volumes are so small we don't have any worries concerning the capacity of our suppliers to deliver the services and as our provisioning and delivery processes are automated we don't have any personnel increase issues. Increasing support numbers in Colombo at an increased rate was already agreed last November and is being implemented and can be implemented at a faster rate at any time so the end result of a much more rapid increase in new customers would pose no problems were it to continue. So, if you took that view, 2010 looks like being a piece of cake with the major concern addressed before most people have even got back to work - well done us.

Then again there's the 'dark' side.

If Exetel's minor and limited actions can produce a 70% order increase what could the actions of a Telstra or an Optus do? Or even a TPG if I am wrong in my assessment that they have no more room to move given their over riding need to maintain a level of profitability that is difficult already and their innate inefficiencies and over staffing are sea anchors to their future progress? A 70% increase in Telstra's order intake would certainly change the face of ADSL delivery in Australia and there is nothing that any other provider could do about it as it would take so many customers away from their current suppliers every month which would mean that in one year no other supplier would have much of a base left at all and long before that their companies would have collapsed as they couldn't cope with the loss of profit which is 'mortgaged' against their DSLAM repayments.

Of course that won't happen but it does serve as a reminder that all of the current ADSL providers will have to do something to their current pricing offers if for no other reason than if one large company does something the domino effect is likely to be pronounced. In any event there has never been even a three month period in the last six years when some pricing change does not occur in the ADSL marketplaces and its very unlikely that there will be one over the next month or so.....but which major company will do that and will they be able to do it in a way that will allow them to attract new customers without butchering the profits they are currently gouging out of their current customers.

It's a fascinating scenario.

Psssst; wanna buy a cheap ADSL2 DSLAM? Only one owner - hardly any ports used - owner must sell.