Saturday, February 13. 2010Apparently Exetel Isn't A Small Company.....John Linton ......according to more of the deluge of 'irregulation' under which business operates these day (if you have more than 25 employees in Australia then the Federal Government decrees that you may not use the word small to describe your company). The 'feral gubmant' now supersedes Fowlers, The Oxford Companion and the Cambridge Modern as THE arbiter on word usage - at least in Australian business. You may think this is hardly an onerous burden imposed on a business operating in Australia but it a symptom of the constraints that now apply to playing a small part in ensuring Australians have places to be employed around the country. It came up at yesterday's board meeting as part of a minor review of our compliance with the various legislation under which we operate based on the new Labor Party's 'laws' regarding their recently introduced industrial relations regulations which are giving so much trouble to various unions around NSW over the past few days. Labor's new IR laws are overwhelmingly the same as the bitterly derided "end of industrial justice for the working man" of the previous government and in fact, as they relate to Exetel they are almost identical. The only difference is that the current Labor government has scrapped each employee's entitlement to five days annual sick leave in their first year of employment and replaced it with 10 paid days "personal leave" and added a further two unpaid days of personal leave. Clearly Labor views the health of people who work in Australia as being in rapid decline or perhaps the change from "sick" to "personal" leave indicates that the Labor party regards work as an increasingly optional aspect of people's lives. The other interesting change was the provision for 24 months (unpaid) maternity/paternity leave) per employee after which the employee now has the 'right' to return to their position they left up to two years previously at the inflation adjusted remuneration they were previously being paid (presumably on the birth of any child over a working life). Personally I don't know of any person who, after two years away from their position could actually do their job in the very changed circumstances that would then exist but doubtless there are circumstances. The rest of the requirements were typically pointless strictures that included holding meetings with employees after sending them and giving them time (during working hours) to read the 50 plus page 'summary of changes' Nothing in the new Labor IR laws will affect any professional person in any way (or for that matter anyone that leads a normal life and works for an average employer and, as I previously said, the stridently derided 'work choices' if you compare the major parts of the screech owls new laws with the ones they replace I defy you to tell the difference. Though, reading the various media this week you would get the impression that more than one or two unions believe the screech owl's version of IR makes them worse off than the previous government's "work choices". We also reviewed some new ACEMA requirements relating to a 'return' we hadn't provided before along with our usual review of our payroll tax returns and our payg returns and our 2009 tax return as well as as our employee superannuation returns before reviewing the latest insanities from the TIO (fortunately a new low) and then we dealt with the major issues of running a business that is no longer 'small' in the time remaining. Fortunately that took very little time as everything else about Exetel is running pretty much as planned which is always nice to 'check off' on the long term calendar. The only, in its way significant 'event' was my request for a research/project assistant to take over the work that I am now struggling to fit into my working week.Age, health and quite possibly boredom with its repetitive and time consuming nature after so many years has finally taken its toll and I can't do a number of key functions with the required enthusiasm and clarity of mind that is required. So I guess that's a very real sign that Exetel is no longer a small company. PS: I have thought about it and discussed it with some sensible people and have decided to make this blog 'members only" with a subscription 'fee' of $10.00 per annum. The subscription "fee" doesn't go to me or to Exetel it goes to one of the wildlife protection projects that Exetel supports. My reasons for doing this are: 1) After over 900 daily entries since I started this exercise the number of daily readers has grown to cover the demographics that were alluded to in the papers that convinced me it was a worthwhile exercise. I have no interest in the readership of the musings growing beyond the useful demographics that have currently been achieved after two and a half years. 2) My view is that whether there is a 'fee' for reading my musings or not the people I, and Exetel, get value from reading this blog will not change by asking them for a tiny donation to a worthy cause. Whether that is a correct assumption remains to be seen. 3) My further view is that if my writing is so worthless then why is anyone bothering to read it in the first place? I certainly wouldn't expect anyone to waste their time doing something so pointless. 4) Over the past six months there has been an increase in the number of d***heads sending emails containing statements that no reasonable person should have to read and I think that having to pay for the privilege of sending their filth will largely eliminate the distasteful task of having to read enough of it to bother deleting it. 5) Exetel customers will continue to get 'free' access via the User Facilities for the time being in the event they wish to do so. I therefore sent the 'work order' to our development function to write the code to make this happen - I gave it the lowest priority so there is no firm time frame for this to happen. Friday, February 12. 2010What Will Telstra Do Now?........John Linton ......and what will a whole lot of other communications companies do then? Steve and I discussed the details of the Telstra half yearly results plus the various statements made by the Telstra CEO to the press over lunch yesterday to ensure we understood whatever information (and comment) was available as Annette and I will be going to Colombo on Sunday and while email is a very effective communication mechanism, surprisingly, the 5 hour time difference makes ad hoc telephone conversations much more difficult. Lunch at the chosen restaurant is always very pleasant though yesterday wasn't as good as I remember it - but maybe that was just me. The overall figures of a very large corporation can never be understood by outsiders and particularly by outsiders without financial analysis backgrounds like Steve and me. So we concentrated on the statements made by the CEO and discussed them in the context of what we see day to day in the marketplaces of which we have some knowledge of. Telstra's 'fiddling round the edges' with its ADSL1 pricing towards the end of 2009 was an obvious reaction to what Telstra saw at that time - which was that companies like TPG were being successful in attracting ADSL1 customers to switch from ADSL1 to ADSL2 and as Telstra had the largest base of ADSL1 customers they would have 'suffered' the most from TPG's success in that respect (the other DSLAM providers would have already transferred their ADLS1 customers to ADSL2 on the exchanges they had activated which, in the main, would be the main exchanges TPG has installed DSLAMs in. As far as we could see, Telstra hasn't yet addressed the fact that it's ADSL services are priced well above even the most expensive of all other providers and, except where it has ADSL2 exchanges where other suppliers don't (largely in less densely populated areas) no-one in their right mind would pass over the much wider and much lower cost ADSL2 plans offered by other providers wherever there is a choice - at least less than there used to be. So that is one of the key issues that will be interesting to see develop pretty soon I would have thought - how Telstra addresses attracting new ADSL2 users without infuriating the large number of current customers who they have ripped off with their current pricing and, of course, protecting that vastly inflated revenue stream that would be a major profit contributer. We were also interested in the Telstra CEO's comment that he thought business conditions had now improved greatly over those of 2009. He made that comment in the next sentence to another comment that wire line connections had dropped even faster over the past two months having previously said that competition and pricing pressures were fiercer than ever. Perhaps it was just the editing that had taken the three comments out of their conversational contexts that made them look contradictory when they ended up in print - but they seem directly contradictory. As far as we can see - 2009 in the communications industry was neither tough nor one in which Exetel saw any market share decline in any of the services we offer - it was as tough as most other years we have been in business but by no means the toughest and certainly not the most price competitive.If it was 'tough' for Telstra then that is only because they have tried to keep their different service prices at unachievably high levels as the ADSL market has saturated and the wire line market continues to die. You only have to look at the Telstra graphs of ADSL new customers from 2005 to 2009to see that Telstra's net adds have gone from hundreds of thousands a year to zero and you can directly map that to the gradual increase in ADSL2 competition where Telstra can't gouge other suppliers by maintaining ADSL wholesale prices above what they sell to retail customers. That ADSL2 build out coincided with Telstra customers gradually accepting that companies other than Telstra offered ADSL service as reliable, as fast (with ADSL2 much faster) and at prices often 50% lower than Telstra did. Telstra's CEO also commented that the Telstra ADSL customer base was eroding from the replacement by their own and other carrier's wireless broadband services. So what are Telstra going to do? Obviously I would have zero knowledge. If I am reading the information provided by Telstra then it says two things: 1) The degree of pressure on pricing/decline in market share has 'surprised' them. 2) They will offer new pricing/packaging to arrest/turn around the current decline. Doubtless Telstra have hundreds of business planners, far more intelligent and knowledgeable than I am, who would well know that reversing a decline is a whole lot harder than steepening an incline. It will take a lot more than 're-packaging' the already multi-repackaged 'special offers' to arrest the ADSL decline and to arrest the wire line decline is a Knut like impossibility. Telstra have never shown any tendency in the past to provide services at realistic prices and have ben happy enough to keep their customers on contract paying the highest possible prices while shoring up new customer acquisition by telemarketing 'once only and only for you' discount offers that avoid ACCC scrutiny.....but clearly that hasn't worked lately as well as it has done in the past - as apparently demonstrated in the half year results. Perhaps the double 'sea change' of mobile and VoIP will wipe out the PSTN revenues more quickly than Telstra's most negative scenarios - there is a glimpse of that in the CEO's different comments. The graph they showed of wire line-less home has risen sharply over the past two years - a well over 50% increase if my eyes don't deceive me. That decline has some pretty serious repercussions for a number of pie in the sky projects widely reported on over the past 12 months or so. Interesting few weeks coming up. http://www.smh.com.au/business/thodeys-uphill-battle-for-leaner-pricing-20100211-nv6d.html http://www.smh.com.au/business/sol-trujillo-was-worse-than-he-looked-20100211-nv22.html http://www.smh.com.au/business/a-very-expensive-fixation-on-speed-20100211-nv8n.html Thursday, February 11. 2010The Dying Of The Light For Wire Line TelephonyJohn Linton I have been looking forward to today's half year results from Telstra ever since the comments by their CEO back in December that growth would be 'flattish' - I was interested to see what 'flattish' was going to mean in Telstra terms. The comment was surprising because it isn't often that a company as competent as Telstra has always showed itself to be in planning its revenues (and profits) makes such a radical, and very public, downgrade forecast only months after it has published the original forecast. (it was the main reason that 'spooked' me to make more significant changes to Exetel's prices than perhaps I should have). Anyway today's publication of some detail of what Telstra achieved over the last six months of 2009 will be an interesting read. The Optus results, published earlier this week: http://www.asx.com.au/asx/statistics/announcements.do?by=issuerId&issuerId=4704&timeframe=D&period=W show strong mobile growth (10%) but only an overall revenue growth of 5% which means everything else actually declined and as Optus is nowhere near as exposed to wire line rental and call charges as Telstra as the overall Optus results seem to indicate that Telstra will report similar product by product results. One thing that surprised me in the Optus results was their wholesale which declined by 2% in the six month period largely due to a 4% decline in wholesale IP and Data services - a very significant fall though the overall profit margin of 24% seems very healthy. Our purchases from Optus in that period increased a fair bit and although our purchase prices declined our total spend increased each month - in fact I was surprised, if I'm actually reading the figures correctly, to see what percentage of Optus wholesale business Exetel is. I noticed that Optus made no mention of ADSL progress specifically, either retail or wholesale. The results do emphasise wireless broadband growth but don't break out specific numbers. After Telstra publish their half year results today the ABS half year figures won't be far behind and the three reports will provide a reasonable view of the overall state of the ADSL residential market places. From what can be seen it seems unlikely that the view will be particularly positive and, if that proves to be the case, it will be even more interesting to see what then happens to 'packaging' and pricing of ADSL services to residential users both by the two big carriers and then the next level down (TPG, iinet) where single service (ADSL2) growth is a key component of their financial well being. It will also be interesting to see what those sort of companies state for their growth predictions for the final six months of this financial year. (I wonder if iinet's figures don't match their forecasts they will excuse that on legal distractions?). I imagine there are far more people than me looking to the current reporting period to determine what their product and pricing strategies might need to be in the remainder of this financial year. One of the big issues for more than just the two big carriers is the ongoing and quickening decline of wire line rental and call revenues.....which is irreversible and while mobile revenues keep increasing and therefore cushioning the overall top and bottom line effect there is going to be some point where it will almost certainly have severe ramifications on the pricing and support of ADSL in various areas. As more people decide they don't need a wire line (irrespective of how the call charges are minimised) the cost of supporting any 'district' has to increase as less base line revenue is available as Telstra's statement emphasizes: "Fixed line revenue dropped by 6.9 per cent in the first half to $2.997 billion, a sharper fall than the 4.8 per cent decline in the second half of the 2008-09 financial year." So, even more important than the three reports I have alluded to, is the joint Krudd/Telstra announcement (today?) of how the current copper connections between residences and exchanges are to be owned, provisioned and maintained in the phantasmagorical new 'NBN2' world and how that infrastructure is to be paid for, by when and by whom. That will certainly be an interesting 'read'. Life may continue to be harder than it should be but it's never dull or uninteresting. PS: As foreshadowed - Telstra's revenue and profit both fell for the last six months of 2009: http://www.asx.com.au/asx/statistics/announcements.do?by=issuerId&issuerId=3826&timeframe=D&period=W Slide 29 shows the 1.9% decline in total residential ADSL customers using BigPond
Wednesday, February 10. 2010International Business Travel Is Often Difficult......John Linton .....seldom enjoyable, but courtesy of the NSW Sheriff, is becoming impossible. I do very little international (and no national) business travel these days except for the quarterly trips to Sri Lanka to review and better understand the progress of our pretty new operation in Colombo and combining some business aspects in to our annual vacation in the EU. The difficulties of traveling to Sri Lanka increased last year with significant reductions of the number of flights leaving Australia for Singapore, Malaysia or Thailand and the lack of flights at realistic times from those 'mid way' points to and then from Colombo. This means it's often a struggle to find flights at all and almost impossible to find connections that don't leave you' over nighting' or else facing up to 10 hour 'transit times'. So we book well in advance and that allows a minimising of the hassles. All well and good until the NSW Sheriff sends you a demand to pencil in 8 weeks of your time from date XX for jury service. Not too catastrophic because there is a list of reasons you can apply for exemption which include you won't be in Australia at the time. So, I dutifully fill in the form and attach the required proof and send it off only to receive back another missive from the Sheriff that tells me my application for exemption has been reviewed and declined. Not only do I have to be in Colombo for a week but 4 weeks after that I have to be in Japan for a completely uncancelable, once in a lifetime, personal event which I cannot cancel - it is specifically date dependent and has been 'scheduled' for the whole of my life. So I am left with a no win situation that will cause great difficulty if I am to do my civic duty. I have no problems with doing what is required of me as a 'good citizen' and have in fact actually done it twice before in my life (which begs the question as to why I get a third summons when most of the people I know have never got one). Those previous 'tours of duty' were a complete waste of time for everybody concerned and made me realise how totally useless a jury system is in the 21st century (or in fact any other century when you look at it). My first experience, in Melbourne's central criminal court, was a corporate fraud/embezzlement case that although in the criminal court was a civil case. "Twelve good men and true" in this instance turned out to be a miscellaneous group of 6 mainly female retirees, 3 manual workers of little or no education and 3 'business' type people. The case was scheduled to last 6 weeks but at the first morning tea break one charming and grandmotherly juror confided in me that the accused was "so guilty - you can see it in his shifty eyes". So much for listening to the evidence. At the end of the first day or so - nine of the jurors had made up their mind that the guy was guilty and I decided the whole process was a waste of time and joined them in not listening to what was being said and trying not to fall asleep too often as the days droned on. Fortunately, and for whatever reasons some way in to the fifth week the the prosecution and the defence decided that the case could not continue (after a couple of days of 'jury step out for a moment' type consultations') so the 'jury was dismissed'. The second occasion was somewhat similar with the accused being in the dock for allegedly stabbing a convenience store owner during a robbery. Again by lunch time 8 or 9 of the jurors were convinced the poor guy was guilty ('you just have to look at him' was an eerie echo of my previous experience plus a couple of nice racist prejudices along the lines of 'they all do it'). I did listen to the evidence this time and I couldn't see that there was any real chance the guy did what was alleged and that was the view of two others. So when the time came to deliver a verdict the 'hang them all' group talked for the best part of two days and then wanted to go home. It was a split vote with no possibility of being resolved and after a couple of meetings with the judge the whole fiasco was declared a mis-trial and everyone went home. It seemed obvious to me that I certainly didn't understand anything about the first case and couldn't possibly have had any sensible view on guilt or innocence and in the second case I really didn't understand either the rules of evidence or the actual evidence and I'm pretty sure all but one or two people in both juries were in the same position - perhaps all of them. I think it's long past time that juries were abandoned - they can never understand what is going on and prejudice has always been alive and well in English speaking societies so you would have thought that someone would have noticed by now. PS: the blog is late today; for reasons I don't know the original 'disappeared' and I took time to attempt to re-write it. Tuesday, February 9. 2010A Nice Lady Visited Our Offices Yesterday......John Linton ....and advised us that our NF/23BYO Line ADSL2 service had been declared PCUSER's Internet Product Of The Year for 2009 and would be reported as such in the February edition of the magazine (page 54). While the only 'awards' that count in business are the monthly management accounts (and the subsequently yearly tax return) that show the company has achieved a planned profit and a planned revenue growth, getting some sort of external recognition is always a very pleasant experience particularly when it is so unexpected. We have one of the walls in our small reception area in North Sydney pretty much full of the various awards given to Exetel over the last six years (the first one dating back to July 2004; SMH - Best Broadband Product in low download, medium download categories and runner up in high download category) and we have small table the top of which is getting quite crowded with 'trophies'. Of course, in the scheme of things these displays don't mean a great deal but they are a vague reminder to our employees (and maybe to our visitors) that the company is recognised outside its own operations as doing some very good things and consistently doing them over time. (I imagine it also annoys Exetel's detractors to realise their views about Exetel are not held by publications that have wide/widish circulations). Following the Asian Fast 500 inclusion last week and the 'Elephant Project' in mid January Exetel has got more positive publicity in the last four weeks than we have got in most years of our existence (Annette received an email from an acquaintance in London over the weekend saying she read the 'Elephant Project' story in the UK media - pity we aren't offering services there as we had planned! Only time will tell if there are any 'financial benefits' in this little grouping of positive stories about Exetel but, on balance, they can't do any harm. Exetel remains an 'under the radar' organisation that only continues to grow due to word of mouth recommendations and, over the last year, due to its active agents around the country to whom Exetel has paid close to $A2 million in commissions since the program started - not very much by other ISP's standards perhaps but large and more rapidly growing for a company of Exetel's size. Each time something like this happens we get to consider advertising again and how we could use it effectively. Every effort we have made over the past six years (very small efforts for the main) has simply been a total waste of money that has done absolutely nothing for us at all. I have no doubt that advertising 'works' for every other company that involves themselves in it but my experiences (with one exception 15 years or so ago) is that money spent on advertising is wasted money.I wish I neither thought that nor had consistently experienced that but it remains the case for anything I am involved in; and yes, I can understand that a logical conclusion to reach from that track record is for me to never be involved in any attempt at advertising (but I have tried that too). Now that Exetel has passed the $A50 million in annual revenues it is almost certainly past time that we made more effort to promote the company and its services and ceased to rely on word of mouth. I suppose that's why we've looked at advertising more often over the past year. Our problem is that of most companies of our size - we can almost afford to do a reasonable amount of advertising but we can't quite afford the money that is really required to sustain some truly effective (produces more money than it costs) campaign that actually works to the point that we could sustain it on an ongoing basis. It remains a dilemma. As Exetel moves, if in fact we succeed in making it happen, to a much higher percentage of our total revenue coming from buiness users residential advertising will become less of an issue so we may never have to involve ourselves in something we are so completely incompetent at. How we become better known by businesses is a different problem but we have a lot more experience and competence in that than we have in residential promotion. Clearly a cop out but I have no other current ideas.
Monday, February 8. 2010The Future Is Always Going To Be Better......John Linton .....for the callow and uninformed.....what the reality is....the future is often different but seldom better. Whenever the Australian technology media writes about wireless broadband it invariably seems to include some sort of reference to the effect that "of course, wireless will never replace ADSL as the primary means of a residential user accessing the internet". No facts and figures or third party research are used to support this claim and, in fact, the only 'semi solid' research source (the ABS statistics) that contrast very large growth in wireless broadband compared to no growth in wire line broadband are usually unreferenced or dismissed as 'secondary connections'. I have often wondered why that is because all the 'facts' that I see (and I don't look very hard) are that wireless connections are increasingly replacing low end broadband as the primary or only internet connection in an increasing number of households. I will be interested in seeing what the December half year ABS report shows in terms of results for wireless and for wire line broadband when they become available later this month and even more interested in how the technology media 'treats them'. Exetels sales of wireless broadband services, while steadily increasing, do not shed any light on the situation though it's obvious from some rough and ready investigative research that some of our own low usage customers are moving from ADSL to wireless and there is little reason to believe that a portion of the new wireless users come from the same demographic. Our percentage of wireless applications compared to ADSL1 256 and 512 applications continues to increase and now exceeds them on a regular daily basis. The simple reason for that is that wireless broadband is lower cost than 512k ADSL1 and more than twice as fast - and getting faster (42 mbps now/84 mbps on the way): http://www.3gamericas.org/index.cfm?fuseaction=pressreleasedisplay&pressreleaseid=2643 When you add in the saving of no telephone line rental it becomes a financial no brainer. Every thing I see shows that wireless is continuing to grow at the expense of lower end ADSL and the desire for an increasing number of people to have mobile broadband is becoming more of a must than a desirable for a growing number of users. The sheer logic both financial and technological is so compelling why does anyone who gives it a moment's thought dismiss wireless and in the same breath laud the imminent delivery of the 100 mbps 'NBN2' which will be neither imminent nor 100 mbps? Now, for the increasing number of dummies who have begun reading this blog, please read each word, and its punctuation, in sequence so that you don't write me emails to the effect of "omfg you total loser u r so dumb you think the internet is for email" - spiced with your usual additional expletives. What I am saying is that some 50% of internet users don't use more than 5 gigbytes of downloads/uploads and that any speed over 512k is a bonus as their needs are very similar to mine (ie they don't include playing on line games, stealing other peoples property or anything else that requires large download allowances). Over 50% of Exetel's users use less than 5 gbytes per month in combined downloads and uploads and I would be surprised if the combined demographics of all other ISPs in Australia show anything much different - almost certainly less than 5 gbytes. Similarly few of that 50% have any current or immediate future plans to change their habits, or are able to increase their budgets, to move to something faster and with more downloads. These users are also, despite the derisory views of 15 year olds, are increasingly using VoIP as they realise how expensive it is having a land line and the call charges for a land line. The move to VoIP by this demographic isn't great at the moment but it is now there when a year ago it wasn't. Optus recent purchase of spectrum, the plans by both Optus and Telstra to test LTE in Australia this year and the ongoing build out of more HSPA infrastructure by all mobile carriers should, I would have thought, emphasised the growth of demand for wireless broadband Australia wide. Even without contrasting that investment with the slow down/halt in any new investment in ADSL dslam capacity or coverage for ADSL delivery it should be obvious that wireless broadband is increasing faster than can be explained away by 'new/secondary' usage. Maybe my understanding of the relative growths of the two technologies is completely wrong - but the facts I can find seem pretty clear cut. PS: Recent media 'exposure' of these random thoughts seems to have caused a very large increase in abusive posts - over 200 yesterday. I resent wasting what little time I have in reading enough of these moron's illiterate missives to delete them so, if the volume of crapulous nonsense persists I will have to deal with that situation.
Sunday, February 7. 2010Meniality And Triviality Really Depend On Your Outlook.....John Linton .....or perhaps that's only the way failures look at their working hours? The amount of pleasure or I suppose, lack of pleasure, in carrying out any job, no matter how menial or trivial, entirely depends on the attitude of the person doing it. I seldom categorise work in to anything other than 'needs to be done' (in which case I do it) or 'doesn't need to be done' (in which case I don't do it). Some inexperienced people equate 'senior' positions in commercial organisations as having no days where they are involved in 'menial' or 'trivial' tasks/jobs and perhaps that is true for 'senior' positions within large organisations but within small organisations it seems to me that 'menial and trivial' tasks/jobs carried out by 'senior' positions tend to increase over the years rather than to decrease. I speak only personally about this as, clearly, I have little knowledge of what happens outside of Exetel. I only mention this at all because I have had two 'meetings' with 'senior' people from other organisations this week that, because we have known each other for a fairly long time and once, a long time ago, worked with each other in two different organisations spent some of our time 'reminiscing' about the 'good old days'. They both continued along the 'large corporate path' and did very well for themselves as bright and hard working people almost always do. I 'diverged' from that path a long time ago. Our 'business' conversations were brief, no more that a few minutes in each case and successful in one case and unsuccessful in the other so we then chatted on for a fair while about the trivialities that people who once enjoyed close and enjoyable relationships often do. As we chatted they both expressed surprise at the amount of triviality in my working life compared to theirs. Apart from the fact that their lives generally are focused on their physical fitness (2 hours of physical activity before breakfast supervised by their personal trainers of course and golf three times a week in the afternoons plus weekends largely devoted to outdoor activity made me realise just how much I used to like 'corporate life'. I also really did envy their 'personal staff' which in one case involve a principal PA who had a junior PA ("to get the coffee and things") and a third PA to look after email while the other had a PA who had a junior PA and he also had a 'rotating intern' to deal with ad hoc 'investigations'. Neither had a 'research assistant' but both had research departments to deal with permanent, semi permanent and project research whose managers reported directly to them. Both said they lunched with important clients or important suppliers most days (though as they have both given up wine and all other alcohol and are on different food intake schemes they both said those demands on their time are a bore)...however it pays dividends as they both looked 10 - 15 years younger than I know them to be.Giving up alcohol and pretty strict diets had made the virtually daily business lunches and twice a week business evening functions containable though they both said an alcohol-less and no dessert meal even at the best of Sydney's restaurants was a non-event but their company doctor's insisted on such regimens for senior management and ran six monthly check ups to monitor progress. Their working days didn't seem to consist of very much except keeping their head offices happy and their personnel away from Australia as much as possible. They both said meeting their business objectives didn't involve much of their time in most quarters though lately they have had a bit of a rough time. My days when I gave a brief description were very mundane and very dull in their eyes and probably would be in most other people' eyes if I ever bored them with the details. I hadn't realised just how far down the 'ladder' of what 'real' people do with their business daysl I had slipped until I had those two conversations. So having thought about it for the past day or so I will do something that, in hindsight, I should have done a very long while ago and I will work out how I could usefully split my current workload so that I can do more useful things in my working day and shorten my working day by something like half and get rid of the week end work entirely. I think it is long past the time I can physically work an 80 hour week and I have to stop pretending I can.
Saturday, February 6. 2010
Share Drops Keep Showing In The Red..... Posted by John Linton
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Comments (11) Trackbacks (0) Share Drops Keep Showing In The Red.....John Linton ......and just like the guy whose financial needs are to big for his... (apologies to B J Thomas). My personal share holdings mirrored the average by losing 10% of their value over the past few weeks and show no sign of reversing a continuing decline. While it's re-assuring that Krudd and Whine have declared the 'GFC' to be over (because they have spent all the money that artificially propped up one or two financial indicators for a few months) every sign I see around me is that financial conditions are steadily getting tighter and tighter - both around the rest of the world and in Australia. That is not particularly bad news for a highly efficient company like Exetel but it does have some very real negatives. Declined payments from the monthly bill run increased by over 10% and perhaps some of that is due to the usual 'time of year issues' (overspending over the Christmas holiday period) it doesn't account for all of it. Suppliers, irrespective that Exetel pays every bill very promptly and all small supplier's bills as soon as they have been checked continue to demonstrate increasing anxiety about their outstanding receivables and Exetel continues to get lower offers for services we buy if we buy greater volumes. I conducted a mini-survey of new customers who churned their connection to Exetel over a one week period and got some surprising replies. The 'survey' was ultra basic and was via email: Thank You For Choosing Exetel Dear [ ], Thank you very much for choosing Exetel to provide your internet services, we very much appreciate your business and will do everything we possibly can to make sure you continue to believe your decision to move from your previous supplier was the best decision you could have made. Should you care to do so we would appreciate it if you could 'reply' to this email and filling in the brief questionnaire below before hitting the 'submit' function in your email client. 1) Why did you decide choose Exetel? a) Recommendation by a friend? b) Your own research ? c) Previous Exetel customer? d) Other - please specify? 2) What Prompted Your Decision To Move ISPs? a) Need for more downloads at better price? b) Need for same downloads at lower price? c) Unhappy with previous ISP? d) Other - please specify [Of the 312 emails sent we received 287 replies. Of the replies the percentage break down by reason was: Question 1) a) - 47%; b) - 29%; c) - 15%; d) - 9%] Question 2) a) - 17%; b) - 64%; c) - 5%; d) - 14%] A surprising result. I haven't had time to think through whether this very small poll actually means anything or not but the 64% moving to a new provider to reduce costs rather than to get more downloads would not have been what I would have picked before seeing the 'results'. If it is at all reflective of something more general then it seems to indicate that there are more people in Australia than just me who think times are tougher than some people would have the more gullible of us believe. Of course it is a less than minute number of responses and in that clear sense has absolutely no relevance but it has encouraged me to look at implementing some sort of ongoing questionnaire for new customers that can be automatically parsed in to an ongoing report of reasons why new customers come to Exetel. It might be very helpful. I guess we could also, if we can develop such a process for new customers, put in place the same process for customers who cancel their service with Exetel. The current feed back mechanisms (fora, suggestion box) do a great job in making suggestions on how Exetel's services and processes can be improved (over 600 suggestions were implemented in 2009) but I imagine a formal analysis of why customers leave could also be very useful. I will check on what's involved but it shouldn't take too much effort or time to put something useful in place....and as we will write the code ourselves we can make alterations/additions as we find out what can be improved. One more thing to add to the never ending list of things that should be done.
Friday, February 5. 2010Cowdroy's Ruling Really Only Gives One Indication......John Linton .....which was that there is no current statute law that requires an ISP to assist in reducing copyright theft....whether he could have been expected to have actually contributed to case law was clearly, and in hindsight sensibly, not ever going to happen: While it can now be seen why Cowdroy acted as he did (by skimming the judgment not by reading it carefully) it hasn't really addressed the issue beyond the extremely narrow confines he chose to use in framing the judgment (there is no current law that obliges ANYONE to take part in the reduction of copyright theft......which is the Australian equivalent of not requiring a person who rents guns to exercise any duty of care as to who the guns are rented to - lawful but not really the point in western societies. So at this point in time, as can be seen in the cited article, some ISPs believe this court ruling means that they don't need to concern themselves with the use of the guns they hire - only that the guns they hire are paid for and returned on time. iinet will get a proportion of the money they have spent on legal costs back and they can now, at least temporarily, give much more of their attention to addressing the day to day issues of running their business. As the Federal Court decision is that of a single judge effectively ignoring the actual 'thrust' of the plaintiff's action (and really signaling that by taking so little time to review the evidence presented) AFACT's advisors have any amount of leeway to ask for the case to be taken to a three judge panel in the Appeal Court and only time will tell if that is to be the case. In the mean time - what should an ethically run ISP do? Has one judge's view changed anything at all? In essence it has only changed one thing because in his judgment he states that the internet is used to massively infringe copyright: "It [BitTorrent]has been used, or more accurately, the constituent parts of the protocol (such as the client, tracker and .torrent files) have been used by those accessing the internet through iiNet’s facilities (the ‘iiNet users’) to download the applicants’ films and television shows in a manner which infringes copyright. I shall refer to the constituent parts of the BitTorrent protocol together as the BitTorrent system." - one man [Cowdroy] simply stated that, on the evidence presented (and AFACT's legal team appears to have done less than a stellar job in making their case), the current law did not require any internet provider to exercise any duty of care as to how its internet services were used. (something Stupid Stephen has claimed to be addressing in his filter trials). I was asked yesterday whether or not Exetel would continue to pass on infringement notices to end users. That is a difficult question to give an unequivocal and immediate answer to as we would need to take legal advice on it and then we would have to consider what the ethical situation is - and to a lesser extent what the actual commercial situation is. So there are three considerations. 1) My non-legal opinion is that we need to get properly qualified expert legal opinion (on which we can rely just as we did when we received the first AFACT notices) as to what Cowdroy's ruling actually means - does it mean as the less than legally qualified technology media seem to claim that it removes all duties of care from ISPs in providing internet services or does it just point out what is already known - that there is no current law that specifically addresses the issue? Only an expert can provide that advice. 2) Ethically, I don't think anything has changed. I think that if someone alleges that an Exetel customer is infringing copyright then Exetel has an ethical obligation to pass on that allegation so that the person concerned can deny the allegation or take future actions in the knowledge that an allegation of illegal activity has been made. I believe, like Justice Cowdroy, that the internet is MASSIVELY used to infringe copyright and that parents of children who may be infringing copyright should be advised of the actions of their children if only to warn them that there may be unpleasant repercussions. 3) Commercially nothing has changed. Exetel is still a small company that can't afford the $A2 million or so the AFACT court case has cost iinet of which, at best, they will get back 70%. Our legal advice, before the current court case, was to forward the notices, get a denial and therefore be in a position to say that we complied with the copyright holder's request but could do nothing further as the alleged offender had denied the allegation and that under current Australian law we were not obliged to take the matter any further. While it is true that AFACT have stopped sending us copyright infringement notices that is not true of the other infringement notice senders and there is no guarantee that one or more of those organisations will not go down the AFACT path using Cowdroys acknowledgment (based on iinet's testimony) that an ISP is aware that their services are being used for illegal purposes. Despite what iinet claimed on the witness stand under oath, (I wonder if that constitutes perjury?) it is a trivial exercise (with minute costs) to forward copyright infringement notices and temporarily block access until the allegation is denied. So it comes back to, firstly a legal opinion on how Exetel can continue to avoid iinet's legal costs and massive disruptions. There is no operational or cost issue involved. PS: Or keep infringing copyright but make sure you have a spare million or two: http://www.smh.com.au/digital-life/games/nintendo-pirate-to-pay-15m-20100209-np4i.html
Thursday, February 4. 2010More Investment Despite The Challenging Times.......John Linton .....and I think we just spent the very last of our 'investment money'. We bought more floor space in the building we already own a floor in yesterday to correct the mistake we made when we moved into the original floor last June. Our/my mistake was not allowing for the larger than planned amount of floor space we used to create our own 'data centre' which was stupid of me and has had to be corrected. While the decision to build a larger data centre than originally planned was sensible as we slowly migrate some of our routers and servers from one of our two CBD colos it has made our plans to build a much larger corporate sales force more difficult - so buying the extra space became a must. We decided against renting as it's clear that is a stupidly expensive option if it can be avoided. We managed to buy the space in our current building at an acceptable price to us, and perhaps not such an acceptable price to the vendor, but it was his decision to accept our offer of course. If the commercial property market has 'recovered' since we bought the first floor at what was being described as the "depths of the commercial property slump" by the agent who sold it to us there doesn't appear much change some 9 months later from the little we were exposed to. The new space will enable us to move our Australian based F and A and Data Base development personnel and some other 'sundry' people (like me) from the current offices allowing us to proceed with the next phase of our corporate sales growth which is building the current team from 12 to 24 personnel and to give us time to evaluate just how far we can continue to grow corporate sales as a totally Sydney based operation before having to establish a 'local' sales presence in Melbourne and, perhaps Brisbane.....something that will have to be considered. Our other option is to move the sales operation if it grows beyond 24 or so people into dedicated premises somewhere in the CBD and convert more of the current floor space in to a dedicated colo facility for smaller business customers. All of that is in the future of course but the future has this inconvenient way of arriving sooner than you are ready for so often. The residential marketplaces continue to defy our predictions on a daily basis but indications are that they are becoming tougher for some of our smaller suppliers who are offering us better pricing without us having to ask - never a sign that all is well in them meeting their targets. The most obvious 'dying product' is wire line calls where VoIP is making increasingly bigger inroads into the bloated wire line call charges of Telstra and the companies that compete in this market with Telstra. Our VoIP business, like everyone else's I have no doubt, continues to grow and the little wire line business we do continues to fall, albeit slowly as we don't charge rip off prices for wire line calls. While VoIP prices are already very low it seems likely that we will be able to reduce our national/local call rate from 10 cents to 9 cents a call and our CTM rate from 22 to 15 cents a minute from March 1st. We will try to put in place a ''package' price for national/local calls of 5 cents a call for our ADSL residential customers at the same time which, we would think, would persuade even the most sceptical and technically challenged customers that VOIP is the only way to go in the 21st century. A key aspect of developing the corporate business at the rate we have planned is to significantly increase the percentage of our corporate data customers to also use Exetel for their outbound telephony via VoIP. We have made little progress in this aspect of the business to date because we have been training our corporate sales force to thoroughly understand the data carriage services and it would not be sensible to try and add another relatively complex service to that training regimen. Exetel's in house use of VoIP is, almost certainly, at the very highest levels of 'sophistication' in almost any method of evaluation and we know a great deal about how to implement robust and sophisticated VoIP services. How well we can transfer that knowledge and make convincing cases to sceptical commercial entities will determine how successful we are in growing our corporate business. The rate of increase in monthly new customers in the first year of the program has been very impressive so far but the real challenge comes now as the 'concentrated' excellence/knowledge of the mentoring program becomes more and more diluted. It's certainly not going to be a business year that lacks challenges.
Wednesday, February 3. 2010I Always Thought That 51%..........John Linton ...was a pretty good percentage of decisions to get correct in business life, though I kept being told that 95%+ was what was really required. Maybe I have always been wrong in my assumptions. When I was much younger and was sent by IBM and other multi-national employers to various 'management schools' a lot of emphasis was always placed on how a manager's main responsibility was to get the decisions they were called on to make correct all of the time. This concept was given a lot of time in almost every course I attended with great emphasis on taking as much time as was needed to gather all the facts required to make any single decision and to allow for consultation with as many people as could be considered as able to add insight and valuable opinion to the process and final decision. It made a lot of sense and doubtless allowed 'correct' decisions to be made the overwhelming majority of the time. However, I came from the sales part of these companies where decision making time frames seldom allowed much, if any, consultation to take place and mostly the decisions that needed to be made were during a conversation with a prospective client which limited the decision making consideration time to a few seconds with no ability to 'consult' with anyone. So, over many years, I have had to make most of the decisions I have been involved in without consultation and within a very short time frame - doubtless I could have gone down a different path and never made a commitment without a lot more consultation and consideration but it didn't work out that way. It is also undeniably true that I have made a lot of really bad decisions over my commercial life (and probably more than average in my personal life) but then I have taken the view that a quick bad decision can almost always be quickly reversed and is almost certainly better, on balance, than taking much longer to make a correct decision leaving many things 'on hold'. It would be nice, and highly commercially advantageous, to be able to make the absolutely correct decision well within the time it is needed to be made and to have access to a diverse range of expert opinion against which you could test any assumptions you have decided to rely on - but I haven't run across that scenario over the past 40 or so years. I have seen appallingly bad decisions made, very often, by decision makers who have taken an inordinate time and endless advice before making them and I have seen so many instances of that happening it has, over the years, reinforced my belief that quick and logical with periodic review beats slow and consultative almost every time. My experience has been that any 'incorrect' decision quickly demonstrates that it is incorrect and can be changed, more than once if necessary, before the consultative decision makers have come to their first decision. At Exetel we have a lot of analysis tools (as I'm sure a large number of companies do), which means that the 'consultative' process is unlikely to provide any more facts than can be obtained from our data bases and reports in a few seconds. Whether two heads are better than one (or three or four) is a moot point in terms of facts. In terms of 'problem resolution' multiple view points are always useful and, almost without exception, provide better answers to any problem than a single person - irrespective of how bright and experienced they are. If people are around to consult on any issue then it would be better to utilise such resources but in many fast moving businesses in changing circumstances that is a luxury that few companies can afford.....almost no companies of Exetel's size have such luxuries. So, for many years now, I have adopted the attitude of accumulate facts (not opinions) as widely as possible and from as many reliable sources as possible and always have them at hand because you never know when you might need them. It has worked well enough for a very long time but, recently, I am having doubts about its efficacy. Perhaps the decisions have become too complex. Perhaps the razor sharp mind I used to think I had has dulled with age and too much alcohol. Perhaps the sources of 'facts' I have relied on in the past are no longer as reliable as they once were. I have no idea. It seems to me that I am 'hovering' too close to the 51% level these days and need to change the ways that Exetel is managed.
Tuesday, February 2. 2010Too Many People Are Buying Exetel Services.....John Linton .......and it's making a nonsense of our short and medium term business planning. The recent 'phenomenon' of a rapid and ongoing surge in people selecting Exetel as their broadband provider is going to pose some quite severe and unwelcome problems for us as we move into the 'real' months of 2010. While it may seem strange under any circumstances to 'complain' about business increasing it is in fact a quite real issue for a business of any size - but I'm only concerned about our own business. My first issue is to find out why this is happening and the most obvious answer is that the pricing we started to put in place in November and completed in December is far too 'cheap' and is attracting the 'wrong' types of new customer...and yes, for all those people who read this musing and conclude that I am denigrating 'all' customers by that phrase try a remedial English reading course so you don't understand those few words to mean that....the delete key on my email client is wearing out. Every commercial entity has some sort of customer analysis software that provides management with the ability to look at their customer base as a whole and, via the wonders of modern data base software, by pretty much any characteristic or demographic they choose and by whatever multiple sort conditions they can dream up. So, with very little effort I can look at Exetel's total customer base in terms of such things as gross profit per customer, usage in any particular time slot by customer, number of recommendations, time with Exetel and pretty much anything else you would want to know or can dream up either as a one off enquiry or as a 'standard' repetitive report. I did some examination yesterday and I didn't like what I saw. Our plans for ADSL for 2010 have been based on a set of highly competitive marketplaces with constantly better 'deals' being offered by Telstra et alia via sneaky 'direct marketing' tactics that avoid examination via the ACCC. We made the assumption that as Telstra got squeezed it would find ways of buying new customers as its older customers ran out of the incentives offered when they locked themselves in to long term contracts in the past and less of them would fall for those tactics when Telstra approached them to resign a new contract. We figured that companies such as TPG and iinet would struggle to keep their shareholders happy by meeting their promised growth numbers and, within their much greater financial limitations, also try new promotions while attempting to keep their current customers paying their bloated plan fees - in the case of iinet. We saw Telstra's huge ADSL2 advantages being used to significantly reduce our 40,000 plus ADSL1 customers because we couldn't see how any customer could continue to buy ADSL1 services when they had to pay more for them than for an ADSL2 service. Similarly we could see the rapid reduction of land line prices (not in actuality but by including 'free calls') as further eroding our ability to provide the Optus included wire line plans. There were many other considerations which all added up to the 'impossibility' for Exetel of growing our broad band business very much - if at all. Therefore our 2010 broadband business was based on a 'graceful decline' over the coming months with that rate of decline slightly accelerating over the last six months of the calendar year. That may still be the case as the months go by because I haven't seen anything happening anywhere in the places I look that tells me anything different. I am looking forward, with even more interest, to Telstra's half year results and those of the other companies I can understand something from what they report. Our November/December price decreases were aimed at trying to ensure the decline of our ADSL customer base was kept to as shallow a curve as possible and the only notionally profitable residential customer revenue we lost would be more than compensated for by adding twice the amount (in the early months of 2010 growing to four times the amount later in the year) of business revenue which was also much more profitable in terms of gross contribution and required much lower support and provisioning costs. A simple plan - and elegant in its simplicity with a symmetry of something approaching beauty in the financial numbers it delivered - nothing like maintaining a modest revenue growth while the associated profit doubles over a shortish period of time. With business users predominantly using the network from 7 am to 7 pm it also provided an elegant engineering scenario going forward with very little or no additional bandwidth required. It was based on Exetel moving towards a much higher proportion of its revenue coming from business users which provided a much higher profit per revenue dollar ratio and far less overheads in terms of provisioning and support.....something we have been putting in place since early 2009 and planned to accelerate in 2010. But the December, to a lesser extent, and now the January take up of ADSL has very clearly signaled that, for reasons we now need to discover, that our assumptions and perhaps our ADSL pricing are not remotely correct and if they continue we will have to make some not insignificant changes. Getting a plan so terribly wrong is really disappointing.
Monday, February 1. 2010Exetel Gets The New Calendar Year Off To A Bright Start......John Linton .......it would be really good if we knew why that was....perhaps we reduced the ADSL plan prices far too much as I originally suspected when I saw the daily order reports increase sharply back in December? As today is the first working day of the month, Exetel processes its recurrent billing charges for monthly services which was again a new 'record' which following January's record month for non-recurrent charges was very good to see. January, until this year, has never been a particularly good month for new customer sign ons and the other 'incidental' charges that make up a month's total revenue. In January new VoIP, Corporate SHDSL and Ethernet, HSPA, ADSL1, ADSL2 and Naked ADSL2 were all well above December's levels and far more than January 2009 levels....in the case of Corporate more than 600% more, HSPA 300% more and most ADSL services over 50% more; so in terms of Exetel's small business the growth in January is nothing short of outstanding - and, with the exception of Corporate customers, very difficult to explain. I doubt that Exetel is very different to almost every other enterprise that operates in difficult and constantly changing markets in that various people within the company look at figures constantly trying to analyse what they mean in terms of the actions recently taken (either by us or by our competitors). One clear sign that January was going to be a very good month was that our GURUS management control system displayed a virtually solid '2' on the screens around the office for virtually the whole month ('2' in our nomenclature means every part of the company is, on average, exceeding its various goals and targets). Financial results are key indicators for any commercial enterprise's 'health' and for company's of Exetel's size they are vital. It sometimes can seem to be an obsession to people both within the company and some outsiders that the tiny financial transactions of a tiny organisation are a bit ridiculous in any realistic context and that's also understandable. In January 2004 when we started Exetel and invested what was, effectively, every last cent we could come up with with the knowledge that 60% of start up companies failed within the first two years of operation with the 'investors' losing everything and, quite often, incurring additional debts for which they were personally liable our financial health dominated everything we did as we, of course, had no income for the first two months while we watched our start up capital rapidly diminishing as we paid for equipment and 'deposits/bonds' to suppliers. Any start up business has to 'gamble' far more than is comfortable for sleeping at night and to continually grow a company while adhering to a policy of being the lowest cost provider is something that is incredibly difficult to do - at least it was for us. So as we grew slightly bigger over the succeeding months of 2004, 'billing day' was always a major day in our commercial lives which, fortunately, continued to give us very positive indications as to our progress (long before we had GURUS in place). 'Billing Day' was always a good day and, being a start up, it obviously wasn't difficult for every month to record recurrent revenues greater than the previous month which, as today, always got the month off to a bright start. Our first billing day was March 1st 2004 so today's recurrent bill run completes six full years of operation with our 72nd consecutive record revenue month. As the numbers are so, relatively small it isn't anything of any significance to anyone else but to us, who risked everything we owned to set up Exetel. I understand that for us to have kept Exetel 'alive' and to also have kept it growing so consistently over a meaningfully long period is something that 98% of start up companies do not achieve as they fail or are absorbed in to other larger commercial entities within five years of commencing their businesses. That has always been a source of satisfaction to us....the fact that we have managed to do that while also selling any service we provide at the lowest price available in Australia, at all times, probably gives us more satisfaction as does generating the financial ability to support the various endangered species projects we have been able to do more recently. So, as always, we briefly get a warm glow of satisfaction over a cup of coffee as we read the results first thing over breakfast and then we get to do it all over again this month and, if we remain competent, careful and lucky, we get to do it again the month after that.
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