Wednesday, March 31. 2010ABS Statistics Confirm ADSL Has Reached 'Saturation'.......John Linton ......while wireless broadband continued to grow at an amazing rate - 40% over the six month period The ABS published its six month survey of the internet market yesterday: with the predicted results of no growth in ADSL and huge growth in wireless broadband.The 'caveat' on all such reports is that they are based on the information provided by 101 'ISPs' and I have trouble trying to think of that sort of number of companies still in the business (though it's more accurate than when the ABS apparently took input from over 800 'ISPs'). So, personally, I have little faith in the exact numbers but I do accept the trends as being a good indication of what is going on in the ISP business. So what to make of the current report? It seems to confirm that the marketplace will not buy any more ADSL services than is currently reported and that the marketplace's 'appetite' for wireless broadband continues to be very, very strong. This obviously confirms that the various current providers of ADSL services will continue to escalate the current price/download war and that there will be less profit in providing ADSL services than there is today. Of course that is the equivalent of stating the bleeding obvious but then...... The announcement of unlimited downloads by AAPT, the latest plan changes by Internode and Optus and the sale of Netspace are all clear indicators of this 'bleedingly obvious' conclusion. As this report shows: opinion is growing on the likely effects of the impact of wireless on wire line data usage. The other alarming/interesting statistic provided by this ABS report is the growth of some 30% in terms of downloads in a six month period - compared to some 20% in the previous six months. Our own statistics confirm the escalation in download usage as being higher than this but I have even more doubts about the accuracy of reporting on this aspect than all of the others. However it makes no real difference except to, possibly, point out that even with the fall in IP costs of around 50% over the last 12 months, back haul bandwidth didn't fall by anything like that much. This in turn means that the average cost of providing an ADSL service actually increased over the past year rather than fell - and that's a really important 'statistic' provided by this report because the only reaction available by ISPs in a static market is to reduce prices/increase what is provided if they are basing their business plans on 'growth'. Of course, each individual ISPs situation will be different and the ABS report only gives overall trends. Telstra, by far the largest provider with around 50% of the total customer base, is going to be affected the least because it has incredibly high margins at both the retail and wholesale levels and could reduce its cost the most and the easiest because of its hugely inefficient internal operating and personnel costs - with a few strokes of the pen you could take many millions of dollars a month out of their cost of supplying internet services (I suppose Justin Milne's departure and non-replacement is one public example of that). I think it is likely to be an example of what will happen across ISP land - some fairly severe reductions in personnel by many, if not all, ISPs (except Exetel and any similarly run operations). However, even 'cut to the bone' operations like Exetel will have to carefully consider what the ABS report signals for the future and make changes using the information provided by the publicly listed communications companies six monthly ASX reports and now the ABS report for the first half of the current financial year. Fortunately for us, we recognised what the likely marketplace scenarios would be for FY2010 and (unlike Telstra) predicted the likely outcomes more accurately. Having had that 'moment of smugness' we are not exempted from the stark realities of the ADSL marketplaces in the current calendar year. There is little doubt that the ADSL business is going to be a lot more difficult over the coming months than the wire line telephony business has been over the past two years - and for the same reasons - a declining market, even fiercer price competition and a better replacement technology accelerating the stagnation/decline. The future for ADSL looks bleaker than it did some six months ago and its likely that there are 'darker clouds' below the horizon. I wouldn't like to be the person responsible for the growth forecasts of any ISP made at the start of this financial year. (now I say that - I realise it includes me - but as at 9 months in to this financial year my conservative forecasts are slightly over the numbers predicted in late June 2009).
Tuesday, March 30. 2010....And Another One Bites The Dust....John Linton
http://www.smh.com.au/business/iinet-buys-netspace-for-40m-20100329-r8bq.html I haven't changed my mind on just how tough this calendar year will be since I first wrote about the difficulties ahead some six months ago. Although Exetel seemed to be almost 'magically' shielded from the obvious effects throughout the first six months of this financial year and for January the predicted 'wars' to try and rekindle growth in customer bases and/or end the increasing erosion as the ADSL market stalled and began to fall back have begun to affect even companies of Exetel's size. While we very clearly saw this scenario as inevitable (and did the best we could to plan for it) the effect is still a little surprising in its severity as more and more ADSL suppliers realise how they are being affected and take their first tentative (at this stage) steps to address the situation that they must have seen coming. The termination/resignation of long term BigPond head Justin Milne, would seem to be an indication that Telstra is preparing to do things to prop up their residential ADSL customer base that, presumably, Mr Milne was unwilling to do and that change, whatever it might be, will come soon now. Optus is 'rumoured' to be contemplating some radical changes to its ADSL offerings but have 'missed' the Easter promotion period but they can't be far away. TPG's half year results for residential services were very positive but they have had to raise their value proposition three times in six months to maintain their growth and only time will tell on what the longer term effects of that might be. iiNet have done what they always do - buy another company when their growth falters so that the next reporting period's numbers will be very hard to work through and Internode is sending cautious signals that it needs more money to achieve its future plans via a share offering of some type. With the possible exception of TPG, all the signs from Telstra on downwards, are of companies not meeting their FY2010 targets in terms of either revenue or profit and struggling to address those twin problems. I obviously have no knowledge of what any other company's situation might be but the 'facts' that can be ascertained from 'the public record' is pretty dismal and appears to be getting even more dismal. If the ABS figures do show a further decline in ADSL numbers tomorrow (bearing in mind the sources of their figures) then you can pretty much make the assumption that the residential ADSL market will get much tougher and more quickly than it has done over the past year or so. In many ways this will be good for the end user of residential ADSL services because the different suppliers will need to find ways of making their current customers happier to stay with them than move to the next most attractive promotion made available by increasingly anxious suppliers. However, unless each of the companies who go down this path have found some new ways to reduce operating and supply costs, the 'profit squeeze' is going to be not insignificant and it will also be necessary to find the money for the various promotion costs whether that is via marketing/advertising or the lower costs of the services offered. The well defined "more downloads for the same price" gambit that has been the method of addressing these issues since the first ADSL service was made available has no reached its limit with AAPT offering unlimited downloads - there is nowhere for that company to go and similarly any company that goes down that path. This means the only real option is, Heaven forbid, lowering the cost per month of providing services which, for almost all current major suppliers, is not possible without a very noticeable bottom line erosion. Perhaps the owners of Netspace see the future in the same way and, in their case, saw an even bigger challenge in their corporate customer base where they, like so many long time providers have a large number of customers paying way over what data services are now capable of being provided for. I don't know any more than any other casual reader of the 'public record' but I was slightly saddened to see the end of one of the better Australian communication providers albeit via a handsome 'pay day' for the people who spent so much of their lives building the company from a zero base. Monday, March 29. 2010Wireless Keeps Eroding Both User Bases.........John Linton .......on which 'NBN2' relies for financial viability. The ABS half yearly report is due to be published on Wednesday which will provide an update on Australia's use of wireless in terms of data services. Telstra's recent announcement that it will trial LTE over the coming weeks and Optus previous announcement that it will do the same later this year add impetus to the reality of much faster wireless speeds in the future and the LTE implementations in the EU confirm what was said in 2008 - that LTE would be a commercial reality by early 2010 - two major carriers in Europe now provide LTE as a commercial offering at speeds above 60 mbps and the three largest US carriers are promising to do the same 'later in 2010'. So, with mobile telephony now exceeding (by 2:1) the use of a falling PSTN telephony installation base and data now approaching ADSL customer numbers what is the future of wire line telephony and wire line data services? Or, if you prefer, if you were going to 'bet the company', on rolling out a new residential communications infrastructure over the coming 5 - 10 years what would you use as the technology base? Well....you almost certainly wouldn't use copper. Would you use fibre? Many countries have done that including the US carriers and, of course, the Europeans did it 30 years ago. So why are the Europeans so determined to bring LTE to commercial use in their much more easily fibred countries than either the US or, far, far more difficult to fibre, Australia? Because they aren't as clever as Australian decision makers? Unlikely - as they not only have almost thirty 'national interests' but they have far more carriers competing across the EU than any other place on the planet. They also, of course, were the early champions of GSM and the subsequent 3G and 4G standards. There are already fibre networks installed throughout the major Australian capital cities (ignoring Foxtel) and have been for more than 20 years which are used to deliver up to 10 gbps fibre services to the carriers themselves and their major commercial and government customers. Over the last five years (more if you count the Optus HFC network for residential users) Telstra and three other 'commercial only' network providers have continued to widen the areas covered by fibre with Telstra saying it can make fibre available to over a million residential users in Melbourne and in Sydney. I really have no interest in the world wide use of technologies other than as a 'guide' for what our small company should do for its own good as, at least I, have seen this situation for over three years now, only wireless has any real future in Australia outside the major cities and within the major cities it is a toss up between the growing speed, lower pricing and far greater flexibility of wireless over a sensibly priced fibre solution - neither owned by Telstra. So our tiny company with its tiny financial and development resources has put all of its efforts into developing its own VoIP, MoIP, SMS and FoIP capabilities while gaining a better understanding of how to deploy the provisioning, customer education and support capabilities for providing those services to residential and corporate users. We continue to make progress with these developments and are a highly sophisticated user of these services ourselves as well as providing them to an ever increasing number of corporate and residential end users. My only concern since the current government came to dominate the communications industry in a way/ways a government has never done before is whether the logical development of fibre for dense populations and LTE for everywhere else would be slowed down by the doctrinaire interference (that happens nowhere else in the world) with the, up to that time, sensible development of competing networks deployed by the two or three largest carriers in Australia. After twenty painful years of attempting to get rid of all the problems associated with a government telecommunications monopoly would the 'turning back of the clock' by smothering the industry with an new, even more expensive and incompetent, government monopoly crush all the innovation of the past 20 years? What has changed over the last two decades that makes building a new Telecom Australia THE answer to Australia's future communications needs? I haven't got a clue as to where someone would start to make a case for such a scenario. But then, I have no interest beyond attempting to ensure that new technologies don't 'damage' our customers or our employees or our ability to survive in circumstances that continue to change in completely unpredictable ways. PS: It's not only me who thinks that the current prime minister is someone only obsessed with getting re-elected to the exclusion of all other issues: Sunday, March 28. 2010Back In Australia.......John Linton ......everything looks a little 'greyer' despite it being a very pleasant day. We got home a short while ago after a 16 hour journey 'door to door' and started to look at what's been happening in communications land during the short absence. Maybe it's the effect of 5 days of relaxed activities in another country but nothing much seems to have happened over the past week that affects anything Exetel does: - Telstra seem to have started another one of their endless 'promotions' offering ADSL2 to Exetel customers (and I assume other ISPs customers) at below the wholesale prices they sell Exetel ADSL1 connections for which is the way they get round ACCC invigilation ("oh no officer - we haven't changed our retail pricing we are just running a limited promotion for a short time - honest"). - We have made some progress in one of our two legal matters with Telstra and have also attempted a way forward with our case against the TIO. - One of the two banks we use wrote to us agreeing to lend us around $A8 million to buy IP bandwidth from SCCC or some other carrier providing that.....etc......etc. - Sales of all but one 'product' tracked to plan over the week - Telephone and email customer response times continued to track towards the EOFY targets So, all in all, I may be able to take more time off in the future as I could have contributed nothing to anything at Exetel over the past week. My main task in the 3 days or so left between now and the start of April is to decide on how to address the apparent positioning of voice telephone calls (and 'lines') becoming a 'standard' inclusion in broad band plans - whether ADSL, Wireless or the putative 'NBN2' fibre offers. It seems that the consensus of the 'bundlers' is that Telstra's voice call services are dead meat moving forward and those suppliers that have any sort of significant revenues from telephone voice calls on the PSTN/ISDN are rushing for the exits and trying to mitigate the damage with VoIP - it's been coming for a long time and maybe this is just an acceleration point? I did notice in the tracking we do that there has been a threefold increase in data plans including 'unlimited' voice calls as part of the 'deal'. Over the past year these offers have become more real and less deceptive and are a sensible approach in almost every way. Voice calls are only another data stream and they can be easily 'included' in a data product offering. The childish mumblings about "mums and dads not having the technical abilities to handle VoIP" are as inaccurate now as they always were and few people with an IQ above their shoe size wouldn't be able to change their PSTN to VoIP in a few minutes with simple instructions. We have been offering various plans that include VoIP for some two plus years now and have developed our own systems and installed our own switches over that time to be able to offer progressively more sophisticated VoIP services (as well as the SMS and FAX services) and we are now able to offer a pretty good MoIP service on Nokia hand sets and on Apple iPhone handsets in the near future.
Amazing how quickly a holiday begins to fade from your memory. Saturday, March 27. 2010Visiting Japan - Again An Amazing ExperienceJohn Linton Sadly, this is our last day in Japan - we get an evening flight back to Australia later today. We have all, I think, had a very good time in our very different ways and the purpose of the trip may have been achieved with three of my children being more than impressed with what they have seen and perhaps (like me so many years ago) being impressed enough to change the way they view life on the planet generally and the part they play in it as a very 'ordinary' person of no stature or influence. I have mentioned in passing over the last few musings some of the more obvious difference between Japan and Australia to the casual 'tourist type' observer. I think the most remarkable aspect of Japan is not that 140 million people are directed by their government to be polite, thoughtful of others and to be 'culturally aware' but, individually, live their lives according some set of principles that results in that overall general behaviour. Some things you can't help noticing in Tokyo and Kyoto: 1) There is no graffiti anywhere - something that makes Sydney such an ugly city - and when I say none - I mean in all the hours we walked round Tokyo and the day we spent in Kyoto there was zip, zero, nada. 2) I saw two pieces of litter on the streets over the past five days - one obviously an escaped plastic bag blowing down the street in the Ginza and another plastic bag trapped in a tree branch. For a city population that smokes a lot, I never saw a single cigarette butt. 3) Apart from on a building site, there were no weeds growing in the cracks in the pavements or where the pavements meet the walls of buildings. All of the trees on the city streets were immaculately 'groomed' and the many plantations hardly had a leaf out of place. The pavements and the streets themselves were in immaculate condition and we encountered no 'emergency' road works. 4) When there is a red pedestrian light no-one quickly checks to see if they can make it across and moves against the light - they wait without 'jostling and only cross when the light goes green. 5) Similarly, when riding in the various taxis we took the taxi driver, and the other traffic, would never try and increase speed to get through a light about to change to red and, with one or two exceptions, no horns were heard in the extremely dense traffic conditions we encountered on almost every trip. 6) In highly crowded public places (train stations, food courts, road intersections) I was never jostled and on the days when it was raining when everyone seemed to have an umbrella up there were not the constant 'umbrella clashes' that is a feature of Sydney streets. 7) The cleanliness of the many trains we took was inconceivable to anyone who has ever had to use a Sydney train. Not only was there no graffiti, litter, scuff marks or general wear and tear each carriage we went in was as hygienic as you would expect in a hospital ward. 8.) Every shop we entered had a device in which you inserted your umbrella and when you withdrew the umbrella it was wrapped in plastic to eliminate water dripping inside the shop. Everyone entering the shop also carefully wiped their shoes on the mats provided before entering.There was, naturally, a disposal bin for the wrappers as you left the shop. 9) If someone blocked your path (in entrances and exits, lifts, escalators) they invariably apologised and stood back to allow you to pass through first. 10) I dropped my umbrella on one occasion and before I could stoop and retrieve it someone picked it up and brushed it off before handing it back to me handle first. I saw several similar incidents. 11) My eldest son pointed out to me that all the cars on the road, despite the plentiful rain, looked like they had just been washed and there were no clunkers or dents. 12) Day or night, we saw no drunks, rowdy 'gangs' of teenagers or homeless people - we also saw no 'badly dressed' people in the five different districts we spent time in. I could go on and list many other, common, actions of the general population we mixed with over the last five days but they would just be additional examples of overall politeness and consideration. All of this is achieved without constant "No Littering" signs or "Wait For Green Light" exhortations etc, etc and we saw very, very few police either on the streets or on the roads. If you are an Australian you cannot help (I would have thought) coming away from Japan without the belief that Australia would be a much better place if each Australian showed the same regard for their fellow citizens that is so very evident in Japan.
Friday, March 26. 2010Pity Work Somehow Intrudes No Matter How Far you Have "Fled"......John Linton ....but,even in Eden there was a 'serpent'. We have almost completed the changes to the basic network topology we began almost two years ago which added one or two (depending on location) direct IP feeds in to each State and the ACT and now the installation of the latest versions PeerApp caching engines firstly in Sydney in December last year, then Brisbane in late February and today the first stage of adding caching in to Melbourne. The network can now deliver 6 gbps nationally which is around 100% more than it could a year ago and the switches and routers have been upgraded to match the increased capacities.In line with these capacity upgrades we turned off the NetEnforcer IP restraints earlier this month and will physically remove the hardware within the next few weeks. All of these plans have now been implemented and, in many ways have simplified the design of the overall network and have made delivering data to any end user faster. For a company of Exetel's size this has been an expensive and complex process that, now it has been 'completed', will start all over again. I had hoped that we could have made a decision on IP and other service supply before I left Australia but, although we received some attractive offers they did not meet the criteria we had set for acceptance. I don't know whether our acceptance criteria were too tough or we have not found the correct ways of dealing with the possible providers. It really doesn't matter because at the prices we have been offered we can't meet our future plans for residential services so before we do anything else we must review those plans in detail and, as my grandmother once said to a bewildered grandchild of tender years - "then we must cut our cloth to suit our pocket". I only allowed this to intrude into this short holiday because I received two emails this morning from possible suppliers asking me when a decision would be made. Looking at the various performance reports available to any customer you will notice that usage across all links has fallen slightly since some 500+ of our heaviest down loading customers have been attracted to AAPT's unlimited down load plans and TPG's versions of them. you may find it surprising that so few users can affect a national network so markedly but it actually does happen as you can see - Exetel's customer base continues to increase but the net average usage per user has slightly declined over the past 6 weeks and it will be interesting to see if that trend continues. We have two proposals to increase our 6 gbps of national bandwidth by 2 gbps at zero cost to us by some interesting financial modeling which we negotiated on the basis of offering a combination of unlimited options and better pfwyu plans in the near future. I was attracted by the 'marketing potential' of that scenario but both Steve and Annette believed it was not what we needed for the longer term and we should not put short term gain ahead of longer term cost advantages. Over the last few days of not dealing with the minutiae of the business my more relaxed 'mind' has come to regard that view as more sensible than my own initial understanding of what we needed right now and moving forward. So the holiday break has served a useful business purpose as well as a personal enjoyment purpose. I would like to have 33% more bandwidth at the current cost level now but I agree that having 50% more in 5 months at less cost would be a sensible trade off providing we can adapt our current operating plans to meet that change in scenario - and, of course, meet whatever changes will now happen in terms of what the large providers of IP services to the Australian marketplaces in which we operate will do. I'm not going to think about it any further as I still have the best part of two days left before we return to Australia and I still haven't been able to locate an antique dragon figurine I have been looking for to give to my youngest son. Thursday, March 25. 2010Kyoto Is Even More Beautiful Than I Remember.John Linton We spent the day in Kyoto yesterday or at least a fair chunk of it. We left the hotel at 7.30 to catch the 8.15 Shinkansen to Kyoto which even at Shinkansen speeds is two and a half hours away. The station, like all Japanese stations was immaculately clean and our carriage was, if possible, even cleaner. Like an aircraft, the carriage was carpeted and the carpet looked like it was brand new without a single 'pulled' thread or the slightest mark. When the train 'took off' there was no sensation of speed and no discernible movements that you associate with Australian trains - it had as little movement as an aircraft. The trip was uneventful and when we arrived at Kyoto station our 'tour guide' was standing outside the carriage door we disembarked from with a sign with my daughters name on it (she had organised the trip). The train trip and that level of efficiency and courtesy pretty much defines Japan in relation to Australia in many ways. We journeyed around Kyoto for the next 6 hours in a type of mini-van I don't remember seeing before that was as clean as if it were on a show room floor. Our guide, as would be expected, was very experienced and knowledgeable and treated us as courteously and deferentially as I have ever been treated in my life - but also adding much humour and many anecdotes about the more scurrilous side of the history of the shrines and temples we visited. Being a professional guide he knew which places to take us and exactly what to show in the places we were taken. Among the high lights for me were the oldest and best known stone garden and the pre tenth century great hall (100 meters long) containing 1,000 beautifully symmetrically arranged life sized wooden statues together with some two dozen or so other statues each 'block' relating to some version of events, gods and people and their stories. The pagoda architecture and general workmanship quality dating back to the 11th century and before was a constant reminder of the beauty of the country generally in terms of the longevity of its culture and engineering achievements. The stone garden which I had visited when I first came to Japan in the late 1970s was where I learned my basic lesson that has helped me ever since then live a more contented and fulfilled life. I visited there with only a Japanese 'host' from the company who employed me and an Australian colleague. Our Japanese host explained that if we sat quietly on the steps facing the garden and contemplated any problem that was concerning us we would eventually see find a complete answer. All we had to do was contemplate the garden and think about why the designer had placed the fifteen stones in the groupings and location he had. It worked for me then and it has continued to work for me ever since (obviously minus the garden which is simply a Zen device to clear your mind. It is true that any issue, no matter how complex, can be solved completely by only the thoughts, knowledge and reasoning processes available to you within your own mind. Doubtless a zillion self awareness books teach the same thing but on that wintry and rainy day more than three decades ago I learned that simple technique and have always benefited from it. We had a simple lunch in one of the many hundreds (at least) of such establishments in Kyoto and, yet We returned to Tokyo and walked back to the hotel in the rain and very low temperatures (almost certainly much lower than 10 degrees) and, in contrast to our country lunch had dinner in the hotels one Michelin star Chinese restaurant where the food and service was at a standard I have never before experienced but, in all the basic ways required of really good food, didn't really leave a better taste or satisfaction feeling than that served in the tiny 12 seat 'restaurant' in Kyoto although it cost 25 times more. Today is my birthday and I will leave it at that - rather than continuing on sounding that Australia is not much of a country - it isn't at all - it's just that Japan is just so superior in so many ways. Wednesday, March 24. 2010100 mbps Fibre Speeds.........John Linton ........I can't tell the difference. We are staying in a recently built hotel in the centre of the Ginza which has internet connectivity via a 100 mbps fibre link (as does virtually every other building in Japans central districts and, as far as I know, most of Tokyo's residential districts. The result for an end user such as me? It works just fine but no better than my home 10 mbps ADSL2 service nor even my wireless broadband service in the places around Sydney that I use it. I very much doubt that there are that many hotel customers and staff using the internet service at 6.15 am but even if there are I don't detect any difference at any of the times I have used the internet over the past two days. I am not drawing any meaningful, or come to think of it any, conclusions from this untimed/unmeasured experience but it is another 'pebble on the beach' piece of 'evidence' that the cost of building a 100 mbps fibre network around Australia will need some more serious justification than getting a political posturer off the hook for involving himself in things he hasn't got a clue about. When you subtract out all the clap trap about 100 mbps speeds being so useful for "on line hospital surgery" (the hospitals already have 100+ mbps fibre and those that don't (if there are any) can get it from Optus and Telstra (or if they want it at a lower cost from Exetel) or any of the other nonsensical scenarios that are 'winged' by people who write justifications for spending tax payer money on the 'NBN2' you have to reach the conclusion that the 'NBN2' is only being built to provide some percentage (and no-one can even estimate what that percentage is) of residential users with a facility that will only be used for 'recreational' purposes. I must be wrong in that estimate but I can't see where. Business users in all capital cities and an increasing number of regional cities can get, today, data connections of up to 60 mbps at a non-taxpayer subsidised very affordable cost. Exetel has been selling 50 mbps links to large schools, student accommodation, medium sized companies and even a few government departments at a steadily increasing rate for over 6 months now. Telstra and Optus have been providing 100+ mbps services to Australia's largest companies and government users for many years. So it seems very unlikely that any of these business and government organisations will be eager users for the 'NBN2' service that is going to be limited to 100 mbps at a time when they are looking beyond 100 mbps for the larger operations and already have the infrastructure in place to deliver it. I keep reading about how "Mrs Jones who runs a small business in West Galagagong will now be able to compete internationally because of 100 mbps internet" - but what will she be able to do with it that she can't already do? What new services will become available in the future that will require such speeds and why does she need to be subsidised by Australian taxpayers to run her own business? If she is inconvenienced by not having some facility to run a business then she should move to somewhere that has the facilities lacking in the place she currently operates from. I don't expect to have Mosman Council extend Mosman Oval so I can run a dairy herd and I'm prevented from doing that because Mosman lacks basic rural facilities (like 1,000 hectares of arable land) - I move to West Galagagong. I realise I have used a wildly exaggerated comparison to sledge hammer home my point but FCS - its only to oppose the current stream of nonsense being used to justify an unknown tax payer expenditure on an unknown service at an unknown cost (and please stop describing it as a national 100 mbps network now the government has admitted that it will drop to 25 mbps (or less) in 'certain areas' meaning a lot of areas. The point remains that 100+ mbps fibre is already delivered to most if not all of the users who want it at this time and those speeds will increase and those costs will decrease over the coming months and years on already established infrastructures. The CBA, The War Department and Mrs Jones do NOT either need nor should they want to be subsidised by me and you. If they want a facility they should pay for it and if they can't get it where they have chosen to operate (through poor planning) then they should move. Now, I'm off to Kyoto for the day. Tuesday, March 23. 2010Back In The Land Of The Rising SunJohn Linton We arrived in Japan yesterday evening and (after a ten hour flight) endured the almost two hour transit from the airport to our hotel in the Ginza and were grateful to have arrived in one piece and undamaged. The hotel (and its staff) was a perfect example of why I chose to come to Japan to 'celebrate' the 'end' of my working life. Everything about the hotel was sheer perfection in every possible way. It easily surpasses the 'intrusive elegance' of the better American and European hotels and improves on the best of the Asian hotels (at least the few I am familiar with) with a minimalist elegance that I have only encountered in Japan. The reception area for this hotel is on the 38th floor and as you approach the reception desk itself you realise that the back 'wall' behind the reception desk is actually a floor to ceiling 'window' some 30 meters long with a panoramic view over Tokyo and as it was well past sunset all that you saw were brightly lit buildings right to the night horizon - it was spectacular. When I first came to Japan as an adult it 'changed my life' in several ways. Apart from the obvious elegance and sophistication of so many aspects of Japanese life, which a non-sophisticate as I was then and remain today couldn't help but notice, there was an overall calmness of every aspect of 'business life' which were the reasons for my being in Japan for the first and all subsequent times up to today's brief holiday. It would be a cliche to say that I felt 'at home' for the first time in my working life but, cliche or not, that was an almost immediate and powerful effect. I visited Tokyo, Skuba City, Numazu, Kyoto, Nagano and other parts of Japan over the following few years several times and each time I experienced the same feelings. Apart from those general feelings I immediately related to the Japanese work ethic and it changed the way I worked from the first trip onwards. I very quickly learned how to adapt my very 'Australian' ways of both negotiating and 'understanding' people's strong and weak points in any negotiation and although I had considered myself a much better than average 'sales person' up to the time of my first visit I became, as far as my limited talents and abilities allowed, infinitely better at everything I did in business life. While being profoundly positively affected by those things (elegance, perfection, work ethics) I also saw the barbaric aspects of the same positive cultural aspects of the Japanese - perhaps an intrinsic natural reverse of striving for perfection in so many aspects of a person's life. I don't have any ability of explaining how I see that as an obvious result so I will spare you any attempt at pop psychology or half baked nonsense I could come up with. So I hope to have a pleasant few days re-visiting Kyoto and taking my family to places like Akihabara and Shinjuku as well as doing the more typical touristy things of attending a tea ceremony and a sumo match and walking round the Imperial palace. It will also be good to eat real Japanese food again in some of the more interesting Japanese restaurants that have apparently become even more refined since I was last here some 30 years ago - there appear to be more Michelin star restaurants here than in Paris including at least one 3 star restaurant. I am looking forward to the day. Monday, March 22. 2010Sad To Think That National Decisions......John Linton ......are influenced by 'lobbyists' whose objectives are solely based on their own monetary well being. A couple of Sundays ago I attended a function on the Gold Coast. Being the polite sort of person I am I got that at the requested time which required me to eat a smorgasbord lunch at a table occupied other people I didn't know - which I did in silence for the first thirty minutes or so until 'accosted' by someone who introduced himself to me. We then briefly chatted about various things during which I made some of my opinions on the Krudd 'NBN2'. Somehow this caused a couple of other people at the table to make a couple of fatuous comments. Those people turned out to be a representative of this organisation: http://www.ccc.asn.au (Forman?) and the person whose ear he had been pouring a stream of non-stop nonsense into for the previous time I had been at the table who turned out to be a WA senator for the Green Party - Scott (Robert?) Ludlam. I had formed the view that the CCC person and the Senator had demonstrated n their interlocution a complete lack of knowledge of almost every aspect of Australian telecommunication it would be possible to have and for the Senator on the one hand to be involved in making decisions on the future of Australia's communications infrastructure based on the information being supplied by an equally ill-informed lackey of two foreign carriers (or is it three) on the other hand succinctly put the concept of unskilled and uneducated 'parliamentarians' making decisions on subjects completely beyond their comprehension and knowledge in perspective. So I read this piece of nonsense when it was referred to me: Sunday, March 21. 2010Business Life Is Full Of Strange 'Experiences'John Linton We have been approached by various brokers/intermediaries/some business owners over the six years of Exetel's existence to buy either all of Exetel or parts of the company - usually the ADSL business customer bases. These approaches have never been taken seriously by Exetel and never gone past the initial telephone call or email except when we have thought it worthwhile to learn somethings we didn't know about the company making the approaches...we seldom did...actually I don't think we ever did. I have lost count of such approaches but I think it's well into double figures. So I was surprised to receive a new approach and even more surprised in the way it was made last Friday. A nice Singaporean lady arrived in our foyer accompanied by a business acquaintance and asked to see me to see if we wanted to sell Exetel. We exchanged a few pleasantries and I asked her to provide us with some details as to the background (especially the cash status) of her and her husbands company and the broad parameters of the basis of her offer and went back to my desk to finish off the work I needed to do before I left the office for a week. There have been occasions over the past six years (almost always in the early hours of the morning during particularly demanding times) when I have thought about how nice it would be to not have to be involved in the constant challenges of operating a company of Exetel's size in the intensely competitive markets and services we involve ourselves in. But that sort of thinking lasts for a few minutes each time for what is a probable total of around 15 minutes out of the past 400,000 or whatever the actual number is over the past 6 plus years. Personally, I think there's little point in any entity buying Exetel as Exetel is just too different to any other Australian communications company. Principally we don't operate the company to maximise its profit - we do the complete reverse - we operate the company on the basis of making as little profit as possible consistent with staying in business and paying our bills and taxes on time and being able to support endangered species at a slightly increasing level each year. Not the sort of company that any other entity would find financially attractive and certainly one where no "synergies" could be found. So the oleaginous reptiles that have approached us with their 3.5 - 4 times EBITDA and the 'multiples' for "synergy" and the rest of the financial smoke and mirrors simply isn't there....even if we bothered to do some basic numbers....which I have never bothered to have done. I have never had any interest in money - at any stage of my business life and that clearly shows in my choice of jobs over the past 40 plus years. My one ambition when we set up Exetel was to build a 'perfect company' that was equally beneficial to its customers, its suppliers, its employees and the country in which it operated. We have a very long way to go to meet those objectives and, after all these years of trying, I don't want to leave before that objective is achieved. I suppose we would sell Exetel for the right amount of cash on a 'hand over the keys and walk away from the business the moment the cheque clears' basis but the sort of people/companies that have approached us in the past never have the right amount of cash (in one case any cash at all) and they and their companies are the sorts of people I wouldn't want to sell anything to even if I regarded what I was selling as completely worthless. I haven't played my part in helping get Exetel where it is today to put its customers and employees in the hands of the sort of people who have approached us in the past. Who knows - this latest approach may be the exception - oddly 'engineered' as it was? Though my experiences with Asian "business people" is such that I doubt Exetel is a suitable purchase.
Saturday, March 20. 2010Unlimited ADSL2 Plans.......John Linton .........not for the faint hearted or companies without access to major customer connectivity bandwidth (let alone large amounts of IP at minimal costs.
PS: An interesting comment on another aspect of Krudd's Folly: Friday, March 19. 2010LTE For Wireless Broad Band......John Linton .....a bit like ADSL2 replacing dial up. Optus have announced they will start trialling LTE "some time later this year". Shortly after Optus made that statement Telstra publicly stated the same and yesterday followed up with a reinforcement statement published here: So many 'commentators' on the actual and likely performance of wireless as a suitable broadband medium speak as though they have been around communications in Australia for a very, very short time. They talk as if 'today's' speeds and coverage are the end point rather than 'five minutes' into the deployment of the technology. It took the best part of 60 years in Australia for the first data stream to be carried over a PSTN copper line and that was at slightly more than 2 kilobits per second. The number of commercial users over the following year could be counted on the fingers of both hands. In the subsequent 50 years the speeds over PSTN copper have increased more than 1,000 fold and 5 year old children in outback Australia use the internet. So, for those uber dumb people who think that technology delivers all it ever is capable of on 'day one' - get some perspective. The current uber dummies who complain about wireless broad band "coverage" and tower "saturation" presumably weren't born or, if they were, weren't wealthy enough to own an early mobile phone on the Telstra network (no free hand sets in those days). If they had (both been born and had enough money and a COMMERCIAL NEED - no social networking could be afforded at those early rates) they could have joined the chorus of complaints about signal drop out in the centres of Sydney and Melbourne and 'no signal' status for most of the rest of those cities. It's called in technology deployment terms "the start up phase" which is usually riddled with problems and 'glitches' and has a steep curve of improvement. Today, teens and sub teens use mobile phones on trains in tunnels going to school without giving a thought to "coverage" or "saturation" and certainly not cost - it's called in technology "maturity" where everything works at a minimum cost (to the carrier). So everyone, except for the completely moronic, assumes that a new technology deployment will continue to improve over it's life cycle in terms of availability, speed and cost - because - well - that's what always happens in technology. So why do so many people in Australia's media keep rabbiting on about the "limitations" of wireless broad band? Basically because they have no idea about communications technology or even deployment financial considerations let alone any concept of market place needs and structures. Will wireless ever replace some form of wire line technology as the preferred medium to deliver data services? The simple answer is yes in a large number of demographics and scenarios. Will it replace a wire line medium in every demographic and scenario - clearly not - but that isn't the issue in any way, shape or form. There is little doubt that 'real soon now' there will be more wireless broadband services used in Australia than wire line services and that disparity will keep growing. It has taken 10 years for ADSL to reach as many people as it's ever going to reach in Australia and the number of users will not grow any further and (depending on the ABS report on the 31st) will decline at some yet to be determined speed over the next few years to some unknown level. Will wireless broadband increase over that same time frame? Undoubtedly and, again, depending on the ABS numbers wireless is already at more than 50% of ADSL numbers which it has achieved in, depending how you count, around three years. Don't under-estimate the impact of that statement. Wireless is in its babyhood technology stage (not even technological infancy) and ADSL is at its peak of technological development...and wireless is out selling new ADSL connections at current estimates of at least 20:1 and maybe higher than 50:1 - again depending on the ABS figures due shortly. This doesn't matter to someone who has an ADSL service with which they are happy and that delivers the results they want from that service. The development path of wireless technology has reached a point where more people who are not totally happy with their ADSL solution will make the change to wireless at an increasing rate as the perceived 'disadvantages' are addressed by roll out schedules and technology developments. Wireless will achieve a penetration rate undreamed of by ADSL suppliers - there is little doubt that it will pass 20 million within the medium term future....more than three times the 6,000,000 ADSL reached in its life time. So Optus and Telstra's LTE tests later this year have no immediate impact except to signal what may well be delivered in the not too distant future in this country. If you can be bothered to type "LTE" in to your browser and add a suffix like EU or USA or Asia you will see what is happening to wireless broadband around the world. While many, many countries are well ahead of Australia in wireless deployment: http://www.lightreading.com/document.asp?doc_id=189365&f_src=lightreading_gnews it will happen here in the not too distant future....what effect this ongoing roll out has on Krudd's 'NBN2' is unknown and dismissed at this time. Thursday, March 18. 2010New Frontiers Look Remarkably Similar......John Linton .....to the old frontiers only more expense is involved. I spent some time yesterday morning having a 'breakfast meeting' (along with 20 or so other people from the Australian communications industry) with a US company who has some new ideas (and products) that address the 'unified communications' requirements of medium to large size businesses. When it became clearer as to what this involved it seemed to me that the ideas were not so new and the products were very little different to those offered by many Taiwanese 'clearing houses' who somehow obtain your email address and bombard you with weirdly worded 'special trial offers' whose principal attractions are the anglicised given names of the people signing the emails which have recently included Violet Sun, Betty-Lee Choo, Marigold Tsieh, Heavenly Tang and Venus Chung - I would really like to meet those ladies one day and see if they are as exotic as their names. I did enjoy the highly polished presentations of the three bright and shiny US employees (I never ceased to be amazed at how incredibly more accomplished US company personnel are at this sales 'art' than any Australian I have ever seen) and, if I didn't know better from direct experience, I could have almost believe what they were offering was worthwhile and of real value. As I do know a little bit about buying most of the hardware they had put together via a few lines of code in a $1,000 or so dollar switch I was grateful to listen to some new ideas on how to 'present' such facilities but wouldn't consider spending some 400% more on what was simply 'packaging'. Essentially they were offering hardware products from Taiwan with some beautifully crafted coding for a user interface to provide 'unified' communications from the office desktop including video conferencing, video calling, voip, sms, fax, email with transfer of all facilities to a notebook or 3G phone so that you could use the facilities wherever you had IP access anywhere in the world. It was an impressive demonstration of an essentially simple concept that even a company of Exetel's size has been offering for over two years now (except for the video phone which we have never seen a demand for in Australia). I did learn how to market these functions much better than we do today (we have never put in place such a capability). I also learned, based on questions and statements by the attendees, that most of the people attending the breakfast presentations did think the products WERE innovative (the person sitting next to me thought they were "very exciting") and that the wholesale asking prices were more than reasonable - one person publicly said he thought they were '"a bargain". (I feel soooo old when people talk like that). However on the way to the office I thought about how much better we could 'present' our SMS and FAX gateway services to business customers or even to soho customers. I have never seen the value of video phones because of the obvious limitations of the lack of such facilities by people you call - however the cost of such facilities now is trivial if you really wanted to use video calling or conferencing from your desk top or lap top. It's a pity that we are so inundated with new development demands at the moment that any ideas I, or other people may have, on how to better 'package' a soho unified communication offering it will have to wait until we acquire more development resources allocated to internal development work. Perhaps its the general uncertainty in the various marketplaces we address but the demand for new development work, despite our doubling of development resources, is becoming much greater than it has ever been. It never occurred to me when we started Exetel that one day we would have more programmers than any other type of personnel but it's definitely more than a possibility that will happen before the end of 2010.
Wednesday, March 17. 2010'NBN2' Pricing No Clearer Now It's 'Published'John Linton A kind long term Exetel user 're-published' the 'NBN2' pricing from the Hobart Mercury on the Exetel Forum yesterday which can be found towards the bottom under "Any Thing Else Anyone Would Like To Discuss" http://forum.exetel.com.au/viewtopic.php?f=288&t=35575 This include's iinet's "suggested retail' pricing for a range of speed and download options. The published pricing, compared to current ADSL services, seems, at least to me, at best to be unexciting. The 'free' local and national telephone calls is innovative but is already offered by more than a few ADSL services and the pricing of calls to mobiles and overseas locations is wildly expensive compared to any ADSL/VoIP service. The various comments made by 'NBN2' personnel as reported here: doesn't make anything any clearer and, while I may not be reading it correctly, it seems to indicate that thie pricing on which iinet has based its 'retail pricing' on is simply one off 'promotional' pricing to get this 'pilot' off the ground. So if you like the pricing then give it a tick and if you don't like the pricing then you can comfort yourself with the fact that it's only a pilot used to bed down the operational logistics. It will be interesting to see what Telstra now offers when it activates its fibre offerings in Tasmania. So the lower end pricing from iinet is uncompetitive with ADSL2 and the higher end pricing that gets you the 'head line 100mbps speed' is way beyound any of the current high end ADSL2 plans available from any number of ISPs....and also beyond the budgets of 90% of current ADSL users. A totally expected result.....and given the disclaimer that this pricing won't apply in the future beyond this pilot program nothing can be read into this particular political stunt - purely intended (by its crass timing) to help Labor at next Saturday's State election and the coming Federal election. I suppose the other disappointment in the brief details announced and published is the fact that, without a shadow of an apology for misleading the Australian electorate by even more blatant lying than usual, we have the 100 mbps service to 90% of Australians suddenly downgraded to a 25 mbps in an unknown number of places with the off the cuff statement that "25 mbps is the fastest speed in some parts of Tasmania"........and presumably other parts of Australia? So has the 100 mbps national network become a mixed speed network with 25 mbps being functionally no better than the current ADSL2 services available NOW at half the cost without ripping off the taxpayers in an attempt to win a second term at the trough? As the old joke goes: "How do you know when Krudd is lying?....his lips move." A more efficient ISP than iinet may well provide the 'NBN2' services at less unrealistic prices than iinet is being reported as offering - presumably as any prices 'announced' today are so premature that iinet can only have done that for publicity purposes and will change them downwards as the actual delivery date for services becomes a reality. Using iinets ADSL2 pricing as an example other ISPs may well offer pricing at ADSL2 type rates rather than the published rates. Similarly it will be interesting to see what Telstra come up with when, for purposes only known to themselves, they offer high speed (or perhaps that should be super fast speed as their publicity machine describes it) in Hobart later this financial year and well before the first 'NBN2' customer is activated. Will Telstra decide to compete on price or will the ACCC protect the 'NBN2' from "competition"? I guess the spectre of Telstra's fibre abilities, already in place to some 1,000,000 plus residences makes the 'NBN2' a lemon in any realistically priced 'war' and Telstra's current pricing of that fibre offering can only be seen as a 'furphy' put in place to allow it to take a wait and see attitude to what the government monopoly would try and get away with. Did/does Telstra truly believe that a residential user would really pay over $A200.00 per month for, effectively, internet services? Even the most jaundiced of observers must have come to the conclusion that they had no intention of actually providing services until the 'NBN2' showed it's hand? Or did Telstra completely lose the plot? and spend more money rolling out fibre than the cobbled together group of third parties did for the government? It would almost be worth the price of the ticket if Telstra decides to go down the path of vicious competitor rather than just roll over. Of course the "Telstra Problem" cannot be addressed for some time to come and this article points out one view of why it was never going to be easy to do:
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