John Linton
....one more time.
I had a call from the people in the UK with whom I was talking up to late July of last year about Exetel providing wireless broadband in the UK via some very attractive arrangements using the T Mobile network owned by Deutsche Telekom. As I made reference to in a blog around that time - that opportunity disappeared when DT decided to dispose of their assets in a different way. However, the opportunity now seems to have re-emerged and the people I was talking to then have become some sort of arbitrageur for wireless network access and wanted to know whether Exetel is still interested in what they have to offer. I regretfully said that the time had come and gone when we could consider operating in the UK but thanked them for the opportunity. With the current uncertainties in the Australian ADSL marketplaces there is no way we can expend any of our very scarce resources in a start up operation some 20,000 kms away.
It triggered in my fading memory that things were very different only nine months ago than they are today. I really would have liked to have gone ahead with seeing if we could make wireless broad band 'work' in another country better than we could in Australia and use the economy of scale that would produce to buy hardware at UK prices rather than at the prices we currently pay - UK pricing being one quarter (then) of what we were paying and now is one fifth of the cost. It would have been a major assistance in more rapidly developing the Australian wireless markets we were aiming at. Oh well....you can never seldom go back to an old girl friend or an old business opportunity and certainly not that one with all that has changed in the last few short months.
We have begun to 'sort out' what we will buy in terms of base services over the coming 12 - 36 months as we need to make a decision before Annette and I go away at the end of this week and make some personal decisions of our own. Steve and I, either separately or together have been dealing with many of the companies who have provided us with proposals for many years - some stretching back well before the 'creation' of Exetel. In some cases the person submitting the proposal has submitted proposals to us in the past for a different company and one person is now submitting a proposal for the third company he has worked for over the past ten years or so. The main problem is that only one company could provide all the services we need but they don't want to do that and the best pricing and conditions for most of the 'elements' we want are provided by different companies. Even if we don't get any more suitable bids before the tender period closes we could address two of our four major issues more than adequately but, personally, I really don't want to do that.
So, as far as I can see, everything has that 'deja vu' look about it and we seem, in some ways, to be back in January 2004 trying to finalise contracts with suppliers that would allow us to get our new business off the ground and survive on the very thin margins our lack of buying 'power' were available to us. Although our current monthly major supplier spend has increased from zero to approaching $A4 million over the intervening years it hasn't helped us buy better than our competitors which means that our 'negotiation' skills have not improved and we are still dis-advantaged in doing business in the various markets in which we operate. I would have hoped to have become much better at this elementary aspect of business life but it appears that either my childhood education or my genetic inheritance has made that impossible.
At this time the only certainties are that we can reduce our IP costs by more than 50% and that we can reduce all of our inter-city and intra-city back hauls by at least 50%. We can reduce one, but not all, of our residential port costs by around 25% and could reduce two of them by around that percentage. We could reduce wireless broad band costs substantially - but not in the way we need to do that and VoP minute costs could be reduced if we were to commit to volumes I, personally, am uncomfortable with. So not a great deal of progress on meeting the price points we sought to achieve in these ever more difficult times. We have made a lot of progress on our support and sales processes which are delivering both sales and retention benefits and we may have to make do with those steps forward for the time being.
Maybe we'll be more successful next year if we don't opt for longer term contracts this time?
PS: An indication of how Telstra's shareholders may vote on any sale to the NBNCo:
http://www.smh.com.au/business/big-investor-warns-on-telstra-20100315-q9ls.html