John Linton
.........you read 'articles' like this:
http://www.itnews.com.au/News/171931,tsn-sells-its-customers-to-comcen.aspx
If you are naive enough to take what is written at face value then clearly the only conclusion you could come to is why is it 'newsworthy' for the temporary inconvenience of 120 ADSL customers (out of six or so million) to rate as 'news'. I mean, a temporary problem in one of Telstra's larger DSLAMs would put thousands of ADSL users off line for a few hours and that happens on a regular basis. However it is reported in the 'industry press' so 'it's news'.
What does it really mean now that it has been drawn to many people's attention - at least those (like me) who waste their time reading such 'information sources'? - apart from wondering why a company so small that it only has 120 inter-State customers rates even one obscure article's worth of attention? Well, unless you are truly naive the explanation (even though it allegedly only affected 120 users) is total nonsense. The 'sale' of 120 customers wouldn't "fall through" after three months because it involves 'pocket change' and it's almost impossible to understand what could "fall through" and why, on the remote chance that such an event could happen, why it would result in those customers having no internet. Can anyone come up with a scenario where that could happen? I very much doubt it.
The most likely, by a 99% likelihood, situation was that TSN, in some delusion of grandeur, decided it's tiny presence in a NSW coastal town needed bolstering by creating the illusion that it was a "national provider" and created that illusion by using a re-wholesaler of ISP services to provide that capability - in this case one of the failed re-wholesalers that has ended up in M2's hands via whatever process that happens. Buying via a re-wholesaler is never a good idea, financially or in any other way, and doubtless this became more and more financially unsustainable as time passed and the predicated user 'volumes' turned out to be something like the alleged "120 users" - not exactly even a break even proposition. So it's only guess work to proceed beyond that point but based on the sudden cessation of internet supply it would be a fair bet that M2/whoever pulled the plug to force TSN to allow them to pass the customers over to another of their re-wholesale customers in 'forgiveness' (partial or in total) of money owing over the past whatever period.
That explanation may be totally incorrect - but it fits the 'known facts' much better than "a sale falling through". A sale falling through would not affect the ongoing delivery of services by the seller in any way. So what does it mean, if anything to the ongoing marketplace palpitations that are enveloping the ADSL marketplaces? Nothing really - at least as far as I can see it is a complete non event drawn to people's attention via being deemed worthy as 'news' on what must have been an ultra slow news day. In general perhaps it is a feather in the wind continuing to emphasise that whatever was thought to be possible in late 2009 has become less possible or impossible in early 2010 and the very tiny end of the data communications supplier chain has come to an end.
Many people in the Australian communications media, few if any using actual facts and figures or even any knowledge of the industry in general, are speculating on the future provision of communications services to Australian customers with the common mantra of "ongoing consolidation" and "only the very largest will survive". Who knows - as a generalisation with no specific time frames that maybe true - it certainly is a possibility but then such a general scenario is always true in any industry at any time - but it seldom happens in any predictable way and, subject to correction, it is difficult to find an historical equivalent scenario.......that occurs over a very short period of time. Smaller companies always have a problem competing with larger companies for the reasons set out in that widely studied Kindy subject - "Business Realities For The Under Fives".
In theory, as set out in chapter one of that book, no company smaller than the largest three (or four) can survive in any aspect of commercial endeavour for more than a few years. However chapter two of that book has a caution that in fact that has never been the case and that from Steel making through pharmaceuticals to automobile manufacturing and every thing in between the provision of millions of products and services are done by millions of smaller companies in every industry type at profit margins the behemoths of any industry can only dream about.
If, as a four year old, you get to chapter three before you graduate to primary school (and take up "Advanced Business Principles For The Very Young" - which deals with same issues but caters for the more mature student) you would have learned that God, in her wisdom, made it an immutable and universal law of commerce that smaller will always be more beautiful (in the eyes of a section of any marketplace) and not only more beautiful but immutably always more nimble and always almost infinitely more efficient - which explains why there are so many, long established, smaller companies in every industry type where the majority of the market is 'dominated' by a few very large companies.
So, perhaps, the cited article does indicate that some/many/most small companies reach a point where they can't compete (that is undoubtedly true in the history of commerce to some degree or other) but to extrapolate from it, even if you take what was reported as being true, is stupid - 120 users of ADSL services (if that is fact the case) experiencing a short period of unavailability means nothing at all to the industry generally or its six million users.
Big is useful in many ways but it has very significant down sides - take a brief look at the last 30 years of as many industries as you can be bothered to spend time on....start with Telstra, Optus, Vodafone, Hutchison and AAPT in Australia and work out the ROI you as a shareholder would have received if you had bought shares in those companies when they became available. I can save you the trouble and tell you each one of those 'investments would have lost you money and a term deposit would be 300% better than the best of them.
Would you be a happy camper now? Or would you have been better off putting your money in a bank term deposit?
Big seldom delivers to anyone except the top and middle management....remember El Sol?