John Linton
....because it is hard enough understanding what just happened let alone predicting what might happen in the future.
Each year at this time we begin to do the overall planning for the coming year. It has become so ingrained in my working years that I seldom even acknowledge to myself that it's time to start the process. This year has had so many changes, from our viewpoint, that beginning a process that has an horizon of 14 months away appears to be an impossible task. I will have some help this year in a much younger and keener mind to do the number crunching - something I have never had access to in the past and which will, hopefully, not only make the process less onerous for me but will produce a better result and more easily deal with the chaos that surrounds some aspects of the residential broadband market at the moment.
It seems a little strange to me that as we begin planning the 7th full year of Exetel's commercial 'life' so many aspects of our business have changed. When we began Exetel we only had one 'product' and some ambitious objectives and, of course, no customers. As the last few years have gone by we have grown to having ten significant 'products' and well over 100,000 customers and operations in two countries - a considerable set of differences. Irrespective of the changes over the past six plus years, Exetel is still operated as a 'small' company with the owners/directors still spending considerable amounts of their time talking to and listening to Exetel's customers on a one to one basis - something few companies do in 2010 and, I would hazard a guess, none of Exetel's "size". As I was told earlier this morning in an email from someone I greatly respect - that is a negative and we should stop doing it.
Be that as it may the facts remain that we need to put together a business plan with an horizon that, I at least, am unable to see as far as. Of course, business plans in essence are simply some 24 month forward looking spread sheets with a few pages of text outlining the major directions to be pursued month by month and some 'facts' to support the reasons for those directions. One of those directions is to determine how ADSL residential markets will move and change over the next 14 months. Since 'Day One' of Exetel's existence almost every thing we have done has been based around building and nurturing an ADSL residential customer base because our basic reason for entering that market was to provide the lowest cost ADSL broadband service at a level of reliability and speed equivalent to the 'best' Australian providers.
For the first time in our Exetel business planning Residential ADSL will not be the centre piece of our thinking. We have never made money out of residential ADSL - breaking even in most years but over the last 12 months losing an increasing amount of money as the Residential ADSL broadband market places first slowed and then began to actually shrink as customer coverage reached saturation and then wireless broadband began to 'eat into' the lower usage customers. The current ADSL offers from a range of large providers to the residential marketplaces have now reached levels where they must, irrespective of the size of the companies, lose money no matter how the 'numbers' are crunched. From what I can see at this time, based on our current offerings, a forward projection shows that we will lose a steadily increasing amount of money each month through FY2011 on supplying residential ADSL. No realistic person can look at such a scenario and not do something different. What we will need to do about residential ADSL is not clear to me other than to plan to have less residential customers each month as we move forward.
We did begin the process of changing Exetel's emphasis from residential to business customers some 16 months ago and, almost certainly, we now need to speed up the building of an effective 'business product set' and also much more rapidly build the number of corporate customers we have. This in itself is a very, very difficult task and one that, even having 16 months experience since February 2009 looks no easier now than it did 18 months ago when we first decided to do it. However, that is what planning periods are all about - finding different ways to address the now known issues and establishing some factual basis for assessing the likely changes that will occur, month by month, over the coming twelve months. It really is that simple - though at the moment it doesn't feel as simple as it should.
It seems that this year's planning period will be the most difficult I have ever participated in.
PS: We received the first fibre service order this morning - a land mark in the sense that I still remember the first ADSL1 order we received in January 2004 (by fax) and the excitement of that event.
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