John Linton
....this doesn't look like starting out very positively.
Despite everything we have looked at over the past few weeks (and pretty much every day for the preceding six plus years) there seems to be no way that we can find a way to provide competitive ADSL1 or ADSL2 services that will do better than break even in the current residential marketplaces in which we operate by continuing to offer the services based on any of the parameters we have used since we began operations. It seems that 'things' have just got too tough for almost all, if not all, providers of ADSL services and the results have been successive changes to offerings that 'burn up' whatever remained of the 'fat' they previously booked as profit at the end of each year.
This has been evidenced in the succession of 'sell downs' by the smaller companies supplying ADSL over the past two years, the ABS half yearly reports showing saturation in the ADSL marketplace, market share decline by Telstra and Optus and an ever increasing 'more for less' in general service offerings (actually that is really more for the same I suppose). It's true that IP costs have fallen significantly over the past 12 - 18 months but as so many people from the larger suppliers are being reported in the Australian communications media are beginning to point out the fall in IP costs is barely, if at all, matching the increase in average IP usage.
So we will now have to make some very tough decisions if we are to continue to develop our overall business at anything like the growth rates we have achieved up to today. One thing that we will need to do is to cease supplying services that lose us money. In looking at the April usage reports one thing has become very, very clear. Apart from the standout example of one single ADSL2 customer costing us over $A600.00 more than his/her monthly plan charge we 'lost' over $A400,000 on supplying ADSL services to 20,000 ADSL customers. We need those customers to leave us and transfer to providers that are able to provide them with services that they 'need' and, via their superior buying power/lower operating costs be able to 'survive' doing that.
If we proceed to do that it will reduce our revenue by around $A1 million per month (around 20%) which will be a very hard to deal with in the short term but will make every other aspect of operating the company infinitely easier. Finding the 'courage' to do something of this magnitude is not going to be easy but there appears little alternative and I, personally, find the prospect of continuing to subsidise so many people's use of the internet to be beyond my abilities to be able to do - both financially and 'socially'. It's entirely our own/my own bad planning that we have to contemplate such drastic actions but there seem to be no real alternatives. Carelessness in any aspect of business tends to get punished very severely.
Not a pleasant thing to have to contemplate doing and something I, personally, have no experience in doing. I'm not sure how to go about it. I suppose the only sensible way is to point out there are better providers than Exetel for people who need to use the internet in the ways these Exetel customers use it and we are doing them a favour for pointing this out to them? I doubt that such a view, how ever well expressed, (and, based on experience over the years, I seem unable to express any view very well) would be well received.
Not a very positive thought to begin the 'working' week with but, subject to a 'brain wave', I don't see any alternative.
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