John Linton .......to not plan for greater per customer connection (and IP) usage you read something like this:
http://online.wsj.com/article/SB10001424052748704289504575313082104914118.html?mod=WSJ_Tech_LEFTTopNews
and particularly this comment:
"Now, with Internet traffic growing at a compounded annual rate of 46%
and expected to quadruple from 2007 to 2011, according to a Cisco
Systems Inc. study, analysts say fiber networks that lay in disuse for
years are gradually being put into operation. As a result, they expect a
round of consolidation in the fiber industry."
If you look at the annual graph of Exetel's customer usage of IP
http://mrtg.exetel.com.au/combined/total-supplier-bandwidth.html
you will see that average usage has increased by over 80% over the past year and around 50% in the past six months.
Part of this has been an increase in actual customer numbers but the overwhelming reason is greater average data download use per customer. This rapid increase in average customer usage has been partially offset by the almost equally rapid decline in IP pricing over the same period (almost certainly a factor in making the overall increase possible). However the carriers from whom Exetel buys connectivity from the Telstra exchange to our PoPs have only reduced those back haul charges much more slowly and in Telstra's case; not at all. Right now it costs more than double to deliver a byte of data from our PoPs to an end customer than it does to deliver a byte of data from the other side of the world to our PoPs.
Clearly a challenge for companies like Exetel over the coming year and one we really need to solve as it is a key contributor to the overall cost of delivering an ADSL service and, like the port cost, has been the major reason for Exetel's inability to more significantly improve end user costs of ADSL services without losing even more money than we have done so far. Unlike support, administration, provisioning and accounting costs which a combination of automation and low costs of operating in Sri Lanka which we have done an excellent job of reducing to lower than any competitors we have never been able to makes similar reductions in our major supplier's charges and until we have the sort of financial resources to buy out a 'Powertel' we never will - and the likelihood of us ever acquiring such financial resources are zero.......
.......though.....one of the things to be thought about while we are away is just how we might structure Exetel financially in the future. Over the years we have had various offers from a range of organisations (overseas and local - sensible and ridiculous) to buy all or parts of Exetel or to 'merge' with Exetel or some version of those constructions. We have never pursued any of them at all seriously for a variety of reasons not least of which was we wanted, and still want, to try and meet our original objectives of creating the Exetel business - which we are still a long way from achieving and, personally, I can't see us achieving them for at least another two years...and almost certainly not within that time frame.
Having said that....there are one or two, perhaps even three, possibilities (and I stress the use of the word "possibilities") that have emerged over the past few months that, if they ever became real, would provide more opportunities than we have available to us now. when you are a long way from Australia and your mind begins to slow down you do think differently and begin to assess all sorts of things from a different perspective. Perhaps 'merging' Exetel with another company would give us new markets and a new financial status that would make it easier to accomplish our current plans. It might certainly give us more financial abilities than the remainder of our family assets not already committed to Exetel are able to provide.....though it seems to me to be very unlikely that we will find people who believe a commercial business should be run to provide the lowest possible cost services to its customers and that 30% of any profits it may make should be given to other people to protect Australia's endangered wild life.
Perhaps lightening will strike (in the thinking sense) and our brief respite from the day to day demands of Exetel will provide fresher inspiration.
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ABN 350 979 865 46
PS: A watershed announcement:
http://www.theage.com.au/business/telstra-signs-transfer-deal-20100620-yosf.html