Tuesday, June 15. 2010Less Than A Week To Go........John Linton ....before we take a break with still far too much to do between now and next Monday. It always surprises me that although we book our annual leave 10 - 12 months in advance we always get to the time we leave with so much to do. I haven't even looked at where we might go after arriving at Heathrow this year other than vaguely glancing at some possible hotels and locations for perhaps a total of a couple of hours. Perhaps planning is best done this way, none at all, as we always have a very enjoyable time. I wish 'business' planning could be done with such a lack of effort yet achieve similarly enjoyable results. In the remaining four 'working days' we have to fit in two meetings with major suppliers, a board meeting to not only cover the usual topics but to approve the Australian and Sri Lankan companies business plans and attend Exetel's end of financial year party.......as well as finalising the 'launch' of the new fibre services in NSW, VIC and Tasmania and settle the sales and corporate support 'structure' of the Australian company for FY2011 which has not yet been completed. I seldom/never 'get sick' but I have picked up some bug which makes the prospect of attempting to complete the myriad tasks involved in this workload extremely unappealing and it took a considerable effort to even get out of bed this morning let alone begin working on what needs to be done. Perhaps there are more interesting things in prospect (a holiday) and it makes the day to day problems and issues of daily working life increasingly tedious as the time between dealing with other people's and your own problems and the 'freedom' of varying your days according to your then current whims get closer. I think it's also the reminder that as you reach the end of one financial year you are already completing the planning for the next financial year which I have done too many times in my life and it is way past time for me to have stopped doing these incredibly difficult tasks. Apart from anything else they are now quite complex and require more knowledge than I have manged to acquire and retain over the years. We have 'framed' a very conservative overall plan for Exetel for the coming twelve months and, for the first time, planned for reductions in some parts of our business that have been key aspects of our activities since we started the company. We have planned for continued overall month on month growth, albeit at a slower rate than any year so far, but in different areas than in the past years. We have also left considerable leeway to make more changes should FY2011 continue the trends so evident over the past twelve months. Perhaps it's that we have made so many changes to our aspirations for the coming three years that has made me feel this way - I can't overcome the view that we have wasted so much time and so many opportunities without getting any real 'pay back' over the past six years. I don't mean in monetary terms, we have never had any interest in pursuing money, but in terms of doing more and for more people than we have been able to do. One of the key things we must do in early rather than late FY2011 is to find better ways of 'pushing' our products and services in to new marketplaces and find either within the company or from outside the company the right people to do that. My current view is that Exetel's 'width' of product offerings has grown beyond the sensible 'vision' of our current methods (there simply isn't enough time in the day for our old methods to continue to work) and that situation is not making the most of what we could do with more dedicated time and imagination. Then again perhaps it's just the flu, ill health and general tiredness which will all, or almost all, be fixed by a couple of weeks in rural England or dreamy Brittany....perhaps even Tuscany? Copyright © Exetel Pty Ltd 2010
Monday, June 14. 2010Dreams Are Ever Thus......John Linton ....and somehow I don't think this Australian soccer team will emulate the performance of the last one......a four goal deficit will be a major problem to overcome with Ghana's win today and the confidence they will take in to the match with Australia in a couple of days time. So a bit bleary eyed this morning and a couple of hours post match sleep has, if anything, made it worse. While waiting for the match to start (not having much interest in the previous games) I read the overseas communications media more thoroughly than usual and predominantly the rapid deployment of LTE across several EU countries (despite their budgetary problems). I would have no idea how the progress to faster wireless speeds is affecting the usage demographics but the impression I get is that wireless has now overtaken ADSL in more than a few countries in terms of subscribers and is beginning to erode the ADSL user base in the UK and France at a faster rate than was expected. It's hard to 'read' what's happening in the Australian marketplaces which lag behind both the EU and the USA and it seems to me, at least at the moment, that we are moving in the opposite direction to both of those more advanced markets. The PennyTel offer I cited the other day and the ongoing Virgin offers are directly different to the Verizon and O2 elimination of their unlimited plans and their public statements that 95% of their wireless data users use less than 2 gbytes per month.....an indication that the majority of users are using mobile handsets rather than using wireless as an ADSL replacement - though the impression given by some of the reports is that is not the case. It appears it is the case in Australia as both the last ABS report and this new OECD report illustrate: If it's correct that Australia is 'trailing' the US and EU markets by 18 months then we can expect to see more of the discounting of data via 'special offers' for the remainder of calendar 2010 and into 2011 and therefore a faster decline in ADSL usage as customers see that they can get wireless broadband for much lower costs. I find it a little bewildering that both Vodafone and Optus make such a song and dance about how wholesale data rates of close to $20.00 per gbyte are the very best they can do without "going broke" and then you glance at your competitor's web sites and see that clearly other customers get rates that are less than half, in the recent case 25%, of what Exetel pays. When queried on how such pricing is possible the answers are always obfuscatory but I always assume there is some methodology that I simply don't understand. I will be interested to see whether the wireless broadband coverage in the UK has improved in both speed and coverage as well as getting a much better idea of the 'street pricing' that now exists compared to almost twelve months ago. I took all of the growth of wireless broadband out of next year's financial plan based on the recent movements in the Australian wireless broadband pricing from both the carriers and some of their resellers. When a company the size of Pennytel can strike deals that allow the pricing currently being offered it is pointless planning to put any real efforts in to developing a more competitive wireless broadband presence. How we retain our current customers is likely to take all the efforts we can afford in this key marketplace. Maybe we will come up with a brilliant idea on how to deal with the current situations but right now I think Exetel's chances of making any further progress in the wireless broadband market resemble the Socceroo's chances of progressing - with two matches to go, a four goal deficit and our best striker red carded and out of those games. To turn dreams to reality takes more than calling the opportunities correctly. Copyright © Exetel Pty Ltd 2010 Sunday, June 13. 2010Size Of Internet Providers In Australia.......John Linton .....and what relevance it has to anyone. I read this yesterday (because it was sent to me asking for comments on churn rates): http://www.itwire.com/it-industry-news/market/39724-relocating-internet-users-favour-telstra-a-optus and while I never pay much attention to figure quoting that provides no credible references I did wonder at why the claims made in this article were made and who they were intended to inform or benefit - because, of course they couldn't be based on anything real - the data couldn't be available to be compiled. Think about it - how do you manage to collect the churn in/churn out rate statistics of your largest competitors? So as the figures were a nonsense my mind turned to why anyone in this industry would actually base an 'address' on such an impossible to calculate set of figures? I was also curious about one very precise number quoted: "(the eighth largest ISP, Eftel, has 43,000 DSL subscriber, less than 10 One can only wonder how iinet obtained that number (assuming it's accurate) and why the speaker believed it positioned the company so precisely in the 'pecking order'. A breach of the NDA it may have signed while considering acquiring EFTel's user base perhaps? In any event, however the figure was 'obtained' I very much doubt it is a correct positioning....although it is appears to be consistent with iinet's claims about its own 'ranking' which defies the fact that the published results for TPG consistently show it has larger revenues than those of iinet. I would have thought the 'ranking' of the 'top ten' internet providers in Australia, based on published claims, would be something like: Telstra, Optus, TPG, iinet, AAPT, iPrimus, Internode, Extel, Dodo, M2. Doubtless there are others I have overlooked but claiming that Eftel has more ADSL customers than Exetel, Dodo or M2 just simply underlines the likely accuracy of the other 'statements'. Not that it matters to anyone other than it is a curious insight in to the company making the statements - not the least of which is that, if they actually base any actions on these public 'facts', then how unrealistic are their management objectives in the general running of their own business? Is all the information they use to make decisions this wrong? I only considered this scenario briefly because I know how difficult it is to understand almost any aspect of today's communications marketplaces and how difficult it is to find out any 'hard' information about any particular competitor let alone any combined information about the totality of your competitors let alone what the overall movements in any particular marketplace may be. Though possibly much larger companies can do that much better than smaller companies - personally my view is that only Telstra can sensibly track changes in the ADSL (and other) marketplaces because they have all the data. So iinet's claims about "15% of this and 80% of that" are pure, and self contradictory, winging of unknowable statistics in the first place and ANY attempted conclusion is just stupid - anything extrapolated from inaccurate data has no value at all and is often dangerous. So I wondered why someone would go out of their way to talk on a subject about which there is no data to support any view at all? The only reason I could think of was to justify what is happening in their own company and prove to the shareholders that their company is doing better than its competitors and they don't mind inventing a series of figures to 'prove' the brilliance of their own performance. I can't think of any other reason. So I replied to the journalist seeking my comment that they should ask for the published sources that would allow any person to reach these conclusions. Copyright © Exetel Pty Ltd 2010 Saturday, June 12. 2010Plus Ca Planning....John Linton ....Plus Ca Meme Screw Ups. The end of another week cutting in half the time left to finish the myriad of planning and other tasks left before taking a break. The efforts over the past week don't seem to have diminished the length of the 'to do' list nor does the finalisation processes relating to next years business plan seem to have made much progress....though given the time and effort put in to them by various people that should have been the case. We continue to make some progress on a number of fronts though and perhaps I will be able to go on leave on Monday week with a relatively clear conscience. During the past week I have met with each of people who report directly to me and thanked them for their amazing efforts over the past 12 months and shared with them the results of the planning for the coming year while ensuring, as best as I am able, to explain why we are making the many changes that they will be part of over the coming months. It is a very pleasant experience to sit down with the key people in your company away from the office for a couple of hours and realise what truly competent and nice people you work with. Steve will complete that process with the people he is responsible for when he is in Sydney next week. Steve and I will also meet with two of our three major suppliers next week to 'brief' them on the changes we are undertaking with a much less comprehensive set of explanations. We will then hold an end of year celebration function next Friday evening after which I don't intend to think about things Exetel very much over the following three weeks until we break our trip home from Europe via Colombo to do the end of financial year reviews of the operations in Sri Lanka. So, I realised that this was a "long weekend" a couple of days ago which, while days of the week have no meaning to me in terms of carrying out the work that needs to be done in running a business of Exetel's size, it does slow down communication with the world beyond Exetel which, because of our planned departure date, is a bit of a nuisance as it reduces the number of 'working days' by 20% next week. I suppose that really means that I have got out of the habit of planning to use three or four day weekends usefully and by constantly forgetting them find them a mild irritation rather than a pleasurable break. It's a sad commentary, at least in some ways, that a person can find no difference in the pleasure derived from their 'work' to the pleasure they derive from anything else....although that could, at least in some other ways, be seen as a plus. One new 'head ache' that needs to be addressed was this offer sent to me by a blog reader from a company called Pennytel: http://promotion.pennytel.com/ I didn't bother to read the details which I assume will not be as good as the 'head line' but for such an 'offer' to be made at all by a reseller of Optus wireless broadband services seems very strange to me. gigabytes of Optus wireless data would cost Exetel very close to $A140.00 a month - I can't conceive of how Optus Wholesale can sell to anyone at a price that permits their reseller to make such an offer. Apart from the offer by Pennytel it would be logical to assume that Optus is making similar offers to its other wholesale customers which makes a dog's breakfast of attempting to find any sensible way for Exetel to provide a viable Optus based wireless broadband service in the future. So part of this weekend will have to be spent removing all expectations of revenue (let alone profit) derived from Optus wireless services which leaves a hole in the just completed planning processes and a very bad taste in my mouth for so completely screwing up over three years of efforts by Exetel personnel and wasting so much money - it is yet another reminder that whatever little ability I may have thought I once had in making sensible decisions is now consigned to the quickly receding past and that I need to find a less expensive way of wasting my time in the coming year. I suppose that is one useful thing about long weekends - they give you time screw up one more time. Copyright © Exetel Pty Ltd 2010
Friday, June 11. 2010The 'Other' Threat To The 'NBN2'.........John Linton .....keeps tracking towards its 'destiny'. I read the IDC report: http://www.arnnet.com.au/article/349602/3_comes_last_mobile_broadband_rankings/?fp=16&fpid=1 in this article which simply confirms what you expect to see in the development of a commercially delivered wireless technology over time - a gradual improvement in overall performance as the technology continues to be developed and as the 'deployer' upgrades the delivery mechanism in line with the economies of scale of an ever growing user base. I have been using the Optus wireless broadband service pretty much since it became available and I have only occasionally noticed a speed or latency improvement because since I first used it there never were any problems in the few areas I needed it to work. Clearly the change from 3.6 mbps to 7.2 mbps was noticeable but in all other respects I have always had a service (all days of the week and all hours of the day) that seldom delivered less than 1 mbps plus and on most occasions provided close to or above 2 mbps. Not being a games player the early 100 ms latency never affected me and now, when I last bothered to check, latency is well below 100 ms; and whatever it used to be or is now never affected my use of VoIP. So there is nothing of particular interest in IDC's report and, personally, I would expect wireless broadband to continue to improve in performance year on year until the limits of the technology have been reached - whenever that turns out to be. The proposed Telstra and Optus trials of LTE later this year will be interesting in that they will get a lot of publicity and a lot of uninformed comment but if they follow the deployment of LTE in the EU they will simply confirm that speed and latency of today will continue to be improved as new advances in wireless broadband technology continues to be commercially deployed. It has always been the case although the majority of the communications media and all the 14 year olds who tend to give the rest of us the benefit of their pig ignorant comments based on their zero knowledge and tiny time frame of experience of communications technologies will continue to exhibit their 'blanket' incomprehension of technology development - wireless will continue to become ever more ubiquitous and ever more useful. One interesting comment in the report was this: "With social networking booming, and consumers increasingly sharing I think that's the first time I've seen some analyst state a real speed advantage of wireless over fixed wire broadband - and there's a lot more to come. The issue with wireless, although it keeps improving, remains its price. I commented about AT&T's withdrawal of its unlimited mobile data plans a few days ago and I read this article that states the largest UK carrier is doing the same: However their new charges make Australia's current charges look like an absolute bargain. So it seems that the US and EU carriers are as equally inept at understanding what wireless broadband users will actually download as Australian carriers are. At least it will mean that a more rational approach to wireless broadband 'plans' is now being adopted in some markets. Exetel has yet to find a way of offering a sensible (for us) and attractive to the end user wireless broadband service but we will continue to try for another year - but with much lower expectations. It will be interesting to see whether the half year ABS figures confirm the continuing rapid acceptance of wireless technology and whether that growth has had an impact on ADSL usage. Those figures are three months away so they are too late to make any impact on current planning but they will be useful when they do become available. In the mean time I continue to use wireless broadband and will buy a new note book before I go on leave that has the embedded sim slot to save fiddling around with an external modem and the ever present opportunity of daily packs/unpacks of losing one or more of the devices during the constant moves. I will be interested in what happens to Telstra's wireless broadband pricing over the coming months. Copyright © Exetel Pty Ltd 2010 Thursday, June 10. 2010It Isn't All Gloom And Doom In Residential Land........John Linton ......according to some people I have spoken to recently. It always seems to depend on who you talk to as to how your own views of the current and immediate future residential marketplaces are 'performing' get validated or invalidated. Over the last few days I have had more than the usual number of contacts with people who either run other communications companies or who 'act on behalf of' people who are either seeking to buy or sell communications companies. Interestingly those people were exactly evenly divided between people who had an upbeat view of the immediate future and people who had a neutral or down beat view. We have no stand point on whether we would ever 'sell' Exetel remaining of the view that unless someone rocked up with a cash offer of a lot of money we just couldn't bring ourselves to go through the process of listening to some slimy piece of **** telling us all the reasons they saw for Exetel being worth less than nothing and how generous they were being for offering to take it off our hands for a small payment by us to them (a small exaggeration of commercial attitudes but you get the point). However, and only sparked by a couple of tentative approaches we have received in the past few days, we have started to consider whether we would consider some sort of 'merger' with a smaller company that had solid financial backing but had not made the progress hoped for by the financial backers. I very much doubt such a scenario would actually work out in practice but it is a more interesting concept than any other we have been 'offered'. It was also interesting that having been offered one such approach it was followed a few days later by a second such approach. What was of significantly different interest to us was that the financial backers in both cases were substantial. I doubt that these 'offers' will become anything more than 'initial interest' but it did jog my mind out of it's rote way of dealing with approaches to buy Exetel. If there are ever future offers of this kind, or if one of the current 'opportunities' actually turns out to be 'real' I think we could be interested in that sort of 'merger' particularly if it provided a 'listed' result for Exetel. Irrespective of that sort of detail, it was interesting to listen to the different views being expressed about the current and future status of today's residential and small business marketplaces....which as I said earlier were exactly evenly divided about whether current 'conditions' were too tough or represented 'great opportunities. I always listen to what other heavily involved people have to say about the communications business as it is the primary source of 'real' facts as opposed to public statements that always have some sort of 'agenda'. People trying to buy or sell companies have no leeway for 'agenda' speaking because the facts will quickly become apparent in either scenario. The only common opinion was that the key growth opportunity was VoIP in both residential and small business but the ability to deliver VoIP without a compelling broad band supply ability was not going to work. Fibre was regarded by each of the people with whom I spoke as a distraction at the moment but would probably become increasingly important with wireless broadband being regarded as a know nothing about it/can't see how it's relevant particularly to small business non-issue. As usual when you listen to other people's opinions you find yourself agreeing with what coincides with your own views and not accepting what differs - at least to a great extent. I offered some contrary views and they generally were rejected with some attempt at factual rebuttal and I will have to check out the 'facts' that were provided - I could easily be wrong in my views - I often am. Normally I would take more interest in approaches such as the ones we have received ver the past week or so but a combination of approaching annual leave and all of the things that I, personally, have to do and finish over the next ten days just doesn't leave any time for future speculation - we have too many issues to address as it stands without putting non existent time in to new discussions and analyses. Copyright © Exetel Pty Ltd 2010 Wednesday, June 9. 2010
At What Point Does A Company Develop ... Posted by John Linton
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Comments (14) Trackbacks (0) At What Point Does A Company Develop Its Own Culture.......John Linton ..........or is that some sort of PR myth? Too many things to do in too little time is a situation that almost everyone who has a 'real' job often experiences....and in tough times this situation always get's worse. I'm sure most people in commercial life believe they work hard and effectively and deliver great value to their employers - and while I've always thought that the majority of those people probably do.......over the past year or so I have become not so sure. I have begun to wonder if Exetel's 'culture' is a positive or negative aspect of our 'being' in the event that we have a culture at all. I have done a reasonable amount of interviewing of people during my commercial life and have been responsible for hiring (directly) more than several hundred people over that time and (indirectly) for hiring well over 1,000 people (and, yes, I actually keep a record of the people I have hired since the very first one - though there are some gaps). Generally speaking my personal track record in 'hiring successfully is very good with very few 'failures' but lately I think I am losing my 'touch' - not so much in hiring people who don't work out (though there have been one or two of those over the past almost seven years of Exetel's existence) but in deciding to not offer jobs to people who perhaps ten years ago I would not have hesitated in hiring. I'm not sure that I have changed or whether the Australian commercial work place culture has changed over that time ...... I'm pretty sure it is the latter though I by no means dismiss the 'fact' that I have also changed my views over that time. This has been brought in to perspective for me over the past three months as we have looked for 'more experienced/older' new personnel rather than pursuing our long held policy of hiring bright graduates who have either just completed university or who have 'bummed around' for a couple of years traveling and/or doing non-career jobs. The advantage of hiring 'unspoiled' people is that they have picked up no bad habits and the disadvantage is, of course, that they have zero real experience of the work place....the former is always a plus if you are able to offer the right training and experience processes. Lately, and for that matter a year ago and several times before that, we have had the need to hire a person with a lot of experience for a position and have either advertised ourselves or have asked a personnel agency to assist us find a person with particular skills. In all of those instances but one (we hired a really great senior systems administrator some five years ago who has grown, built and maintained our now some 100 servers from then to today) we have failed to hire a single person in Australia above the recent graduate level. Now that is clearly our own, and in particular, my own failings in this part of running a business. The sort of positions we have tried to recruit for range through a General Manager, National Sales Manager, Marketing Manager, Operations Manager and also include a number of senior technical competencies in a range of networking aspects of the business. In each case when I have interviewed an applicant for these positions I have seldom got past the first two or three minutes before 'deciding' that Exetel was just not a good fit for the various different people's career/working day needs. What always puts me off are the, more than reasonable questions about 'working hours' and 'other benefits' that most people seem to concentrate on. I have got far too used to working in smaller companies where deriving the revenue and profit to survive makes the concept of 'working hours' something of no consideration at all in getting a job done and the benefits of the job are that you are paid what you asked to be paid and you take care of your own 'other benefits' because your employer pays what you ask for (and keeps increasing your remuneratio and responsibilities). I only mention those two points because in several interviews with 'mature' and 'skilled' applicants yesterday it really irritated me early in the interviews to have a range of, to me, petty issues, raised in a serious conversation. Clearly I have been away from 'main stream commercial life' for far too long and have become immersed in Exetel's "culture" of do it now/do it right the first time/get on with the next thing without pausing for self/other congratulation because the more things you do more quickly and the faster you learn the faster your career develops.....and if something goes wrong, which it will, don't try "buck passing" because no-one will blame you for your mistakes they will only 'blame' you if you don't fix them as Perhaps it's time to let someone else 'influence' or re-define Exetel's work practices? Then again - I have always preferred to work with very bright people who regard perfection as the only standard wotht achieving until something better is found. Copyright © Exetel Pty Ltd 2010 Tuesday, June 8. 2010How Many People Will Choose Fibre?John Linton Despite the latest poll saying that Labor and Rudd continue to lose 'market share' in polling and if it continued that way there would be a change of government - we signed the NBNCo contract yesterday on the basis of whatever happens in the upcoming election the Tasmanian fibre roll out will continue and that it will provide an alternative to ADSL1 which is all that Exetel can provide for Tasmanian users at the moment (neither Optus nor AAPT have wholesale ADSL2 in Tasmania). Before we signed the contract we had a smile at this: http://www.theaustralian.com.au/news/just-16pc-tipped-to-take-up-nbn/story-e6frg6n6-1225876225571 with the usual sub editor's 'head line' and the usual mis-representation of the 'facts' by the journalist. It's a good question as to how many people will select fibre over ADSL2, wireless or even ADSL1 and I certainly don't know the answer. What I do know is that in 4 weeks we have received more applications for fibre services based on Telstra's fibre roll out in Point Cook than we have ADSL customers acquired over 4 plus years. Now, not being the complete fool some people assume I am, I understand that a one off pilot against slow moving opposition is not indicative of anything other than a general trend. This general trend is pretty hard to misread though - whether it's novelty, early to market advantage or the peculiarities of the particular area there is a lot more than 'idle interest' in a fibre service by Point Cook residents.....even at prices based on Telstra costs to wholesale customers. We will 'go live' with the Opticomm fibre services in their NSW and Victorian 'estates' later this week and we are well behind other ISPs offering fibre services in those locations. So we will have no advantage of 'early to market' in those areas and obviously the 'novelty interest' will have been well and truly gone by now so we will get a much better idea of the sort of take up that may be possible in a more competitive market place. However, like Point Cook, I am assuming that the wholesale buy price for Exetel is similar to the wholesale buy price offered to other customers and therefore, for the first time, Exetel is not at an immediate cogs disadvantage. That may well be naive of me but we were assured that was the case and, naturally, I always believe what suppliers tell me. Anyway - time will tell and it will be an interesting exercise. After wasting so many years trying to make peak/off peak a benefit to our customers and, no matter what we did, failing to make 100% of our customers 'happy' all of the fibre plans are based on the pay for what you use basis.....in theory....no customer can ever be unhappy....though we will now 'waste' the opportunity of giving sensible users the benefit of the lightly used hours of the day and therefore waste the money that pays for having 'idle' bandwidth. However, if we couldn't get it right after six and a half years of trying there is no reason to expect it can be got right (by us) with the far less well (less overall bandwidth for the links to and from the customer) provisioned fibre circuits. Irrespective of what happens over the coming months there is one thing that is absolutely certain and directly contradicts the head line in the Australian article - the take up of fibre will far exceed 16% of the market available to it....if the early results of the Point cook trial are in any way indicative the MINIMUM take up of fibre will be 50% within a few months of fibre becoming an option and it will move to something greater than that over time. What any 'final' percentage will be is dependent on how wireless broadband develops and how the 'real' price of installation changes once the various trials are completed...and, of course, what Telstra decides to do in terms of selling whatever to the NBNCo and therefore what its own future fibre offerings will be. As always, there are more unknowns than knowns. Copyright © Exetel Pty Ltd 2010 Monday, June 7. 2010The Average Wireless User.........John Linton ........I wonder how that "person" is identified? I read this article earlier this morning: which was a follow up article to one I cited last week. Near the bottom of the page it cites a recent survey that purports to show how much data mobile phone users download: "A study released by Consumer Reports in February found that consumers These figures seem to be in line with Telstra's view of the mobile handset user world so they are almost certainly indicative of at least something or other. However as AT&T has made the recent very significant change to its plans and, as the article itself points out that growth in data usage will continue to increase at a faster rate as more data demanding applications are used by mobile handset users, the use of data will continue to grow. The reason for the need of increased data revenue is to compensate for the increasing use of moip by US mobile telephone users as evidenced by: "How consumers will react to the change will affect not only their bills, American mobile telephony users have accepted moip more quickly than their Australian counterparts and the use of moip is growing at an accelerating rate. I continue to use moip as I have done since our early versions getting on for two years ago now and I have no problems. An increasing number of Exetel customers are downloading our MoIP app from the Exetel USer Facilities and sales via the Apple iStore increase week on week - presumably by mobile users who are not Exetel customers and are not even in Australia. As a simle user I don't comprehend why anyone would use the carrier's capped plans when 10 cents unlimited calls from mobiles to wire line numbers are available but then I never did understand those scenarios. What this article, and the previous one, clearly imply is that even a network as huge as AT&T's wireless network is not large enough to sustain 10% of their mobile users being given 'unlimited data plans' for $US30.00 per month - if not right now then when AT&T looks in to the not too distant future. Given the cost of data, even at a massive US carrier's internal 'buy' rates I am slightly surprised at this radical turn around after such a short time. With all the decades of experience and the demographics and customer analysis data available to AT&T's planners they seem to have totally misunderstood what actually happened which, literally, amazes me. Why did they get it so wrong? It's one thing for a company of Exetel's size to get assumptions on 'unlimited' usage plans totally wrong but it surprises me that such a sophisticated planning company like AT&T could do something like that. Which brings in to question the validity of the figures in this article - if the average data down loader averages so little what is it that panicked AT&T in to withdrawing their unlimited data plans so soon after announcing them? I suppose the second question is - will the other US carriers do the same?........and the question that interests us - what will Telstra and Optus do who face no competition and are therefore not pressured by anything other than each other? The current wholesale cost of wireless data to a service provider such as Exetel in the UK is less than one fifth of what we pay to our Australian suppliers. I have no idea what the wholesale cost is in the USA but the cost in EU countries is between one tenth and one third of what we pay in Australia. You can only assume that the various carriers costs in those countries are lower than their wholesale costs. But even at those low costs it now seems that 'unlimited', or indeed anything above 2 gbytes is not 'economically viable'. A surprising reversal of a trend I have been tracking for the past four years. Perhaps I need to learn a lot more about wireless futures. Copyright © Exetel Pty Ltd 2010 Sunday, June 6. 2010Fibre, Ethernet Over Copper.......John Linton ....nothing has changed in the last 30 years since Telstra assured I know it's petty but I was amused by this: http://www.pcauthority.com.au/News/214057,new-iinet-adsl-business-service-could-reach-40mbps.aspx This is news? That a company is "developing" a service that will Hatteras have competitors that offer similar boxes that differ in their Our 'standard' business user service at this moment is a 10 x 10 Hatteras Having said all that, and the reason the fibre futures caused me to re-look The price of fibre should have fallen long ago but, as always with companies Is it a fibre future - or will copper survive yet another notice of its Copyright © Exetel Pty Ltd 2010 Saturday, June 5. 2010Another 'Flown By' WeekJohn Linton Most of the week was taken up with next year's planning and analysing the changes that we have been making to the various residential ADSL services as reflected in the June 1st recurrent billing run which showed some interesting things. We had our highest ever ''churn away' ADSL2 rate which was unsurprising as we had asked several hundred customers to find a provider that was better able to meet their needs than Exetel and the natural result of asking some customers to move away from their obsolete plans. Despite those losses revenue was up and we have now, with four weeks to go, exceeded the total revenue target we planned to achieve some 12 months ago.....the profit target was not such a satisfying result but this has been the toughest year I can remember. The most positive thing about the ADSL2 'customer loss' was that, the overwhelming majority of the customers leaving Exetel, were ultra heavy down loaders who I'm sure will be happier at their new ISP and who cost Exetel a great deal of money each month while they were an Exetel customer. So both parties will be much happier with that result which is a true win/win for everyone concerned. It was a useful indication of what may well happen in the coming months as Telstra et al crank up their customer retention and 'win back' marketing programs and gives us added insight in to how the replacement of very low profit margin business with sensible profit margin business will affect operations in the coming twelve months. It would be really good if what we see from the June billing figures (and the MRTG reports over the last few days) becomes a real 'trend'. There wasn't much time for anything other than planning activities during the week except that we interviewed several people for corporate sales roles and began the task of finding suitable additional engineers both for the main networks and for corporate support. Our growth in both our residential network and our corporate network will require more support resources as they, combined, grow past the 10 gbps level over the coming year and then more rapidly grow past the 20 gbps level.....assuming our current planning predictions are met over the coming 12 months. It is not going to be the easiest set of tasks to accomplish and will be yet another 're-definition' of Exetel that we will need to manage. We have not yet started on the revisions to the Sri Lankan operation's plan which we will need to complete by the end of next week. That plan is far 'simpler' in that it has already been done as part of a two year plan beginning on July 1st 2009 and 'only' needs re-validating in terms of the financials with no real changes to the operations other than to ensure we continue to have the correct resources in place and that the ongoing education programs are correct for the status reached each month. Having said that - there is a lot of revised thinking required in just how we develop the SL business and whether or not we add new (non-Exetel related) activities. So my head is reeling from constantly trying to assimilate the meanings of different sets of figures and my eyes are very tired from hours and hours of gazing at screens filled with Excel columns and rows and I really need to take a break from those activities over the weekend. However while the financial planning is vital it's meaningless without the sales and marketing programs that make any set of numbers meaningful and we have yet to complete those processes - particularly for wireless broadband and VoIP....and we have as yet given absolutely no thought to fibre and what the various scenarios that may become realities will mean to us. Then there are the revised commission and agent plans and........ Maybe I'll just watch the football. PS: To bring a smile to your face: http://www.theage.com.au/opinion/politics/all-gloss-and-guff-no-glory-20100604-xkne.html Copyright © Exetel Pty Ltd 2010 Friday, June 4. 2010FY2011 - A Grim Outlook For Residential LandJohn Linton What is there left to do in providing ADSL services in Australia? Hard to know. The aim is to finish the final draft of the Exetel financial plan for FY2011 by COB today to allow for the reviewing of the sales processes we need to put in place to make the 'final figures' happen. It has been a different process this year with all of the number crunching and hard analysis being done by people other than me which has been an interesting process in itself. We have produced what should be a workable basis for maximising what we see as the opportunities in the coming year but it is, easily, the hardest period of Exetel's short 'life' and the planning has therefore been more conservative than for any of the six and a half previous plans (our first 'year' was effectively five months). Among the key changes to the plans for next year is a reduction in the total number of residential ADSL customers after the first 76 consecutive months of Exetel's existence where ADSL customers increased. It was almost a sad number to agree to but, despite all analysis showing that for 98% plus of our current customers we offer the very best price and performance and support our belief is that the residential market, at least for us, will decline this year on a month by month basis. The reasons for that view are pretty straight forward - the overall residential ADSL market is saturated promoting an ever increasing number of providers to offer more and more at their 'bottom level' pricing points plus the 'depredations of wireless broadband at the lower end of the user spectrum and fibre at the top end of the user spectrum. Right now it's impossible to determine what the impact of fibre will be on ADSL. We haven't been offering fibre for even a month yet and any 'figures' so far have to be treated as non-indicative as the combination of so many different factors in the Point Cook trial (lack of ADSL2/RIMS/Brand New Syndrome/lack of competitors etc) will all skew any figures upwards. However it would be true to say that our first three plus weeks of fibre applications in Point Cook certainly far exceeded my expectations. So the fibre impact will totally depend on Telstra's ambitions and how/if they provide wholesale fibre services beyond the Point Cook 'trial' and at what 'real life' pricing they do that at. To a lesser extent it will depend on what NBNCo does and how quickly they make services available outside Tasmania. Our new ADSL offerings to residential users will be aimed at the peak usage usage customers who use less than 60 gb per month in that time period with far more emphasis on the 30 gb and below customers who comprise the great majority of our current users. How we end up doing that is a set of issues that we will deal with over the coming two weeks. We have a few ideas - but very few - and really have very little 'room' to move on pricing as things stand today and without significant supplier accommodations in the future we see no way that the current situation will develop other than to become even tougher than it is today. While that is not exactly a promising outlook it does recognise reality and it does provide for a sensible attitude to looking for ways to improve such a forecast. One 'good' thing about planning to have less ADSL customers than today is that the losses we make on 'high end' ADSL customers 'go away' in the first quarter of FY2011 and provide more financial scope to do anything else. It makes a lot of sense financially to see a progressive reduction in total ADSL customers providing the customers that leave Exetel are the ones that cost us money rather than the ones that break even or make a dollar or so each month. However while that's the plan a plan is far from an accomplished fact. We will have to be very careful over the coming weeks to ensure our assumptions are closely monitored and validated. One good thing - because all the hard work is being done by other people this has been the easiest 'planning season' I have ever had. Copyright © Exetel Pty Ltd 2010 Thursday, June 3. 2010US Carriers Indicate Future Data Pricing.......John Linton .......though the current announcement is a radical turn around. We are gradually moving towards the completion of the new financial plan for FY2011 with the bulk of the work completed with only the various future service pricing to be completed. This article was interesting to me when I read it earlier this morning as it indicates a major change of direction by at least one of the largest US carriers: the key statement being: "The plan will be replaced by new offerings costing $15 an month for 200 I can't remember when the previous unlimited plans were introduced by the various US carriers but I think it was late 2009/early 2010 - so this is a very different analysis of what the markets need and will continue to buy. I have made references to the difficulties that Exetel has faced in offering a viable wireless offering that is attractive to either mobile hand set or PC/Laptop users many times over the past two years and I was quite surprised to see AT&T now charging $US25.00 for 2 gb of data and commenting that is more than 98% of their user's current down loads. It will be interesting to see what the other major carriers do now. Co-incidentally - our wireless broadband users follow the same pattern with 99.5% of customers downloading less than 1.5 gb per month and we charge $A22.50 for 2 gb but our price includes uploads as well - so it appears that there is a great deal of similarity between US and Australian usage patterns. I don't know what to make of the current ADSL market and I have little understanding of how it will continue to move. We do an 'analysis' of our own customer's usage each month and it has been interesting to see how significantly our own usage demographics have changed over the past twelve months let alone over the past six years. Today - Exetel's customer base 'profiles' are very, very different to when we started and even quite different to two years ago. We continue to 'lose' customers who down load large amounts of data and continue to gain customers whose required downloads are very 'modest. Today less than 1% of our ADSL customers download more than 60 gb in 'peak periods' and around 20% of our customers download less than 2 gb per month. It was obviously time for a change in emphasis in what we provide moving forward. With so many changes in the different marketplaces it is becoming more difficult (if that is possible) to run a company of Exetel's size. We have always manged to 'read' the constant changes relatively well and have seldom been 'caught by surprise' over the years. I do think that Telstra will become more of a 'factor' in the residential marketplace than they have been for the last few years and I think that will introduce a completely different set of problems for all sorts of companies that they may not have factored in to their planning. Assuming Labor gets re-elected later this year I also think the 'NBN2' will confuse things even more than they are today. A lot of unknowns including what actually now happens in the Australian economy - which is not remotely as 'rosy' in outlook as our current government would have us believe from what I am seeing and hearing. So, FY2011 is shaping up to be a very different year from past years with more uncertainty, doubt and direction change than in any previous year of Exetel's short existence. Whatever FY2011 brings I think that our planning has been very conservative and any final draft will be more conservative than the current iteration. Copyright © Exetel Pty Ltd 2010 Wednesday, June 2. 2010God Invented Annual Holidays For A Good Reason.....John Linton ....it takes at least three weeks each year to recover from the demands of the previous twelve months. It's been a very 'long' period of time (January 1st 2004 up until now) to work the extremely long day on day hours that it has taken to get Exetel from a 'start up' operated from a 'back room' of our residence to the, still small, $A60 million dollar a year company that it is today providing services to over 125,000 customers with 100 employees operating in two very different countries in fiercely competitive marketplaces that constantly change. Big deal - you might, quite rightly, say. After all - over that time: 1) TPG has gone from being an unkown to the fourth largest communications company in Australia and has made David Teoh and Vicki Teoh many hundreds of millions of dollars each 2) iinet has 'swept up' a slew of comms companies to become the fifth largest 3) Internode has kept on keeping on to have quadrupled its size over that period 4) And I'm sure the last 6+ years have resulted in many other similar achievements of which I am unaware All very true - Exetel has achieved nothing like such achievements. All we have managed to do is to survive the various 'disasters' that have beset us on occasions and still managed to grow our company each year while adhering to the base objectives we set when first offering services to Australian users. We have also managed to survive those critical first five years of starting up a new company while no other communications company that began operations around the same time has survived and many long established companies (OzEmail, Westnet, Netspace, Commander and, literally, dozens/hundreds of other such companies have failed or sold out or just disappeared). I reflected on just how hard it has been to actually make the various things happen that have been required to 'allow' Exetel to survive when so many other companies have failed as I studied the current iteration of the FY2011 business plan. The first thing that is obvious is that it has taken an awful lot of effort by a large number of people to get this far and its going to take even more effort by even more people to achieve the very modest targets set out for the coming twelve months and the financial rewards for Exetel's investors will be even more modest than they have been in previous years. One thing must occur to any reasonable person at times such as this - "is it really worth working this hard for so little"? I have no choice as every last cent Annette and I own is invested in Exetel. Having no choice is not a bad thing - it makes wasting any time or emotion on considering such a question completely irrelevant. The other thing that is becoming more and more evident is that Exetel has grown as far as it has to date based on very inexperienced personnel. With the exception of Steve and me, (and Rohan in Colombo since May 2009)) every other operational, supervisory or management position except one is held by people for whom Exetel is their first 'real' job since they left University and all the complex operations we now run are managed by people who, apart from their 1, 2, 3, 4, 5 or 6 years with Exetel have zero other experience of the communications industry. It's a strange situation and one I have never experienced before. This particular thought occurred to me because, for the first time, in FY2011 we will make a much greater effort to 'decentralise/devolve' the detailed operation of the various parts of Exetel and give more responsibility for day to day decision making to the operational managers rather than having every last detail being 'approved' by one of the directors. Apart from being a sensible recognition of the development of many of our people it is just not possible for, at least me, to continue to work 80 hour plus weeks - my aging body and mind simply cannot handle such a work load any more. So Annette and I are going away for our annual break a little earlier this year and the plan for FY2011 needs to be finalised at the June board meeting which is three days before we go and there remains a lot of work to be done. Roll on June 21st. Copyright © Exetel Pty Ltd 2010 Tuesday, June 1. 2010First Day Of The Last Month Of The Year....John Linton .......'dawns', despite the weather forecast, without a breath of wind and with, almost, cloudless skies. Pity that I awoke to it because of the sounds of a currawong (actually what turned out to be two currawongs) trapped in our bedroom chimney. Eventually they both 'fell down' in to our bedroom hearth and with no encouragement flew away through the opened windows. Just as well because when we called WIRES for advice/assistance it turns out that their 'support centre' doesn't open until 9 am. The monthly recurrent figures also brightened the day, a new record amount for a month where we actively reduced our number of ADSL customers. The reduction in ADSL residential revenue was more than made up by a strong increase in corporate revenues from several different corporate services and the profit on corporate services is many, many times greater than that of residential services - especially when the vast majority of residential users that left us for greener fields actually lost us the most money. While it is always sad to lose any customer (with a few exceptions) it has become necessary in these much tougher times than any I have ever been involved in while participating in the Australian communications business. As I have said before we now lose money providing ADSL residential services and we simply can't afford to do that. If the 1,000 or so residential ADSL customers who lose us money find another provider that better caters to their needs than Exetel does then they will be happier and we, and the other Exetel ADSL customers, will be happier. If we can accomplish that 'reduction' by replacing residential revenue that loses us money with corporate revenue that makes us money then both 'parties' will mutually benefit. Our young corporate sales team set another monthly sales revenue record yesterday which was very pleasing and our corporate wireless sales were also a record which was an interesting result. I met with two of our major suppliers yesterday to have preliminary discussions on what we, jointly can do to increase the sales rate of corporate services. I did point out to both suppliers that to actually achieve what had been accomplished to date had been far from easy and, for both of them, to talk in terms of "we have planned for you to double your sales" sounded quite odd to my ears....I had to make the point that we weren't planning to double our level of corporate sales pe month until very late in the financial year. It was a reminder of how suppliers think about their wholesale customers. One of the new services we are introducing for corporate customers is 'pure IP'. We have never considered selling such a service before because we have never had a a particularly good buy price and, obviously, the companies who sold to us could sell to other buyers at the prices we bought at - or below in many cases. However there are a number of changes in the Australian marketplace that have allowed us to contemplate providing IP to commercial customers using the process I alluded to in a past musing that had allowed an unknown company to enter a market dominated by US multinationals and make a major impact. The set up costs are pretty scary in these difficult times but the analysis we are able to do shows there is a pretty large opportunity. We have been getting a steady stream of enquiries for this 'pure IP' product just by running a very small 'ad' on our web site and we have successfully installed the first customer for this service (in Tasmania of all places) and now have two more orders we expect to receive very soon. From what we can see the current suppliers of IP services to corporate users offer services at per mbps prices around treble what we can sell at and make a sensible return. It's far too early to make that a firm statement but it's based on the few serious enquiries/sales made to date. How it will turn out over the coming year is hard to predict but we would see the same problems for the current suppliers as we did for current SHDSL providers - they have a customer base they have been ripping off for a long time and are very reluctant to provide the cost savings to those customers which recent price reductions have made possible. So a new 'product' for us and one that has interesting potential....a long way to go though. I hope to finish the planning for FY2011 before the end of this week - running a few days late as I am teaching other people how the Exetel financial planning process works - and I am encouraged by the execution of the first year results in the long term changes we are making to Exetel's business - still a very long way to go. Copyright © Exetel Pty Ltd 2010
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