Wednesday, September 15. 2010Times Keep ChangingJohn Linton I read this earlier this morning: and while it may not seem to be of any real relevance to the issues we are confronting in our very minor way it serves as a reminder that a 'business strategy' that serves any company well, and however immensely successful it may have been, reaches an end date eventually. Vodafone is an enormous business success story almost since its creation - measured against any criteria -but the final arbiter of success for public companies, the stock market, regards Vodafone as barely an also ran these day; even though it has more customers in more countries than any other mobile carrier can come close to. I think it has been evident for some two years now that Exetel's initial business 'strategy' (if you can call it that) is well past its use by date. We recognised this some two years ago so we aren't totally stupid but our efforts to move to a different strategy have been not as fast to implement as we would have liked and that has given us continual problems as all changing markets are unforgiving in the relentless pressures they bring to bear on small businesses when the 'tectonic plates' of business direction exert their massive influences. Perhaps hyperbolic but real enough in trying to describe how any business, even one as large as Vodafone gets to feel when they haven't changed fast enough to meet the realities of changing markets. OBVIOUSLY THROUGH MY INCOMPETENCE I LOST THE LAST 5 PARAGRAPHS WHEN I WROTE THEM EARLIER THIS MORNING. SO I RETYPED A DIFFERENT VERSION OF THEM A FEW MINUTES AGO. THEY HAVE ALSO 'DISAPPEARED' I HAVE GIVEN UP. Tuesday, September 14. 2010Who Would Have Thought The "One Bill" Concept.......John Linton .....would still be alive and well ten years in to the 21st Century? Well, contrary to the date published on the web site and a verbal confirmation from the ABS itself mid yesterday morning, the latest ABS figures on broadband take up will now not be available until next Monday. While a week doesn't matter much it was disappointing because we would have liked an update on the progress of wireless broadband before making any final decisions on just how we might change our current wireless broadband offerings - but another delay in that long drawn out process is not going to jeopardise anything in particular other than losing slightly more 'momentum' than we already have. I will be interested to see the latest ABS figures for other reasons such as whether there has been any growth in the reported number of ADSL services - I stress the 'reported' aspect of that sentence because there must always be doubts about the accuracy of 'self reporting' of the base data which I doubt is done as accurately by at least some of the companies as it is by Exetel. However I have always assumed it was a very good indications of trends if not a very accurate indication of overall market size which I think it has always 'over reported' - perhaps that's too cynical a view. The 'trend' that becomes more evident each day in terms of the ADSL market is that Telstra now accounts for almost 100% of the churn aways we experience. - there are more days when all the churn aways are to Telstra which is something I wouldn't have believed possible only a few months ago. Perhaps equally surprisingly is that there are almost no churn aways to TPG which used to comprise around 50% of churn aways every day only 8 or so weeks ago but now, as if a tap was turned off, are very rare with only one or two every day or so. I have no idea as to what other ISPs are experiencing but I doubt that Exetel has any particularly unique characteristics that would make our experiences so different. When we call the 'departing' customers they don't seem to have any distinct reasons for moving from Exetel to Telstra. Hard though it is to believe the only discernible reason is that they "want all services on one bill". No-one has said they did it to reduce their spending and only one or two said it was because they were unhappy with the quality of the service provided. We will have to do a far more rigorous check on 'departure' reasons because I just don't understand what I have seen so far. Perhaps the 'one bill' nonsense has more impact than I have ever given it credit for. I have always resisted the temptation to add to Exetel's revenue by offering telephone line rental as there was no value we could add to the provision of such a service and we certainly couldn't save the end user any money. I understand that many other providers don't share my view and, if the analysis of Telstra's acquisitions of Exetel customers proves out the QAD analysis we have done so far, maybe they have a more correct view of the residential market places than I ever have - not very hard to believe. It is far too late in the 'day' to think about offering telephone line rental now - it would, apart from anything else, be far to cynical for a company that only uses VoIP in its own operations and believes so firmly in the future of wireless to recommend a dead/dying technology to any type of customer....but the 'analysis' done so far has really surprised me. I wonder what other 'discredited' concepts will come back or simply re-surface to make decisions even harder than they are at the moment? Copyright © Exetel Pty Ltd 2010 Monday, September 13. 2010Fibre Services - Not An Easy Thing To OfferJohn Linton I re-read the sparse 'facts' relating to the 'NBN2' over several attempts yesterday. This is a difficult thing to actually try and do because despite the 'millions' of column inches about the subject there actually are no facts on the public record concerning this particular political stunt. All anyone who attempts this exercise can find some two years on from its announcement is a plethora of opinions ranging from completely uninformed to totally idiotic. THERE ARE NO FACTS. What there are, after two years of zero progress, are less claims of how beneficial an 'NBN2' will be and the beginning of the realisation that the Emperor really doesn't have any clothes a la: which simply re-states what I have been saying for the past three years plus adding some current figures from the OECD. I don't know whether at any time in Australia's history that any national government has proposed to spend the then equivalent of $A40 billion dollars without a single attempt at having any form of costing done and checked by Treasury but if there ever has been one - I can't find it. The only fact that can be established about the 'NBN2' is that there are no facts - only comments from people who have no knowledge about anything. So, what can a company of Exetel's size do about considering whether or not it's possible for us to offer fibre services in Australia to residential users (we already offer fibre services to many hundreds of business users in every State capital city in Australia (including Hobart) and have done for several years. Well, one of the surprising things that appear to be a FACT is that Exetel currently provides more broadband services via 'real' fibre than any other ISP in this country other than Trelstra and Optus on their decade old HFC and Foxtel services. Based on public statements and some 'minor research' it appears that Exetel's combined customer base on the Telstra Point Cook, Opticomm and NBNCo (Tasmania) may well exceed the combined number of customers of iinet, Internode and iPrimus put together! Now that's a FACT that would probably surprise any reader of that statement. Of course our combined customer base on those three services barely exceed 100 users but such is the current take up of fibre at this moment in time it nevertheless remains a pretty accurate assessment. Irrespective of the accuracy/inaccuracy of the assessment above what is very definitely true is the FACT that we have as much or more first hand experience of delivering fibre services over three completely different 'carrier' networks as EVERY other communications company in Australia except Telstra and Optus. We also have first hand knowledge of the financial and commercial situations that a 'new carrier' may employ in building 'enthusiasm' for their particular fibre offering. What we obviously cannot possibly know is what an unaccountable network builder (the 'NBN2') could offer services at to cover up any deficiencies in its internal costings - only a bunch of egomaniacal know nothings with access to Sovereign Government borrowing capacities can know that....that would be the current and previous Labor "governments" for the slow on the uptake. So, the only issue that concerns us is what Exetel might be able to do in terms of providing fibre broadband services when they become more generally available which we have no information about via our own discussions with NBN Co nor can we find any in the public domain.Presumably the screech owl will have to eventually make public what she bribed her way in to office with (one of her apparent bribes was to ditch the "carefully" planned roll out of the 'NBN2' to divert it all to New England and the NSW mid North Coast - and, boy, does that say it all as to how "carefully" and "detailed" the current state of the roll out has been planned). Personally, I think that exactly exemplifies what the Labor 'NBN2" really always was and is - a political stunt to win votes from the stupid welfare dependent mentality child voters. My best assessment is that there will be no mainland connections before mid 2012 but it really doesn't matter. Two, perhaps three, things become pretty obvious for a company of Exetel's size. Firstly we need both a direct contract with 'NBN2Co' and another relationship with a much bigger wholesale customer of 'NBN2Co' - such as Telstra or Optus. Secondly we need to learn as much as we can about the likely methods the also rans in the current broadband providers will use to deal with the scenario that will develop of having a single source of customer connectivity owned by the government. And, possibly, thirdly we will need to use whatever attractive aspects that may remain about our company to work with one of the major two providers to maximise their returns from their rusting iron (their ADSL2 dslam investments). The June 30th ABS figures on the broadband markets are almost certainly out by now and they will give a further indication of where things may be heading. Copyright © Exetel Pty Ltd 2010 Sunday, September 12. 2010Unlimited Download Fibre For All.......John Linton .....at $A39.85 per month. A beautiful sunny, Sunday morning in Sydney seems too nice to waste staring at a computer screen and keyboard....but then the stream of information and requests involved in running a business of Exetel's size pay no attention to time of year, day of the week or state of the weather. One of the things that Exetel now has to do is to review the various fibre plans we offer in the very limited areas we offer them. Our experience with fibre to date has not been very exciting with the exception of the Telstra fibre 'experiment' in an outer housing development of Melbourne where we sold more fibre connections in 6 - 8 weeks than we had sold ADSL connections in the previous 2 -3 years.....courtesy of Telstra not charging for activation for this experimental period. What we "learned" from this "experiment" was that Telstra's provisioning systems worked as well for fibre as they did and do for ADSL and that anytime that Telstra wished to provide fibre services they could do so without any fuss about provisioning, fault reporting and correction. Given the current HOA that Telstra signed with NBNCo it seems unlikely that Telstra will broaden the areas where it offers wholesale fibre services so while the Point Cook experiment was interesting it seems it might be what Telstra always said it ws - a once off experiment. Perhaps that will all change next year if Telstra's shareholders decide not to approve the HOA but that is too far in the future for us to concern ourselves with. In contrast to the 'sign up' process to sell their fibre services which took less than two weeks the nightmare of signing up to sell the NBNCo (Tasmania) services took the best part of nine months for no discernible reasons other than complete lack of any sort of procedures at all within NBNCo (Tasmania). There still is no B2B order processing facility (something that Exetel could write, and has written several times in a week or so) and, unlike Point Cook in Victoria and based on comments by other ISPs, there seems to be little demand for fibre in the three townships currently operational. We will test that demand over the coming weeks by making our ability to provide services at the very attractive prices made available by the Tasmanian NBNCo as part of their start up promotions but the apparent sales by iPrimus, iinet and Internode appear to be, based on their own published statements, very disappointing at best. So too the Opticomm estates where we have no clue as to how to make the possible buyers aware of our services and where sales to date are pitifully small. If I point out that Opticomm are providing NBNco (Tasmania) with the 'order processing and other facilities' then you would understand that the lack of B2B services and other taken for granted facilities don't help make selling and installing the Opticomm fibre services any easier. We will try and work out how to do this with Opticomm over the coming weeks but, at this time, I have no bright ideas as to how this can be made to happen...... all of which made me smile when I read this piece of arrant nonsense: http://www.zdnet.com.au/dodo-thinks-nbn-wholesale-339305922.htm I'm not sure whether there actually would be any small ISP that would be crazy enough to use Dodo as a wholesaler if they actually read the communications industry press but, from the little I know, Dodo is not even a provider of retail fibre services via the current fibre infrastructures and, despite the statements about 'being in discussion' is unlikely to be in any position to become a wholesaler in the future - not only based on its current reputation but based on its volume purchasing. Stranger things have happened of course. However his next reported comments: "Yesterday, the telecommunications company launched a 3-terabyte (TB) seemed to indicate either the reporter didn't hear them correctly or their was a language barrier or..... I, of course, don't know what Dodo buys connections to the Telstra or Optus ADSL2 networks for but based on Exetel's buy pricing, $A38.85 would barely cover the monthly port charge let alone TW's very high back haul charges or even OW's much lower back haul charges let alone the IP cost and the operational costs of running the business of looking after the customer - not that Dodo seems to do much of that based on the reports attached to the article. However the real piece of la-la land nonsense was the comment that Dodo's actions would influence the other providers of internet services in Australia to not impose download limits on any ADSL2 plans in the near future. I would have liked the reporter to have asked just how that could be accomplished at the $A39.85 price point. Maybe it's just an indication of how badly Exetel have 'negotiated' our own buying prices? Anyway - I'll get myself another cup of tea and see what if anything Exetel should do about fibre services 'moving forward'. Copyright © Exetel Pty Ltd 2010 Saturday, September 11. 2010That Was The Week That WasJohn Linton It was an interesting week though there are many interesting weeks these days. I suppose the highlight for me was finally getting the NBN Tasmania end customers orders submitted after so many incredibly pointless, at least as far as I could see, delays spinning out a simple process to the best part of nine months. In the mean time we have had expensive infrastructure lying idle and a 'marketing' campaign that was just wasted money. One more thing learned in this joyful ride of attempting to start up a viable company in the Australian communications industry. It will be interesting to see how long it now takes Telstra and Optus to start 'advertising' that they can provide retail services using the NBN Tasmanian fibre connections.....shorter than nine months? We will now have to start again to find sensible ways to provide people who can get NBN fibre in Tasmania with details about what Exetel can provide. It seems, based on a media comment by iinet/Internode (I forget which) that they and iPrimus have not been very successful in getting Tasmanians in the limited area where fibre services are available to take up the offer in the two months it has been availlable with a quoted figure of "70 services" being signed so far" together with a peroration of how ungrateful the relatively few Tasmanians capable of getting the service are for not signing up in far, far greater numbers. A bit of childish foot stamping I thought - in the event that the quotes were accurate. Another 'high light' was the 'finalisation' of new wireless broadband plans that, subject to contractual completion, allow us to halve the current data download costs we currently provide and, possibly, remove the charges for uploads. I personally don't think these new prices will be very helpful for very long but at least I now understand how the providers that apparently offer much lower cost prices than Exetel does are able to make the offers they do - they have no intention of delivering the speeds of which the networks are capable fo much of the time a customer might want to use the service - hence so many negative statements about 'congestion' - the congestion is 'artificially' created - at least according to one 'source'. I am not sure whether it is a highlight, more the removal of a stupidity on my behalf, but I finally found out how to 'bundle' mobile telephone services and give big ADSL plan discounts without going broke. Of course it was my own naivete and stupidity that had prevented this being understood years before but my education and parental background has ill equipped me to treat human beings as 'herd animals' whose only point of existence is to be regularly 'shorn' by the privileged few who obviously come from very different backgrounds to mine. One more sign I should do something better fitting my highly limited skills set and ethics. A 'mini bonus' was finding yet another way round providing SMS services at the lowest possible prices which while a cent more expensive than the 'old' price will at least allow us to keep offering a reliable SMS service to residential users. The week also saw continuing progress on most of the "sales fronts" with corporate VoIP beginning to grow more quickly now we have our 'hosted pabx' service running extremely well and delivering great performances where it has been installed - it installs so easily our customers keep expressing disbelief at how simple it is to save so much money with none of the 'feared' loss of voice quality: http://www.exetel.com.au/business-voip-testimonials.php So - a pretty productive week with current targets mostly met and a series of decisions that may make it easier to hit future targets. If only that could, for once, turn out to be true. Copyright © Exetel Pty Ltd 2010 Friday, September 10. 2010"Bundling" - Mostly For The Gullible........John Linton .....but perhaps also for the mentally lazy. I have never been a fan of 'bundling' different services together to seemingly give a customer a better deal. Basically it is a con/scam in almost all instances because there is no, for the provider, savings to be made by 'bundling' a wire line telephone service with an ADSL service and/or a mobile service let alone with other even more different services. So what bundling means is that the individual services are priced unreasonably high and some profit can be sacrificed in the illusion that more overall profit will be generated - or something along those lines. However, I realise that this is a personal bias which, like my aversion to "capped" mobile plans is based on my non-understanding of the stupidity of the 'average' customer and my aversion to unethical practices in any part of the supply of services.....an wholly out of date set of views that 'hold Exetel back'. There is another reason that Exetel is highly constrained from using 'bundling' which is we already sell each of our services at the lowest possible margins and there simply is no room for 'additional discounts'. We make better margins on mobiles, wire line telephone calls and VoIP than we do on ADSL which barely breaks even so the concept of giving away some profit on the other services to sell more ADSL which makes no profit has never been a very attractive financial proposition within our simply based organisation. However,such is the strangeness of the current circumstances in the Australian communications business we find ourselves contemplating making some sort of bundled services available due, like 'capped mobile plans' to the apparent innumeracy of a significant proportion of current buyers. Why has this come about? I don't really know but as we continue to lose ADSL customers to Telstra Retail we have to see if there is something we can do about that. We do some checking on why people leave us to go to Telstra and we find two main reasons. The first is straight financial incentives that we cannot begin to think about - Telstra offer more money as a 'welcome back' day one discount than we would make over the average lifetime of the contract. The second is the 'illusion' created by the discounts Telstra offer by 'bundling' multiple services when the customer buys multiple services. Although the 'discounts' are only achieved by agreeing to buy a service that is over priced without the discounts and the products you have to buy to obtain the discounts are similarly over priced and the net result is the customer pays more for three services rather than just paying more for one apparently doesn't register. Like all mug cons this particular 'three card trick' is based on misdirecting the gullible. The 'Telstra Bundling' incidence of the 'short con' is often based on the fact that the customer is already paying for an over priced wire line telephony service (plus even more over priced telephone calls) and an over priced mobile service so all Telstra actually offer is a very overpriced ADSL2 service and then offer to 'discount it' (back to a price closer to reality) by locking the customer into longer contracts for their other over priced services. A bit cynical but basically correct - unless you actually believe the three card trickster really does have the 'lady' as one of the three cards for you to select from - or that Telstra can afford to employ the services of hundreds of people making telephone calls or door knocks AND give the customer a good price for services. I spent some time yesterday looking at one of Optus' bundles and also double checked, via a colleague, the arithmetic on Telstra's current ADSL2 bundles. After almost two hours of 'running the numbers' every which way I could not for the life of me see how any person who even cursorily examined the offers could actually be so stupid as to buy them. So we decided to have a look at what Exetel could do this afternoon. The only basis we can use is to give away the small profits we make on the 'other' services because we make no money at all on the ADSL services and I'm pretty sure that isn't a sensible basis for a pricing policy. However, as this concept is so widely offered perhaps I am missing something and it will do no harm to re-look at the various permutations. Since being 'forced' to look at this scenario again I realised that I was "missing something" and have therefore come up with at least one idea as to how to make it work financially for Exetel but, I'm almost sure Exetel shouldn't have to use such tactics in what used to be a clean and simple business based on technical merits and a degree of altruism. Yet another indication that I'm past my use by date. The answer to all really difficult questions is always something really simple - all you need to do when being confronted by an 'impossible to solve problem' is to remove, one by one, the thoughts that create the impossibility - I keep giving myself this advice but I seem to have a problem remembering it. PS: Now the 'election' is over it was interesting to hear that both Telstra and Optus are applying to re-sell the NBN (Tasmania) fibre services. The mind boggles at how Telstra (or Optus come to think of it) will cope with dealing with NBN (Tasmania) if their experience is anything like ours. Copyright © Exetel Pty Ltd 2010
Thursday, September 9. 2010
Broadband Wars - Episode CCXXIII........ Posted by John Linton
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Comments (11) Trackbacks (0) Broadband Wars - Episode CCXXIII........John Linton ....going pretty much as predicted but now reaching the ultra silly stage as the Empire doesn't only strike back but the Death Star wasn't destroyed as originally reported and a lot more ISPs have gone the way of Alderaan.....and the rebel leaders are quarreling among themselves. I saw that Internode have released a "terabyte" plan and also had yet another go at Telstra Retail for "selling retail below wholesale cost". What 'magic kingdom' have they been residing in not to have noticed that Telstra Retail have been doing that for the best part of two years in their latest iteration? Perhaps it's only now that they have begun to lose customers on a big enough scale to notice? I get asked by current customers on a more frequent basis "when will Exetel release "it's" terabyte plans. My answer is always - "when we see a demand for them and can provide them at a cost people are prepared to pay and that we could afford to offer which at the moment would be never". Perhaps there are one or two people who could actually find a terabyte of data to download in a month; month after month....I would personally doubt it - even accepting that the vast majority of such data would be illegal copyright theft. Then again could a provider, of any size, provide a terabyte of downloaded data for $100.00? Of course not. So we have the, to date, absolute silliness - a broadband 'plan' that no-one can use and that no provider can provide without losing mega dollars per customer. (Internode very sensibly pitched its price at 50% above the other offerors to ensure no-one took them up on the offer). The ultimate stupidity in this particular silliness was a company called 'Spin' (whom I had never heard of) 'announcing' a terabyte plan which five minutes of 'research reveals is based on Optus ADSL2 wholesale pricing and, should they ever be unfortunate enough to sign up a customer on it would lose them a great deal of money at even one tenth of that download allowance. So what is it all about? I don't have the slightest idea beyond achieving some ephemeral 'awareness' among the ultra-stupid/teen age ADSL users (and the teenage media who write about it) who could never afford even $100.00 a month unless their parents pay for it. Beyond the stupidity it is a sign of total desperation by more than one provider as Telstra continues to spend whatever money it takes to 'win back' market share in the residential ADSL product categories. We have an increasing number of days where the churn loss of customers is 100% to Bigpond and we offer very competitive ADSL2 plans to those Telstra offer on the Telstra customer to us network. What we don't have is the $200.00 plus of cash incentives to 'lure' the innumerate nor the multi-billions of dollars to pay door knockers and telephone pests to call up all Bigpond's customers with 'amazing offers'. I am pretty sure even Optus (who continue to single handedly decimate the forests of the planet to provide the shiny paper to fill my letter box and pollute my newspapers with inserts proclaiming the wonders of broadband) cannot 'out spend' Telstra in the current onslaught let alone the less sizeable providers who are smaller and far less 'wealthy' than Optus. Even someone with only a passing acquaintance with the Australian broadband marketplaces would realise that a 'terabyte plan' is going to generate very, very few users and that the cost of actually delivering such a nonsense is going to be money losing. It would also have absolutely NO effect on stemming the customer churn away via the current Telstra Retail promotions - so why have the companies that have done it ....well...done it? The two words that come to mind are stupidity and desperation....at least they are the words that seem to describe the scenario. For those of you who have bothered to read my jottings for a while you may remember that I wrote some 18 months ago that 2009 would be very hard for broadband providers but nothing like as hard as 2010 would be? I think that forecast was very accurate and 2010 is turning out to be very hard indeed. As in all 'price wars' the only thing that can be done is to raise prices (nothing can be achieved by lowering them) and looking after the percentage of customers who value the services you provide while reducing your expenses via the customers who do not value your services transferring to other providers with different views and thus lowering the bills you get from your wholesale suppliers. One more thing to worry about. PS: Amazing what can be done when people care enough: Copyright © Exetel Pty Ltd 2010 Wednesday, September 8. 2010All The Good Ideas We Have Had So Far......John Linton .....don't seem to be that good in other people's eyes. I did some 'test marketing' of the theoretical one version of the new wireless broadband plans yesterday afternoon.......by which I mean I sent emails to 30 people I am acquainted with and asked them for comments on the three of the proposed plans: 1/1, 2/2, 3/3 with the peak period being 5 pm to 11 pm and an 18 hour off peak period of 11 pm to 5 pm - essentially including 9 or 10 hours of what most people would regard as peak usage normally (the whole of the 'working day'). By earlier this morning I had received 23 replies with the following 'scores' to my questions: 1) Does an off peak of 18 hours rate as a major plus - 16 yes/7 no 2) Have you ever seen more economic plans - 11 yes/12 no 3) If so can you give a url - 22 no/1 yes - I couldn't see how it was more economic (5 gb for $37.50 compared to 6 gb for $35.00) 4) If the ratio of peak to of peak was x:2x would that be more compelling - 21 yes/2 no (prefer use at any time) 5) Do you consider an excess usage rate of 2 cents per mbyte reasonable - 12 yes/11 no (most thought excess should be shaped) 6) Do you use a wireless broadband service - 16 yes/7 no 7) If you do what do you use per month on average 11/less than g1 b - 4/less than 2 gb - 1 over 10 gb How do find your speed for your usage 18/no problems - 2/patchy at times - 3/inadequate too often 9) Which Carrier do you use - Telstra/9 - Optus/5 - VHA/1 - Exetel/8 10) Would you swap to this sort of plan - 16 yes/7 no I am not sure how helpful these responses are but they are probably 'better' than I had expected. There is obviously more 'work' to be done to construct wireless plans (that don't send you broke) that have more general appeal than what we have been able to come up with so far. The problem is that the costs just make that near enough impossible. Even the 23 people who responded to my mini survey (who are all adult males in responsible positions in business) seem to think that everything should be 'free' judging by the "any other comments section that was used by 14 of the people. Free modem was a requirement by almost every person who added comments. Suggested price of $20.00 - $27.50 per month maximum for 5 gbytes usage or more was the next most common. Maybe a whole new ore body of inspirational ideas will be discovered if we dig even deeper through the dross and granite we have found so far - nil desperandum. Copyright © Exetel Pty Ltd 2010
Tuesday, September 7. 2010Truth In Advertising - An Oxymoron.......John Linton .....and only 'believed' by "morons"? We spent most of yesterday seeing what could possibly be done to improve our wireless broadband and mobile telephony plans/services. We have limited options because of our size and also because of our basis of being in business which means we already sell every service at very little profit at any point in time. Our other consideration is do we change from Vodafone whom we have used since we began offering mobile telephony to Optus after all these years. No decision is ever easy and, right now, decisions are harder than they have ever been as far as I can remember. If I was to believe what I am told about data and voice call margins being achieved by suppliers I would be happy enough to accept that Exetel should give up trying to provide wireless broadband services and leave that very important aspect of communications services to 'the big providers'. However I don't believe what I am being told and 'the big companies' really annoy me with their, to me, basically fraudulent advertising. I realise that it is entirely my own personal perception problem and it also almost certainly means that I should no longer be attempting to play any part in the Australian communications business. However, right now, I have no real options so I get to spend frustrating days like yesterday. By the end of yesterday we had made little progress on developing any significant new mobile plans that, assuming potential buyers had enough mental acuity they would see any advantage in what a company like Exetel could offer. It would be an exaggeration to say that I felt physically ill in looking at current mobile plans being offered by major suppliers but I was certainly mentally 'distressed' at what "large" providers thought of their potential customers as implied by the outright lies spread across their web sites. Are people REALLY that stupid? Of course they must be - otherwise the web sites wouldn't contain the arrant nonsense they are now filled with. So a very depressing day. On the wireless broadband tasks we made a little better progress and are thinking of a more adventurous peak/off peak set of plans based on an obvious usage pattern by our current wireless broadband users. Optus have recently introduced a set of peak/off peak plans which are attractive enough in their way but are pretty 'pedestrian' as far as a 'typical' wireless broadband user is concerned. We looked at what it may now be possible for us to do and looked at our current user's usage patterns and found what, until it's copied, may be a uniquely appealing scenario for our own customer base and the sorts of customers who are attracted to Exetel rather than the many other larger providers. We are thinking of offering an 18 hour off peak period with either a 1:1 or even a 1:2 allowance (i.e. 1 gb peak plus 1 gb off peak or perhaps 2 gb off peak etc) for the current cost of offering the same 'peak' downloads for 24 hours. This would give something like: 1/1 - $17.50 2/2 - $25.00 3/3 - $35.00 etc; with an off peak period of 19 hours from 11 pm to 6pm and excess usage at something between $3.00 and $15.00 per gb. We figured such plans would not only address the ADSL replacement sector of the marketplace but would be very appealing to business users. However we would expect the concept, if it does actually work the way we think it will, would be very quickly copied by the usual idea bereft people and any advantage it gave us would not last very long so we need something else that will not be so easily copied. What that could be I have no idea and I eventually gave up trying and went to bed. So a fresh day and a fresh start - maybe we'll have more inspiration this morning and make some decisions that will help us stay in the wireless broadband and mobile telephony 'markets'. Copyright © Exetel Pty Ltd 2010 Monday, September 6. 2010...Just Ongoing Changes...No Fancy Words NeededJohn Linton "New Paradigm" and "Paradigm Shift" are over-used phrases (and almost always used incorrectly) ever since some American (I assume) marketing course introduced the word to its ill educated attendees who subsequently found it useful to fudge every future presentation to senior management that they couldn't articulate any real commonsense in. Perhaps an overstatement but you get my view on the usage of such phrases. So I was disappointed over the weekend to see that no less than three of my correspondents had used one or other of those phrases in our correspondence on wireless provisioning and the mooted TPG business fibre costs. There is no "paradigm" involved in under provisioning bandwidth on wireless networks - simply at best 'sharp practice' but in reality just simple dishonesty. The fact that "everyone does it" is about as ethical for business 'marketing' personnel to use as the people who steal other people's property via illegal downloads who use the identical phrase. Similarly there is no 'paradigm' shift/new/or otherwise involved in a company taking a view that they can use assets built by a company they have acquired differently to the way the original company used them - I thought that was the whole point of companies taking over other companies.... to use the assets more productively. It really doesn't matter what words you wish to use in either of these cases the actuality will remain the same and the reality of services based on technology......selling prices fall over time in ways and levels that are inconvenient to long term market leaders who have become used to their profit margins increasing constantly by not passing on the advantages of technology delivered cost savings and, over time, creating a completely falsely premised price structure....which then gets exposed by some new/more daring/more desperate 'player' in any technological marketplace. I have had less that 72 hours to 'digest' what I have apparently learned about some, apparently wide spread, provisioning policies by various wireless broadband sellers and even less than that to assimilate what TPG's 'new' business offers may mean to Exetel. In the past this would have been more than enough time to reach a conclusion on what this might mean to Exetel and to then formulate any required changes to current and medium term 'strategies'. These days I will take a little longer to offer my views on what we might do as a few more days will not make any difference and it will allow other people within the company to understand the scenarios and come up with their own ideas. I have started to put in place the simple changes to our web site that will deal with the TPG offerings and those should be completed today. We will hold a meeting this morning to make whatever changes we decide are appropriate to the wireless broadband plans and we will get whatever changes are necessary to be made to our current supply contract as quickly as our supplier can make them happen with a view to putting the changes to our wireless broadband offerings in place before the end of this week. In the mean time we have to deal with the ever tougher issues that routinely confront every part of our business in these ever more difficult market conditions. I think the only positive that comes out of the constant changes with which we are being confronted is that they affect our competitors more seriously than they ever affect us and we are small enough to deal with them, as best we ever can, far more quickly than our larger competitors. Meanwhile the 'cargo cult' NBN2 remains a huge dark shadow over any form of rational decision making and continues to drive the Australian communications industry into a new 'dark age': http://www.itnews.com.au/News/230989,consensus-evaporates-on-nbn-model.aspx "Always look on the bright side of life"....but sometimes it's really hard to do. Copyright © Exetel Pty Ltd 2010 Sunday, September 5. 2010Another Day - Another Issue.......John Linton .....even though it's Father's Day and a Sunday. Some kind person sent me a PDF of the flyer that TPG are apparently letter boxing in the buildings that Pipe have run fibre into and also directed me to the web site that has more details. As anyone with more than two brain cells to rub together would have realised TPG would use Pipes fibre to 'retail' data services to Pipe's "old" wholesale customers to compensate, and accelerate the process of losing Pipe's old wholesale customers. To put it in perspective: TPG is offering 100 mbps fibre to 'retail' customers for $599 install and then $500 per month for 24 months Pipe/TPG offers 100 mbps to fibre to Wholesale customers for $1,750 install and then $1,250 per month for 24 months ......yes, that will really work to ensure that TPG loses all of the Pipe wholesale business as soon as the contracts reach their end dates. However as this was always going to be the case it really doesn't matter that much as, I would have assumed, that all of Pipe's wholesale customers would have planned to move elsewhere as soon as it became clear that TPG was going to buy Pipe back in 2009 - I know we have transferred 60% of our small ($50k per month) spend to other providers and will move the balance by the end of this financial year as the contracts expire. It's the same old problem of providers retail operations competing with their wholesale customers - you just can't do it unless its on a commonsense basis - which this sort of offering by TPG obviously isn't. It will pose Exetel a few problems in the immediate/short term but nothing truly 'life threatening'.....at least I don't think so. Pipe didn't/don't have that many buildings 'fibred' which means that not very much of Exetel's target markets are affected. Looking at the flyer, it is written by a very residential oriented person(s) and if that carries through to their overall selling processes and people the really good price won't survive the rigor of a business/corporate sales cycle. However it's a new approach to a market that has been characterised by ridiculously high prices for very little value for a long time and will doubtless 'ruffle some feathers'. However that, of itself is not necessarily a good thing. The 'feathers that will be ruffled most' will be those of Telstra who has, by far, the largest percentage of the business and corporate data market and who have by far the highest prices in that market - they have 'old' pricing still operating in that market that is ten and twenty times higher than the pricing being proposed by TPG now. As TPG has taken the most retail ADSL customers from Telstra I would imagine that this new initiative by TPG will ensure that Telstra takes particular notice of how it may deal with TPG's "depredations". The problem, as Jonathan Swift once detailed before Australia was 'discovered', with being the most noticeable prodder of a sleeping giant is that when the giant does eventually notice it tends to all end in tears for the 'prodder'. Exetel, like all the other providers of communications services, knew this would be what TPG would do and we, like I assume all other companies that might be affected, would have put in place their various different processes to deal with such an expected use of Pipe's assets. Hopefully we have worked out how to deal with such issues (from TPG or from any other company) sensibly enough to be unaffected in the areas where Pipe fibre exists - if we haven't we will have to think again. What a great way to start 'Father's Day'.
Saturday, September 4. 2010No Fool Like An Old, Naive, FoolJohn Linton .....who ignores the blindingly obvious even when a scenario can only be caused by one situation. Exetel has struggled to build a sensible wireless broadband business for a month or so short of two years now. We have certainly built a realistic and surprisingly stable residential customer base and have continued to slowly build an even more stable business customer base. Throughout that time we have struggled to match, let alone surpass, the pricing/bandwidth offers of any of the carriers or even their larger resellers. This has reached a point where we have considered abandoning the investments in time and money we have put into wireless and simply left it to the people who can offer so much for so little.....something we simply can't do and haven't been able to do since 'day one'. I actually reached the point where my metaphorical 'pen' was hovering over the metaphorical 'paper' on which I was going to advise our provider that we would cease promoting the service to residential users completely and only provide wireless broadband to business users. My reason for not ceasing to promote the wireless service to business users was that there are several business users (including a long term personal acquaintance) who all make the same comment - "Exetel's Optus wireless service is so much faster with zero drop outs than other "Optus Wireless" services they have tried from Virgin, Dodo, Internode and Optus themselves. I have found this to be true over the past year or so and have even confirmed this "strange phenomenon" with the Optus manager responsible for the wholesale wireless service. This "phenomenon" manifests itself in a simple way. Put an Exetel "Optus" laptop next to an "Optus/Virgin/Dodo/Internode Laptop and do a speed test of the 'other' user's choice and compare the results. The Exetel "Optus" service will deliver a much faster result than any of the other four "Optus" wireless services - using the same source data from the same tower/cell from the same location at the identical time. Over the past eighteen months I have conducted this test some 8 - 10 times and the result is always the same. If I had been conducting the same test on two ADSL services (which of course would been logistically impossible) the answer would have been immediately apparent to me as I am sure it is to any reader of these scribblings. However, until yesterday it wasn't obvious to me concerning the HSPA speed test comparisons and I just shrugged my shoulders and was grateful enough to pick up some extra business in the cases where that transpired. In the meanwhile I just plodded on shaking my head at why all Exetel's competitors could offer so much more than we could even when we sold the service at 'cost'. Until yesterday I never did find an answer to this scenario although each time I saw a comparison of two services side by side producing such difference in download speeds (if you do the test in the early evening between 7 pm and 8 pm it is almost 4:1 in Exetel's favour) the answer should have been obvious - unless you are a totally naive fool I suppose. So, what to do? Have an Ethicsectomy? Pretend I come from a different country and parental and education background? Get out of the communications industry? Do what "everyone else does" and feel perpetually nauseous? Give up? Food for thought over the weekend. The very least that can be done is to not go down the ethicsless path of "everyone else" but to change our contract to allow us to use the currently totally unused midnight to 8 am - 10 am - 12 noon periods as we do with ADSL to provide 'free downloads' of some magnitude.......1:1, 1:2 or even perhaps 1:3. We will have to consider the implications of the apparently ethicsless actions of our competitors and maybe we should go down that apparently universally trodden path - and corner the market in Dramamine supplies. If it is in fact true then it would explain why so many wireless broadband users have such a low opinion of wireless broadband that I always struggle to understand as my experience is always so different. It seems lack of ethics can trash a whole technology's reputation in a country. Copyright © Exetel Pty Ltd 2010 Friday, September 3. 2010The 'Need' For Speed And Lower Pricing.....John Linton .......has been the 'defence' for the 'need' for an Australia wide fibre network since Krudd tried to hide yet another of his mindless 'election winning' broken promises after his 'NBN1' fell in the heap it was always destined to. Telstra's latest announcement: is simply yet another example of how/why new technologies continue to deliver more for less as time passes. In itself it is not that important but as yet another 'mile stone' on the development path for wireless technology in Australia it is significant. The plan of $69.00 for 6 gb over 24 months (including wireless modem) is quite a step forward if you go back to the beginning of wireless broadband's very brief 'history' in Australia. Detractors of wireless, of course, never want to do that because, of course, it invalidates their view that only wire/fibre based broadband can provide 'true internet' for all Australians. Wireless technology has a clearly mapped out future development path (and has had since the EU put in place the 'standards' for developing mobile telephony across its members. Over the past ten years that 'road map' has proven to be very accurate in terms of both implementation times and technical achievements. If I wanted to be particularly bloody minded I would point out the wireless broadband has developed 5 times faster in 3 years than wire line broadband has done in ten years and covers far more of Australia's geography that ADSL ever will. But the key difference is that wireless broadband is less than 40% along its KNOWN development path and hasn't really begun to reach the scale that will allow pricing to reduce to achievable levels that only come with higher adoption by more countries resulting in far lower hardware pricing and much greater efficiencies of spectrum usage. The other interesting facet of Telstra's announcement was the speed at which it implies that 50% of Australian demographics will be able to use the new much faster, and cheaper, wireless services - almost immediately. While "50%" and "almost immediately" have to be taken in context it still demonstrates how much faster it is to add/replace some hardware on a 'tower' than it is to build a new Australia wide network. Sure, once you have spent some uncosted amount of money and undetermined amount of time you will be in the same position but just how much will that cost and just how long will that take? No-one, including Treasury based on their recently released papers, has any idea. What will wireless technology be capable of delivering in whatever time it actually takes to get a fibre connection in regional Australia? There is little doubt, based on the 4G/LTE 'road maps' that wireless broadband will continue to get faster and there is even less doubt that it will continue to get cheaper. By the end of 2011 wireless broadband will be faster, cheaper and more ubiquitous in Australia than Telstra's own ADSL2 network which is 3 times larger than any of its competitors. The only thing wireless will not be able to deliver is 'terabyte' downloads for $100.00 a month. But for 60% plus, more probably 75% plus, of internet users it will be able to provide more than they need in terms of speed, downloads and price per month than any ADSL2 service can do and that is the problem it poses for even the most stupid of 'NBN2' "supporters and proposers". Is a Labor coterie of completely unknowledgeable people trying to 'cling to power' by borrowing unknown billions building a network that, at most, only 25% of the projected market would ever contemplate using and perhaps not even that many? But even that isn't the real point. The real point is that technology moves so quickly and offers so many diverse 'paths' that then split in to so many more diverse paths that NO government (command economy or quasi democracy) has the knowledge necessary to make such decisions. Ignoring that the current nonsense of an 'NBN2' came about because an about to be disgraced politician attempted to cover up his ridiculous lies it wouldn't be possible for ANY government to make ANY decision on ANY technology scenario. The reason that technology is delivered to the possible buyers by multiple commercial vendors is because some decisions will be wrong at any point in time and those companies will collapse but others, who got that particular call correct, will continue. In the meantime the end users will continue to get a service at the best possible price and at the greatest possible 'technology level'. It's been the case for 4,000 years....only children, the welfare dependent and the poorly educated don't understand that simple fact. Copyright © Exetel Pty Ltd 2010 Thursday, September 2. 2010Australia's Economy Is "An Economic Miracle"......John Linton .....the "envy of the World" and......so why doesn't it feel that way in Sydney business? I read the mega column inches in the financial, and general, press yesterday and again this morning about how amazingly well the Australian economy is doing but, after dismissing the hyperbole and mis-reporting, it seems to come down to two things. Exports of minerals to the PRC are up in volume and way up in pricing and Australians are gambling much more than they used to - now spending more on gambling than they do on food by quite some margin. I'm sure that is a stupid over simplification but it actually makes more sense to describe the situation in those terms when you spend your time in an industry where your major competitor (who is also your second largest major supplier) has ensured that you get less money per customer than you used to and that you have to provide more (and therefore have more cost) than you used to. The other aspect of business that has become noticeable is the reluctance of residential customers to pay their bills on time. Since 'day one' we have been very strict on collecting money owed to us (no start up can ever do otherwise) and because we automated our 'collection' functions well before our second year in business was finished we have never had any problem with 'uncollectable' money. Basically our automated systems suspends a user service if their payment defaults and then gives them three days to fix the problem and restores the service once they 'click' to acknowledge they will make payment within the three days. If they fail to do that then the service is again suspended until payment is received. No Exetel personnel are involved - it's completely automated. Over the six plus years we have been in business we have billed well over $150 million and total 'bad debts' over that period are less than $5,000. Even when we fail to collect an unpaid bill our debt collector agency manages to recover nearly 100% of the defaulted payments. However we have noticed that a slightly higher amount of money has to be referred for outside debt collection each month of 2010 which is a genuine indication that there are more people unable to pay basic bills than you would expect in a 'miracle economy' Similarly we are finding that a greater proportion of the few corporate customers we allow to pay via invoice rather than via direct deposit are not paying within the limited trading terms we provide to them. This is mainly our fault for not being as insistent on payment as we are with residential customers and, while I am not particularly concerned about it at this time, it is some sort of signal that business is not as easy for more than the communications industry outside WA. Perhaps it's just my overly sensitive perception that business conditions "on the East coast" have tightened but a recent conversation with one of our two bank managers confirmed that business for them was "not that good at the moment". So, apart from being so stupid not to start a career in mining all those decades ago, we will have to address the 'business conditions' we are stuck with in NSW and the other parts of the "East coast" that are not currently being blessed with rivers of gold. The only issue is to find our equivalent of the 'mining boom'. Once you look at the issues from that perspective the gloom surrounding the residential ADSL marketplaces at the moment begins to dissipate and you, again, realise that if you put a great deal of effort in to a business and have only a modicum of good fortune you will produce better results for all concerned than if you continue to "mine a played out ore body' (to keep in context with the mining analogy). Providing residential ADSL services 'today' is about as rewarding as attempting to bring usable ore from an exhausted seam at great depths. Moving those highly skilled and knowledgeable resources to an 'untapped ore body' is really the only way to go - a self evident fact. The problems of doing that are, of course, also self evident. The arrest in the churn aways in August and the slight increase in overall new customers via the Telstra ADSL2 services has lessened the need for 'instant' change but the major issues remain - that ADSL is a dying market and sooner rather than later a company of Exetel's size needs to find other things to do with its investments in infrastructure and its personnel.' Then again - perhaps the 'miracle economy' will extend beyond mining and gambling as industries and eventually reach the "East coast" geographically? Copyright © Exetel Pty Ltd 2010 Wednesday, September 1. 2010A Lone 'Sun Beam' Sheds Light And Warmth.......John Linton ......albeit briefly, in the increasingly Stygian darkness of the Australian residential ADSL marketplaces. It's the 1st of the month so its recurrent billing day at Exetel. This month's recurrent billing is a new record and has increased by just on 2% from August which, in these very difficult times, is a very good result and a little higher than we predicted (I would be very happy with that sort of increase every month in this financial year). It was interesting to see that our ADSL service revenue increased as did our number of ADSL customers although our plan was for both ADSL customer numbers and revenue to have fallen given everything that is going on in the residential marketplaces. Corporate services, mobile, VoIP, SMS and FAX all increased in line with predictions. So it was very pleasant to review those figures over 'breakfast' - it always makes for a really good start to the day. While a good month is always really pleasing there is no doubt that every month of this calendar year since February has been a real battle and, without being pointlessly pessimistic, I see the coming months as being even more difficult in a wide variety of ways as well as ways that are not possible to foresee. I think the next round of Telstra promotions and the 'flow ons' from them will happen in October and will accelerate between then and Christmas and that can only make what is already a difficult set of residential marketplaces - even more difficult. The introduction of Telstra ADSL2 plans in early August certainly slowed the churn away to Telstra (and Telstra resellers) but that is likely to be a once off 'blip' - assuming Telstra 'further improve' their retail 'win back' programs. We continue to fail to find a sensible way of offering wireless broadband services no matter how much time and effort we put into it. After almost three years I am about ready to give up on making any further efforts as it is simply not producing any worthwhile results....at least as far as residential services are concerned. We have a new 'offer' from Optus and have a better offer from another provider but neither address the requirements of the residential markets we perceive and it is just too much effort for very little if any return. We might just have to concede that we are not the right company type to offer wire line broadband services in any sort of sensible, to a carrier supplier, quantities. We are beginning to make some encouraging progress in business VoIP services and our new 'hosted PABX' product has made an auspicious debut with the first customers all reporting high levels of happiness with the first installations. Again, business and corporate VoIP is making faster progress than residential VoIP and with far less 'support' issues (it makes a very big difference when Exetel or a corporate IT department configures and installs the hardware to a residential customer doing their own install and refusing to read the instruction supplied by Exetel or their hardware manual). It's early days but business/corporate VoIP is something we have very high hopes for as we have a set of highly differentiated products and will build even further on the current base. August also saw another two large corporate customers sign up for quite complex and large solutions from Exetel. The average 'value' of corporate sales keeps increasing month on month and the complexity of the services being supplied also increases. We are making slow progress with our IP only offers but the first three of those have now been sold and the initial customer (who gave us the idea) has upgraded his initial service. We also reached the first of the revenue benchmarks set for corporate sales last month which while being three months 'late' was a pretty impressive achievement for a 'bunch of silly young girls' (as our corporate sales force was disparagingly described by a competitor to one of our suppliers earlier this week). So - all is well with the world, albeit briefly. 30 days of unremitting 'toil' now have to be put in to ensure we make the September targets. Copyright © Exetel Pty Ltd 2010
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