John Linton's Personal Musings

John Linton

.....even go so far as to pretend it never happened at all. I never thought a business year could be so particularly horrible in so many different ways.....but there were some achievements that were notable.

There is never anything useful about looking backwards in business, or probably in any other aspect of life - irrespective of what anyone might say to the contrary you are not really going to learn anything from the past (you certainly aren't doomed to repeat any mistakes you may have made). As the new calendar year is now less than 24 hours away all the bad things about 2010 are finished but the good things remain and are the basis for believing that 2011 will be a much better year than any we have previously enjoyed as a business.

Firstly despite the incredible number of problems we encountered and, largely, overcame we completed our seventh full year in business from our start up in January 2004. Over the year our business grew by a double digit percentage in terms of revenue (around 15% subject to final figures) which was remarkable in itself given the conditions we, and every other company, encountered and endured throughout the year in terms of residential ADSL. Profit was a completely different, and much sadder, story that we have already taken steps to address for 2011.

Secondly our company again became much stronger operationally with very few people leaving us and our recruiting of new people adding immensely to our capabilities in every aspect of our business. Our ability to retain our people year after year has been a key factor in any success we may have enjoyed and is something we need to continue to do if we are to continue to grow. We now have just over 100 people between Sri Lanka and Australia with 30% of those people now in some form of direct sales role.

Thirdly we completed the three year program to transfer all of our back end processes to Colombo and began the process of building outbound sales capabilities in Sri Lanka. Not only did we complete the processes but we established and met the benchmarks that were set to ensure that the SL facilities operate not only at world best practices but that they deliver services to our customers that are superior to those of every other Australian communications company - bar none - a very significant achievement. The ability to provide much better service than our competitors at a fraction of their costs is a very significant sales advantage that will begin to 'deliver' in 2011.

Fourthly we completed all of the work planned to make our Australian network even more robust by adding bandwidth and installing multiple paths in each State and Territory as well as upgrading the hardware capabilities of each piece of equipment deployed across the network. We spent more money on new hardware in 2010 than we did in the previous three years added together which is some measure of the scope of that program - which is ongoing.

Those four achievements were the keystones on which all future growth of Exetel was and is dependent and to achieve them in an incredibly tough year was a great success in itself. We also enjoyed continuing success in building our corporate business to more than double what it was at the start of the year and also finishing the year unbelievably strongly with, currently, 82 new sales in a single, usually extremely 'quiet', month. Our corporate VoIP, SMS and Fax businesses also more than doubled over 2010.

We will complete the last of the planning for 2011 some time later today with the revised pricing for all of our services, residential and business on the web site and almost all of the remuneration increase letters completed and sent to all personnel (a very important activity) as well as the last t's crossed and the last i's dotted in the overall business plan - not many organisations would be able to say that - but then not many organisations have the discipline and abilities that Exetel is lucky enough to possess.

So 2010 was not a total write off but as I look across the meeting room table at the tired faces of our key personnel it's obvious that whatever it has taken for us to achieve whatever we may have achieved over the past twelve months it has been done at significant personal costs to too many really good people. Both for them and me - COB today cannot come too soon.

I wish you a very happy new year....and thank you for reading and commenting on these thoughts - it has been a big help to Exetel.

Copyright © Exetel Pty Ltd 2010
ABN 350 979 865 46

John Linton

....too much work to be crammed in to two days.

We finished almost all of the revised residential ADSL offerings for new users yesterday with the only decision left to make being what, if anything, we do about Telstra ADSL2. My view is that we should no longer offer it because the 'promised' price reductions never eventuated and I, personally, see no advantages in offering a service we buy wholesale that is higher priced to the end customer than Telstra Retail offers the same service - a ridiculous anomaly in any sensible view of commerce. However other views are that Telstra's 24 month contracts and other requirements actually render their head line pricing a 'trap' for the unthinking and there is a market for more thoughtful buyers. We will look at those views again later today and I am pretty sure that my views will not prevail.

We will start finalising any 'special' offers for our current customers later today starting with the offer to our current 'naked' users to restore their telephone line to a working PSTN service at no charge to them if they sign up for a new 12 month contract. There has always been this stupidity in pricing of 'naked' ADSL services in that the cost of a 'naked' service is only two or three dollars less than an ADSL service with a working telephone line. I can't remember now how we were ever persuaded that providing a naked' service was ever a good idea in the first place but it is a really stupid concept that is hard to implement and even harder for an end user to change providers once the line has been 'crippled'. In offering our 'naked' customers the chance to change their 'crippled' line back to a full service line at no cost to them we think that will be a very good thing to do. It will be interesting to see whether our 'naked' customers agree.

At least one of our carrier suppliers continues to be interested in improving their offers to us but, as always, they remain firmly grounded in acquiring 'new net add customers' which make such offers almost useless in today's marketplaces. I would have thought that it must be quite obvious by now, even to the dullest minds with a zero knowledge of the markets, that once a residential market is 'saturated' the retention of current customers becomes an overwhelming issue that dwarfs the concepts of taking customers away from other suppliers....but apparently that is not the case, or if it is I can't grasp the basis of the views they hold. I can't see a way of utilising the latest new customer acquisition offers which may just mean my mind is too tired from trying to make sense of the various inputs we have been dealing with in coming up with sensible ways to approach 2011 - maybe we're just 'punch drunk' from dealing with the ever more complex events of 2010?

This article sums up the last five years of wire line/ADSL pricing issues fairly well:

http://www.smh.com.au/business/behind-the-no-to-telstras-flat-30-20101229-19a8q.html

You should be able to see why the past two years have been such a waste of time in most respects.There really is no place for a company like Exetel in residential marketplaces that have become so incredibly embroiled in political points scoring by people who haven't got the slightest interest in delivering value for money services but only in raping and looting to their own personal advantages.

Maybe I shouldn't make any decisions today as my personal mood is severely darkened by the advice from our vet at 6.30 am that our small dog who has been an integral  part of our family's life for the past 15 years may well have to be 'put down' later this morning if the tumor they found last night proves to be inoperable. I have loved dogs all my life but I have never been able to sensibly deal with these inevitable moments. 

Copyright © Exetel Pty Ltd 2010
ABN 350 979 865 46

John Linton

Among the many other issues we need to find solutions for is how to make wireless work better for us in 2011 than it has in 2009 and 2010. The major reason for us switching from Vodafone to Optus (after over six years) was Optus more overt commitment to LTE and 4G just as much it was because of Optus' continued build out of the wireless network itself. Anyone who has read my views on wireless would know that I have always seen the future of data communications for residential users as being a wireless world once the technology reaches a point along its published development path - anyone with any interest in the future of residential communications doesn't see it any differently.

So among the 'that was the year that was' articles that appear at this time of year I read this one with more interest than such articles usually engender:

http://online.wsj.com/article/SB10001424052748704774604576035611315663944.html?mod=WSJ_Tech_INTL_LSMODULE

I thought it was a useful summary on where wireless had gone and may be going in very general terms with the numbers giving emphasis to the general trends. Doubtless you have read the various statements made by Telstra and Optus about their progress in 'testing LTE' in their various different ways and their estimates of when and where they will provide end user services. If you haven't then you haven't missed much but the implications are that both companies will be providing LTE services in line with the time frames more clearly stated by the EU and US mobile service providers - second half of 2011 with very substantial coverage by the end of 2012.

The mid year figures from the ABS will be available in February some time (I noticed we had received a reminder that the survey form is now available and needs to be submitted by early January) and they should show an even stronger trend towards wireless broadband over taking wire line broadband in general use. This will obviously be well before the speeds have been affected by LTE or the wireless coverage has been 'intensified' by the build out of LTE capable facilities on the current networks.Something to take into consideration will also be the fact that the 'intensification' of the LTE build out will fall in the period between the current cessation of ADSL2 investment and any delivery of Labor's 'NBN2'.

Personally I doubt that 'NBN2' and wireless broadband are going to 'clash'. The users of the two services are entirely different which is something that I think is fundamentally wrong with the "70%" take up assumptions made by Stupid Stephen and Ms Faustus. ADSL was always an 'interim' technology that was, effectively, an extension of the life of the PSTN by delivering faster speeds than dial up data connectivity but completely failed to address the obvious point clearly seen in how mobile telephony had already begun replacing the old PSTN constrained telephone call services. ADSL would never have existed as a 'dominant' technology if mobile data services had been in place five years earlier than they currently are because they really don't address the needs of a pretty large percentage of data users....they just provided useful 'sun set' revenue at huge profit margins for the owners of PSTN infrastructures.

As the ever growing, and ever more quickly growing, number of Australian residences without a PSTN phone line demonstrate - wireless telephony and wireless data services are more than sufficient (at today's evel of inadequacy) for a growing number of 'dwellers' who, in the past, would not have considered not having wire line telephone, and data, services. Depending on what statistics you read (and believe) the number of residences without any form of wire line connection will reach 30% some time in 2012. For those numerate enough to deduct 30% from 100% (presumably not the Australian Labor party) the 70% of residences in Australia that would be available to use the 'NBN2' currently claimed by Ms Faustus and co is actually 100% of the current available residences if you ignore the fact that the 'NBN' is stated to only connect 9X% of the total residences in Australia. So......it seems that the 'NBN2' is not aiming for 70% (an improbable number in the first place) but something like 112% of the currently available residences....or some nonsensical percentage that since its all based on pie in the sky in the first place is now totally meaningless.

Back to reality. Just what growth wireless broadband will play in Exetel's 2011 is something we need to maximise and we currently don't have any sensible plans in place to do that.....which we really should. We definitely need an Android MoIP app.

Copyright © Exetel Pty Ltd 2010
ABN 350 979 865 46

John Linton

....my true love said to me - "I'm going to the sales with Catherine so get your own lunch".

I don't know whether it was the dullness and sheer predictability of the cricket yesterday or the difficulties in trying to find answers to the questions that require decisions in an ever shortening time frame but I made no progress on anything yesterday. I blame the cricket personally....not the rate of scoring or the efforts of the bowlers, though it was disconcerting to see how very, very ordinary the efforts by Smith, Clarke and Watson were - they set a new low for the standard of  "part timer" in test cricket. Perhaps it was just the third day of a break and also the third day of over eating accompanied by too much wine - whatever it was, no ideas of any type presented themselves. Perhaps the third day of Christmas is always marked by lethargy induced by the consumption of too much rich food over the previous two days?

So yesterday drifted by with constant showers deterring any serious effort to leave the house and absolutely no progress being made to addressing the pressing business problems that do not take holidays. I turned on the Arsenal/Chelsea game at midnight with no expectations that it would produce anything but further lethargy and promptly fell asleep before the kick off. When I woke up half way through the second half I was pleasantly surprised by the score line which remained the same until full time by which time I was wide awake again and opened up my lap top and looked at the residential pricing parameters yet again.Maybe it was the blurred state of my mind but when I checked the arithmetic this morning there seemed to be a glimmer of two good ideas buried among the silly extrapolations I had applied to some base figures. I will wait until tomorrow to check the concepts and double check the math before I
get too hopeful - but maybe there is a workable scenario after all. Maybe Arsenal should win against a major club more often.

The other major problem of finding 42 additional sales people (the 8 additional network engineers are not really a problem) remains as insoluble as it has been since we began to find it progressively more difficult to source high quality candidates over the past six months. I cannot work out what has happened since we hired the first 21 graduates
(18 of whom remain with us) and the past three months where we have failed to find anyone suitable at all despite interviewing over a dozen people. Something has obviously changed either in 'us' or in the type of candidate we are seeing or in our interviewing processes - but I don't know what that may be. Perhaps we need to find a new source other than the one specialised recruitment company we have been using, exclusively,from the start of the program? What ever the current problem is we need to find a solution in a hurry.

I have noticed one strange thing over the past two days but particularly this morning. That is the number of sales enquiries that are coming through in a period when there are usually very, very few. Right now there are three calls 'waiting' with three other calls being dealt with. To have six simultaneous sales enquiries on the 28th December is highly unusual. Looking at the call logs it has been fairly busy for the last two days and both Christmas Day and boxing day were more than twice the number of calls of last year on these days.

My computer has now had a Firefox crash for the second time in 5 minutes and the 'save' process has acted in a very peculiar way so I am going to quit now while there is some semblance of what I have written - albeit in a stupid format.

Copyright © Exetel Pty Ltd 2010
ABN 350 979 865 46

John Linton

........with still a lot to do to ensure 2011 gets going at midnight on 1st January 2011 in the best possible ways to ensure Exetel has the best possible chances of meeting the objectives we have not quite set for the coming year. So, the challenge is to get everything in place to begin operating while the majority of Australians are just getting their second wind at their various New Year's celebrations - not an easy set of tasks as we won't have the last of the 'bench mark' starting point data until the January bill run is completed in the early hours of the morning of January 1st 2011.

We have many operational difficulties to overcome if we are to first survive 2011 ans then grow our business in ways that will continue to strengthen it after the various depredations of the past two years. While our challenges are many and various, two stand out as being the most difficult. These are increasing the prices of our current residential ADSL offerings and reducing their costs so that they are no longer a financial and managerial drain on the company and finding a much faster way to recruit sales trainees and more experienced personnel for our corporate services. Everything else we do, or have currently planned to do, depend on addressing, correctly, these two major operational issues. I suppose the good news is that thee are only two issues to address instead of the dozen or so we have been confronted with in previous years.

There is still a way to go to address the first issue but the time to do that is now very, very short as we will need to advise our current out of contract residential ADSL customers of what their options are by no later than 2nd January. In 'gross terms' we have no real option but to increase our residential prices by $10.00 per customer as of February 1st 2011. We have looked at how this can be done most easily by us so that the customers concerned have the clearest possible choices and the simplest possible actions on their parts. We have been thinking about this for most of the past six months and have yet to finalise how best to accomplish this - this has to be done over the next four days. We have one scenario which will be the likeliest to be implemented which is:

Increase all ADSL2 Optus Bundled plans by $X.00 and include $10.00 worth of local and national calls and calls to Optus mobiles in the increased price. In addition offer the choice of bundling a low cost mobile plan which will provide a $10.00 discount to the current ADSL plan. This has considerable merit for those Optus ADSL residential users because their average usage of local, national and calls to Optus mobiles is around $10.00 a month on those call types so, for those users there is no actual billing increase with the 'extra' $10.00 for the ADSL plan resulting in a $10.00 decrease in the telephone call charges. If they then also take on an Exetel/Optus mobile they are actually $10.00 better off each month. So those are the sorts of things that we have been trying to put in place.

The on time and successful recruitment of 40 corporate sales and support people over the next ten months presents a problem of equivalent difficulty to resolving the ADSL pricing issues without the chances of some relatively simple to execute solution. It is an obvious truism that any company is only as good as each individual of which it comprises and therefore any company is only as good as its recruiting policies and the execution of those policies. Truism or not it remains an even more very, very difficult scenario when the recruiting is based on growing a new 60 person 'hierarchy' from the ground up with the ongoing development of the first people recruited an essential ingredient in building the three tiered 'structure' that will be required to ensure the last person recruited is as effectively inducted into the organisation as the first one was.

These two issues alone need more that the four days remaining to put in place the actions that have to be in place by 8 am on the 1st of January.

Copyright © Exetel Pty Ltd 2010
ABN 350 979 865 46

John Linton

....there really is no 'NBN2'.....it's just a story told to the very young of intellect to keep first Krudd and now Ms Faustus noses in the political trough". (apologies to the UK Daily Telegraph December 24th 2010 edition for bowdlerising the text of their cartoon about the 11.32).

....which was what I told my father in law over lunch yesterday when he turned to me and said: "John, what does this NBN mean to me?" Now my father in law is a cult hero to his grand children (and a very decent bloke - starting his life as a highly decorated WW2 Lancaster pilot who managed to fly over 40 missions and live and then going on to have an interesting and equally daring business career before ending up as CEO and then Chairman of Arnotts) who, despite his advanced age, has been an 'early adopter' of first PC technology and then internet/voip/streaming internet usage courtesy of his son, son in law and now grand children who have 'kept him at the forefront of technology use' over the past twenty years.

Apart from his advanced age making the delivery time frame of the 'NBN2' to Mosman some sort of barrier to him ever having the opportunity of experiencing the collective wisdom of at least fiv of the people sitting round the table (three of whom who had used computers since the were five years old and internet since it was a dial up service with a 28 kbps modem and the original Zork, Buck Rogers, Leisure Suit Larry and Space Quest were the computer games of the day) those five people, from their differing view points, couldn't give him a sensible reason why a "super fast fibre service" would deliver him any benefits than his pretty fast (mid teens) Optus based ADSL2 service provide him today. Cost was not an issue because his grateful family have always provided him with PCs and internet services.

Only a gullible fool makes predictions on technology directions and, while some significant number of people may well consider me a fool, I doubt whether even they also consider me to be gullible....though perhaps I am wrong about that. However, if the brief history of silicon, fibre and wireless based technologies shows anything at all it shows that every prediction made about it's limitations has been wrong every time someone has made some pronouncement on its future limitations in terms of capabilities. These three technologies have continued to defy the popularly trotted out "laws of physics" if only because the "laws" referred to were merely poorly understood concepts of their day that had to be 'adusted' in line with new knowledge. (Gallium Arsenide was 'man made' to overcome 'God's' "laws of Physics" that were preventing the ongoing densification of micro chip technolgy being an obvious example).The oft trotted out "Field Of Dreams" mis-quotation also has no applicability to the 'NBN2' - for all of the obvious reasons - that stream of cars would not be heading to the boondocks if the admission ticket price was double a Yankees v Boston game).

So the conversation around our Christmas lunch table moved on to more interesting and appropriate things and we completed a very enoyable family gathering. Later that evening I read this:

http://online.wsj.com/article/SB10001424052748703548604576037920087686958.html?mod=WSJ_Tech_RIGHTTopCarousel_1

which reminded me that our industry has always been full of 'got rich quickly stories' with a similar number of 'went broke equally quickly' stories because their are always a continuing stream of 'opportunities for the wide boys and con men to divert a portion of the communities general 'wealth' to their own pockets. Krudd and Ms Faustus are simply two recent examples of people with that lack of basic morals and dearth of principles. They are the true descendants of people making a 'quick buck' by espousing PTB's observation of human frailty.

Copyright © Exetel Pty Ltd 2010
ABN 350 979 865 46

John Linton

....and may this traditional celebratory period bring you happiness and relaxation shared with those closest to you. For those of us in Sydney it is a perfect summer's day - not a cloud in the sky and still a fresh off shore breeze in this part of the city....and Christmas carols on the sound system with the first aroma's of lunch emanating from the kitchen.

We finished up the Exetel year in the Australian office with nibblies and champagne in the office around lunchtime yesterday - also celebrating the 'arrival' of a further 8 business data link orders well and truly breaking the record for a record business sales month.....an amazing result. Most Australian personnel (and many Sri Lankan personnel are now on holidays with only a skeleton staff returning to work next week in Australia but an 'almost business as usual' number in Colombo - just recognising that the 'demand' for support and other services is much lower over this period recognising that almost all Australians take time off during the days between Christmas Eve and the start of the New Year. 

We didn't manage to complete the re-pricing of the residential ADSL plans yesterday morning as we had hoped with only the first 'draft' of the AAPT based plans in any sort of 'final form'. This was disappointing but the problem simply is that the market generally and Telstra Retail and TPG in particular have made it quite difficult to offer plans that appear to be competitive but that aren't offered at below our current and likely near future costs.Looking at other company's pricing for residential services indicates that they don't seem to have any sort of coherent pricing policies at the moment though that may just be that my tired mind is not able to comprehend the nuances and subtleties of their strategies.

In TPG's case it appears they are only 'sustaining' their low 'head line' prices by severely under provisioning much of their network - which is something that will prove very costly to every aspect of their business in the future - if that assessment is correct. Telstra Retail is offering the pricing it currently does via a deliberate, and publicly stated, policy of losing something like a billion dollars in give aways and massive marketing budgets. I'm not, for one moment "complaining" about the tactics of either company - simply making the point that in such circumstances it becomes very difficult to find a way, let alone 'ways', of offering services that break even let alone return a small profit to ensure that the company remains in business. We will finish the Optus based ADSL2 plans next week and also the Telstra based ADSL1 plans - with a bit of inspiration that we need to generate between now and then - hopefully the 4 day 'rest' will revive the flagging 'little grey cells'.

We did almost make one major decision yesterday - unless something changes significantly over the next five days we will execute the heads of agreement to almost double our North Sydney floor space to allow for the more ambitious of our planned growth programs for business services in 2011. Personally, I have hesitated about doing this because we have found it more difficult to find suitable sales trainees to hire over the past few months which has slowed that intake significantly - to the point that the last person we hired made her tenth sale yesterday (which came in while she was on holiday) and therefore successfully completed her probation. As probation usually takes around three months to complete this means that, for the first time since we commenced this program (22 months) we have no 'probationers'. One more issue to be considered over the 'Christmas Break'.

Have a great day.

Copyright © Exetel Pty Ltd 2010
ABN 350 979 865 46

John Linton

.....for those people who are able to take a 'break'.

We will, hopefully, complete much of the work required to provide revised plans for most of our residential ADSL services by midday today though whether those efforts result in the plans reaching the web site for new users remains doubtful as most Exetel people will not work past lunch time today - at least not in Australia and the programming staff, particularly, have been working flat out for the past two months ensuring they complete a major external software project before Christmas.Some of the overall changes will include:

- We will no longer offer 'naked' ADSL plans to new users and will provide a no charge upgrade to all of our current 'naked' users to restore a working PSTN line on their 'naked' service if they wish to do that.

- We will no longer offer a Telstra ADSL2 service as the foreshadowed cost reductions on those services never eventuated and the gamble we took anticipating that they would has been an expensive mistake. We could have raised the Telstra ADSL2 prices but, as we originally decided, what's the point of Exetel offering a Telstra service at a price higher than Telstra Retail sells it for?

-  We will continue to offer Telstra ADSL1 services to new users for the time being

- There will be four download offers for each of Telstra ADSL1, AAPT ADSL2, and Optus ADSL2/Inc PSTN Line (30,60,100,200 peak plus 180 off peak).

- There will be the option of including a $10.00 add on for the Optus plans that provide free unlimited local, national and CTOptus Mobile

- There will be bundled options for all three service types to bundle a mobile phone, and/or wireless service and/or a VoIP service

- Pricing will be lower than all other ISPs except for TPG

- New plans will have a 10 or 12 hour off peak period (either 5am to 5 pm or 6 am to 6 pm)

Maybe there will be other changes as the meetings progress this morning - it's hard to do this sort of thing against a fixed dead line.

How we address the 'clean up' of current old plans (used by out of contract customers) has not yet been decided. That is the really difficult process, far more difficult, than putting in place new plans, and it will take much longer.....at least until the end of next week - possibly longer. This remains a problem because, as I have said before, the various carriers only provide incentives/bonuses for new sign ups and net adds - their preoccupation  with NSRI and base customer numbers is sort of understandable but it is almost impossible to achieve in a saturated market - something that they are apparently incapable of understanding.

On the bright side we received another six business link orders yesterday (and have already received two more today) to take us within a 'whisker' of having a record business month which is an almost impossible to believe achievement in any December - we must be doing something right.....maybe our "bunch of silly young girls" (and "boys") are in fact infinitely better sales people than the sales personnel of a much larger company who described them that way.

PS: At a little after 1.00 pm we received our 8th new business order for the day taking the total to a new record of 80 sales in a single month for the first time in any month - let alone a December. An amazing result - and there are still the days in next week! An amazing result from our very young business sales team and their, not much older, manager.

Copyright © Exetel Pty Ltd 2010
ABN 350 979 865 46

John Linton

It was the most remarkable day for Exetel corporate sales with 14 new sales being made after successive days of 9, 7, 8 and 6 on the previous four days - 44 for the 'week'. Let's hope it's a true sign that our plans to build a highly successful business sales and support force are coming to fruition. Building any kind of sales force, let alone one capable of selling technically complex products to corporate MIS managers, is a very difficult thing to as anyone who has tried to do it would know. Building one of 54 people in three years is something that verges on the 'too difficult'.....but we are one third of the way there now with the last of the current personnel looking like they will successfully complete their probationary period tomorrow (we define probation as making 10 new sales in 3 - 4 months from joining). It was also good to see the 8th of our young sales force make her 50th sale this month with two other already having gone on to make their 100th personal sale.

It is such a remarkable result that it almost convinces me to recommend that we take the extra floor below our current floor to ensure we have no problems in continuing to build the sales force in each month of the coming year. We will run out of space on both Level 5 and Level 9 in the not too distant future. At our recent board meeting mine was the dissenting vote on proceeding with the additional burdens of signing up for and fitting out enough space to double the number of people we employ in North Sydney (almost all of it for additional corporate sales and corporate sales support). I had suggested that we wait and see what the first months of the new calendar year brought in terms of what impact the new sales director would bring and how accurate our sales predictions would be but now I'm not so sure that was the correct decision.

I, along with several other people, spent most of yesterday 'wrestling' with the various issues that are involved with developing new plans and simultaneously 'teaching' more people how to derive the information from our internal sources and to 'research' the external sources to provide sensible base data on which to make decisions. With the ever growing complexity of the different carrier offerings and the historicity they bring to even understanding the bases of the pricing issues with the 'old' plans let alone the new conditions of supply that will affect any new plans that particular task is more difficult to explain than actually carry out. We made some progress even if that progress was that some of the information we were using was wrong and that our decisions to date were invalid.

By the end of today we should have most, if not all, of the work completed on the new plans and then the really hard work on what we need to do regarding the 'old' plans needs to commence 'in earnest' given there is so little time now left before the end of 2010. I have come up with no 'bright' ideas so I hope other people bring more creativity to the meetings today. It is a very difficult thing to do and by leaving old plans from four years ago, and longer, the task is not made any easier. We still have almost 300 (out of a little over 550) of our earliest users on Pioneer Discounts which is very, very good to see - that this very large percentage of our earliest customers are still with us for coming up to seven years in February/March 2011. It may well be time to create a new category of discount for one level down from the original 'pioneers' which seems an odd thing to do when you are try to increase the non-existent profit on those old plans.

It will be a very interesting day.

Copyright © Exetel Pty Ltd 2010
ABN 350 979 865 46

John Linton

We held our final board meeting of the year yesterday mainly to celebrate the fact that we were just about to complete seven years in business including two of the most difficult years the industry has ever seen - at least in our collective experiences. We held the meeting in a nice restaurant and had some outstanding food. We discussed two very serious topics and made the appropriate decisions and dealt with the other items in between reminiscing about the various events of the past seven years. It was a pleasant two hours or so. We decided that the key events of the past seven years were:

 - Surviving the Lorraine Rose Infamous attack in the week before Anzac Day in April 2005

 - Surviving the Optus four months of under provisioning their ADSL1 back hauls in March through July in 2005

 - Surviving Optus over billing throughout 2006

 - Having the foresight and 'courage' and patience to hire the first work from home Sri Lankan support engineers in January 2007

 - Having the courage and skills to decide to move all back end functions to Colombo in January 2008

 - Having the foresight and skills to set up a corporate sales force in December 2008

  - Surviving, at least so far, the Telstra succession of 'win back market share' promotions of 2009 and 2010

Certainly, the last seven years have not been without their challenges. Perhaps 2011 will be the toughest year of them all - so far.

With the exception of residential ADSL pricing for 2011 we have completed the planning for next year and hopefully the forecasts are more accurate than they were throughout 2010 - a year none of us will be sorry to see the end of. In terms of residential ADSL pricing - it is a very difficult thing to do and while we are making some progress in terms of revised plans for 'new' customers we continue to struggle to find ways of putting in place plans for 'old customers'. Each of the carriers we buy from are only interested in 'net adds' and don't recognise, or simply can't recognise, that it's fine to give big bonuses for new sign ups but that it is ultimately pointless if current customers are attracted to the bonus driven plans of other suppliers.

It remains difficult to explain to current customers that the plans they are currently on were only made possible by previous 'new customer' sign on bonuses provided by the carriers and that those have now been exhausted many years ago in the cases of customers who are on four or five year old plans. It's obviously Exetel's fault that this situation occurs because we have always passed on all the benefits provided by the people we buy from to the customers whenever we obtained them. One of the major down sides of attempting to provide the lowest possible prices for the past seven years.

On the brighter side we had another very good corporate sales day yesterday with six new sales bringing the total for the last four days to 30 - something we have never got close to before - let alone in the 'dead days' just before Christmas when business business is very quiet with someone actually answering a phone or email is unusual (except with a message that "Bill Jones will be on annual leave until January the 99th.....", so we have done something quite well in these difficult times. Let's hope we can continue to build on that in the coming year.

Copyright © Exetel Pty Ltd 2010
ABN 350 979 865 46

John Linton

.......but ours are an economic work of art compared to the drivel released yesterday purporting to be the 'NBN2'  business plan for the next 9 plus years.

I wasted part of my life yesterday reading the newly released NBNCo business plan - or more correctly described - the NBNCo draft outline of some ideas for possibly constructing an unbudgeted infrastructure with no underpinning facts to show why it would be a good thing to invest an unknown (because there was no factual basis for almost all of the assumptions) amount of money in. As a 'business' document it lacked any credibility to any sensible investor - but then the investors, you and I and every other tax payer, were never consulted before this Krudd failure attempted cover up was foisted on us.

Doubtless much more financially credentialed commentators will assess the contents of that document over the coming days:

http://www.businessspectator.com.au/bs.nsf/Article/Stephen-Conroy-Julia-Gillard-broadband-NBN-pd20101220-CB6XA?OpenDocument&src=kgb

http://www.smh.com.au/business/fast-download-camouflages-faults-in-the-network-20101220-19386.html

so I will merely comment on the most obvious aspect of it, at least as it would affect any wholesaler to end user. The proposed $24.00 (ex gst) monthly cost of a 12 mbps data service (and I don't understand whether this price is expressed in NPV dollars, as the document covers a decade, or today's dollars but I am going to assume they are today's dollars) is around 30% more than Exetel, as a small wholesale customer, currently pays for an ADSL2 service from the most sensible of our carrier suppliers if you don't count the need to also pay for a telephone line (which is also not included in the NBN proposed costing and it's not clear how/if telephone call services are to be provided in the document). There doesn't appear to be any mention of a connection/activation price so it's not possible to compare that to the current situation with the three carriers that Exetel currently use whose charges vary from time to time but for much of any of the past three years are zero for two of them with only Telstra insisting on a substantial activation charge (in line with their very high monthly charges).

So, give or take, the 'NBN2' proposed pricing remains a mystery but a sensible commentator would say that is likely to be 'in the current ball park' in terms of Optus and almost certainly lower cost than Telstra assuming the telephone call service charges and/or equipment required are sensibly priced. However I couldn't see how any of the scant pricing details had been arrived at and the base assumption that there would be a 70% take up across the service areas appears to have no justification whatsoever other than that's the figure needed to allow the other figures to be derived. No-one, least of all me, is capable of determining that figure so I will let it go - you have to make some estimate and, despite the increasing use of wireless broadband maybe 70% is achievable if you rip up all the copper and therefore make current ADSL2 and telephone call services unavailable. However there appears to be no basis, other than necessity, for making 70% a realistic figure.

http://www.smh.com.au/business/telstra-has-the-call-on-nbn-20101220-19387.html

So, is anyone any further forward in understanding when and how and at what price a replacement service is going to be available for the current PSTN? I can't see how but perhaps smarter people are. My summary from reading the document is that for the majority of end users they will get no faster services than they have today (or are planned for tomorrow without the 'NBN2') nor will they get them at lower prices than they get them today. They will either have to use their mobile for telephone calls or will need to buy VoIP equipment which will not be any lower cost than today's methods of making telephone calls. Depending on the cost of back haul from the points of interconnect the overall service is not going to be able to offer any cost advantages at all over the current networks and there are several downsides not the least of which is that Australia's communications network is back in the hands of a government monopoly which is the very worst scenario in terms of any other option.

The words "back to the future" inevitably echo in my mind.

Copyright © Exetel Pty Ltd 2010
ABN 350 979 865 46

John Linton

.....of the hopes, aspirations and even 'life and death' scenarios of the human species.

There are not many things left to do in the remaining days of December to complete what is required to start the new year on January 1st. The major things are to finalise the pricing for new business services and residential services and write the communications to the various out of contract organisations/people that/who are affected. We also need to do some revisions to the web sites and advise our personnel of the various, relatively minor, changes to the company's operating structures. It sounds quite simple and easy to accomplish but it represents a reasonable amount of work to be accomplished over the remaining 11 days of 2010 and doubtless it will take until COB on the 31st before it is completed - for some reason it always seems to do that.

I wonder whether anyone who takes time to look at the coming year in any sort of detail has any real idea what 2011 will produce in terms of their company's development and/or progress? The pleasing symmetry of figures in spread sheets depicts the second by second events and the actions of real people in simple numbers. It is a total de-personalisation of human activities - representing all the work of a group of human beings by rows and columns of numbers on a screen and/or, for those that can be bothered, on sheets of paper. The X's and Y's that represent people we, as yet, don't know depict people 'polishing their resumes' and hoping they find a suitable first job as they post or email them to recruitment agencies and companies whom they don't know nor have any idea of how their abilities and qualifications as depicted in words, they don't really know how to use as yet, will be received.

Yet, for better or worse, it is figures on a spread sheet these days that determines the 'fate' of practically everyone who works for a living either in their current work place or in a work place that they aspire to work. Stating the obvious? Almost certainly; but I wonder how many people actually think about it in that way when some unknown planner or decision maker deletes some X or Y from some spread sheet grouping or changes some projection either up or down based on the best information they have available to them at the time but with no real knowledge of what will really happen beyond the columns of actual figures preceding the forecasts they or someone advising them have made in the columns representing the future?

Perhaps I am over stating the case but you see the results of these tyrannous rows and columns everywhere. I derided the iinet public statement that "iinet were no longer going to grow because they wanted to concentrate on developing new and better services for their current customers" (or words to that effect). What really happened was that those tyrannous columns were trending downwards in terms of numbers of customers and the revenues and profits being predicted and they had no option but to make future plans based on those unarguable numbers. So who is in charge of such organisations?.... the people making their spin spiv derived statements of what they hope the gullible will believe or the spread sheets depicting the reality of the actual situation of the past and giving one, often quite different view, of the future?

The actual reality is that whatever any 'planner' does in terms of his/her own sets of forecasts are almost entirely dependent on what other 'planners' working for their competitors are putting in to their own forecasts and that information is not available at the time decisions have to be made - other than as extrapolations of what has been seen in the recent past. I am starkly reminded of this when I look back over 2010 and recall how many times we modified our plans and forecasts over the past twelve months. So in this time in this industry the huge efforts that go in to constructing future plans is largely if not completely wasted.

Who really knows what 2011 will bring? Look at the result of the third test compared to the 'expert' press predictions and the bookie's odds after Australia's first innings was completed to see just how wrong you can get predictions of events just a couple of days in the future.

Copyright © Exetel Pty Ltd 2010
ABN 350 979 865 46

John Linton

A pleasant Saturday with the 'wind down' generated by the December/January Australian annual holiday period very evident wherever you go and whatever you do. We put up our Christmas tree and began writing our Christmas cards and emails and generally drifted away from 100% concentration on the vicissitudes of operating a communications company in the most difficult conditions I have ever participated in. There is another 'life' outside Exetel which the vast majority of people take for granted that only the very stupid miss out on. It will be nice if I could participate in it for a few days.

The only bit of real work I did yesterday was to read the skeleton draft of the proposal for support and sales telephone services for a company called Airtel which is very large Indian mobile provider in 14 countries in and surrounding India. The proposal is to provide back end services for their 1.2 million Sri Lankan mobile customers. If you read some information on the internet you would have to wonder what they are expecting to be able to afford in terms of support:

http://en.wikipedia.org/wiki/Bharti_Airtel_Lanka

http://www.airtel.lk/AirtelSL/broadband/packages.htm

How does a mobile company establish a 1,000 base station network and then offer data at the equivalent of $A5.00 for 3 gb or $A15.00 for unlimited?....or mobile telephone calls at 1 or 2 cents per minute? The cost of the equipment is the same (it all comes from the few major mobile technology manufacturers). So the answer must be in the cost of labour/personnel. If you do a quick multiple of SL salaries to Australian salaries then those numbers come back in to line with Australian mobile charges. So while we will complete the response to the RFQ I doubt that the prices we would charge to provide back end services would be the sort of prices an Indian company would be prepared to pay in Sri Lanka.

I have borrowed mobile telephones from one or other of our Sri Lankan personnel on occasions to make calls within Sril Lanka and I detected no differences in quality to making mobile calls in Australia. I have also used the Airtel HSPA service on my note book on one visit and, again, detected no difference to using an Exetel/Optus mobile service in Australia - so, based on those very few experiences, it didn't seem that Airtel was charging such low prices by having inadequate network structure. Of curse, as noted in the wiki article, Airtel made a massive loss in its first four years but then building a new, quite extensive, mobile network, would inevitably produce that (Optus and Vodafone made massive losses for ten or so years before making a profit in Australia).

I have no expectation that tiny Exetel will win the support contract for Airtel but it is sensible experience for our Sri Lankan company to put together such a reply because we will look to supply services to other companies in the not too distant future. One of the interesting things, at least to me, was that we actually keep all of the statistics required in the tender and we exceed all of the requirements asked for - with the exception of the requirement to answer 100% of calls within 20 seconds which appears to be an impossible (financially) level of support to provide. However perhaps we need to re-consider just how that could be achieved.

In any event it is a very positive step in the right direction to get the first positive feed back from Sri Lanka on how we can better support our Australian customers by learning what an Indian company expects as support levels to residential Sri Lankan customers. Their requirement make Australian support centre standards look "third world" although they cost fives times more to operate.

Copyright © Exetel Pty Ltd 2010
ABN 350 979 865 46

John Linton

....before the end of Exetel's 7th year in business.

It has been a very productive week in almost all aspects of running a business of Exetel's size. We did complete the man, many changes to the 2011 operating plan by COB yesterday which is always a source of satisfaction. We had another great corporate sales day with 7 more sales to add to the 9 received yesterday which set a new record for the number of corporate sales made in a two day period in any month - to make that number of sales on the 16th and 17th of December is amazing. Residential sales were well above our expectations and the new mobile bundled plans continue to sell very, very well - again - above expectations. We also completed all but a few loose ends of a major software development project we have been doing for an Australian company which was very good to see.

All that remains now is to finalise the pricing for our business and residential services for 2011 which we have pretty much done all the ground work for and can now use the 'quiet period' of the last two weeks of December to make those, always very hard, decisions. One of the easier decisions is to discontinue the supply of 'naked' services which we will no longer offer to new users in the immediate future. Our buy price cost difference is $2.20 (inc GST) between a working PSTN line and a 'crippled' PSTN line service which is already very little and when you take into consideration the complexities of provisioning and support and the customer difficulties of moving to another provider and all the hassles that causes on many occasions it is simply not worth having a 'naked' service - unless anyone can tell me why there is an advantage?

Our new Sales Director came in to attend the Friday sales meetings we run so that he could get an initial impression of how the sales people 'present themselves' and how future sales prospects look across all of Exetel's services. For the first time since we 'created' Exetel I didn't attend those meetings and it felt a little strange. Hopefully someone with a great deal of experience and knowledge and who is able to devote 100% of his time to the job will have a very positive impact on Exetel's sales growth next year. A very necessary step for us to take as we begin our eighth year in this ever more difficult business.

Steve and I had an end of year lunch at our favourite Sydney restaurant and talked about the new and very different opportunities we could see that we might get involved in over the coming months and how we could improve the things we are already doing. The really good thing about the communications industry is that technology moves so quickly there is never any shortage of new implementations to look into and see what can be done to improve what is already 'out there'. 2011 looks like being one of the more interesting years in that respect. Perhaps it was a little too much wine - but we both agreed that one of the best decision we have made in Exetel's almost seven years of existence was to decide to establish an operation in Sri Lanka. Not for the short term benefits of more effective support but for the opportunities it allows us to now pursue that would be impossible to contemplate if had not taken that deep breath.

So it is feeling a bit more like summer and Christmas and I am now looking forward to a more relaxing time....for a few days at least.

Copyright © Exetel Pty Ltd 2010
ABN 350 979 865 46

John Linton

.....on the basis that Telstra and TPG have lowered the cost of their 'promotions' over the past year to the point that there is no further cost cutting they, or anyone else, can do? Perhaps not but I don't seem to be able to find any "Christmas" offers from any Australian provider this year - in marked contrast to other years.Maybe I am not looking carefully enough - or maybe iinet's "Christmas Message" to its customers summed it up in their typical wankerish, obfuscatory manner:

http://www.computerworld.com.au/article/371538/iinet_internode_gear_up_apps_2011/

I particularly liked the sheer lying effrontery of this (presumably a 'softening up' pre-cursor for some upcoming unpalatable back downs in the half year report figures):

"Michael Malone, said the provider was moving away from growing its
customer base - now at approximately 650,000 subscribers - and instead
looking to deploy applications over coming years."

.....almost made me spill my coffee in laughter for the incredible obvious lying stupidity of expecting anyone to believe that iinet had any part in making such a decision instead of Telstra's and TPG's cut price offers eating ever more deeply in to iinet's ADSL customer base. Does iinet think their customers are all illiterate fools - though by paying iinet's prices for their poor quality and over priced services does give an indication that might be the case. I think Telstra Retail and TPG determined that iinet's customer base would not grow and the over pricing and poor quality services have only allowed a charade of growth via constantly buying up other companies and then seeing those customer bases decline as the newly acquired customers were exposed to iinet's pricing and inadequacies. Then again I may well be quite wrong.......

.....and, in all fairness, it was nice of iinet to add a massive contribution to the general amusement of this Christmas season by publishing that incredibly stupid statement. Not many people are prepared to make such a public fool of themselves in the general interests of giving people such a good belly laugh to start their day.

The new ABS statistics in late February and the half year reports to the
ASX towards the end of January will make interesting reading. I will be particularly interested in seeing what Telstra are prepared to say about their market win back successes. It will also be interesting to see how Optus have fared over the past six months. I haven't seen any 'industry commentator' express any views about what is happening in the industry. Perhaps this indicates that no-one actually knows what is happening which is likely to be the case as most 'industry commentators' make no efforts to inform themselves or do any sort of research other than regurgitating what the different companies spin spivs feed them. Maybe 'news' always consisted of obvious lies pushed to the gullible by the unscrupulous in the interests of the venal?

Yesterday was a very pleasant day for me personally and for Exetel as a business. We ate from a very interesting menu at a lunch hosted by our largest supplier and exchanged some useful information about the market generally according to our different sources and interests...always a very useful thing to do. Corporate sales didn't quite make double figures for the day but certainly set a new record for any December day - let alone this late in December. We almost completed the 2011 operating plan with only some minor tinkering now required to finish it off today and then we can do the hard work of writing the documentation required to allow us to begin 2011 on the first day of January with decks swept clean, all brass work polished speckless and all movables stowed Bristol fashion.

A nice feeling.

Copyright © Exetel Pty Ltd 2010
ABN 350 979 865 46