Sunday, January 16. 2011Return To Bangkok- Home Of Cut GemsJohn Linton I took the evening Emirates flight out of Sydney which got me to my hotel by 2 am local time and 6 am Sydney time - having slept for most of the 8+ hour flight and it now being my 'getting up time' in Sydney I am wide awake as would be expected. I have never driven from the airport to the city at this sort of time and it made you realise how stupidly wasteful our major cities (and those of most of the world) are. Not a single large business tower block had any lights on - something that is eminently sensible and would save Australian major corporations a great deal of money if they followed this obvious example. There is now a delayed 'live' broadcast of the Arsenal game so I will finish this later.....which didn't work out very well as I fell asleep after about 20 minutes and didn't wake up until after the game was over at which point it seemed sensible to go to bed and wake up whenever - which I did. So much for jet lag and time differences but, as I have absolutely no plans to do anything but absolutely nothing over the next two days was and is just fine. In fact - I do have one thing to do while I am here which is to buy some sapphires. Since we opened the Colombo office (Sri Lanka being the source of most of the finest sapphires in the world) we put in place a program of recognising the performance of our newly hired sales personnel by giving them a 2+ carat sapphire when they reached one of their ongoing sales targets. As our sales personnel in Sri Lanka are 100% females and our sales staff in Australia are 80% females these rewards seemed to be very appropriate and sapphires also make very nice cuff links for our few males sales people in Sydney. It also seemed appropriate that we could buy something that a person wouldn't normally consider buying for themselves and that the retail cost of a fine sapphire in Colombo was 70% to 80% lower than the lowest wholesale cost I could find in Sydney. We have been running this program for around two years now and we have handed over some very nice gem stones to our sales people. For the Australian personnel the target for the first stone is 50 corporate sales and for the second stone it's 100 corporate sales. Two of the first four people we hired in Sydney have now achieved their second sapphire (despite having supervisor responsibilities added to their personal sales targets after four/five months after joining Exetel) and another 8 people have been awarded their first sapphire. In Sri Lanka the targets were set at 500 residential sales for the first sapphire and 1,000 residential sales for the second. The first three SL sales people have already received their sapphires and another six have now recently qualified having made over 500 residential sales. So some time in the next two days I will spend a few hours in the 'gem district' trying to update my knowledge of current pricing and trends and also find what new 'discoveries' have appeared (such as tsavorite that was new to me a couple of years ago but which is an extremely beautiful green gemstone from East Africa). I started buying, at first, emeralds over 30 years ago when some kind person explained to me the folly of buying jewelery in city stores and showed me how to buy much better stones via estate sales at auction (breaking up the ring or ear rings or pendant and only keeping the main stone and then having a skilled jeweler make up a new piece using the stones thus obtained) and how to understand the quality differences. Since then I have become an 'expert amateur' not only in emerald qualities but then in sapphires and rubies and other 'exotics' but, not being a 'girl' the females in my immediate family have a lot more jewelery than they would have otherwise...and more recently the 'girls' within Exetel. I look forward to browsing around the wholesalers in the streets off Shilom Road near the Holiday Inn with a great deal of pleasure. Copyright © Exetel Pty Ltd 2011 Saturday, January 15. 2011Not Understanding Australian 'Culture'.....John Linton ....provides no basis at all for understanding the culture of another country let alone its business sub-cultures. I managed to finish all the tasks I had to do by yesterday evening and will begin the trip to Sri Lanka this evening arriving in Bangkok in the early hours of their morning. I didn't manage to get any 'time off' over Christmas/New Year but I am actually going to take three days R and R in Bangkok (two on the way and one on the way back). Unfortunately Annette has had to cancel her trip as we have a terminally ill dog who may depart this life at any time and she would not contemplate that event occurring while at least one of us is not present. While, if anything, I am more concerned about this than she is the demands of running any business, particularly a remote business, make such aspects of a personal life a compromise. I made a list of the things that I need to cover while in Colombo and we discussed the Colombo operation for longer than usual at the last board meeting to ensure that everything was agreed in terms of what we might do in the future. I am not sure whether we will be able to achieve all the things we have set out to achieve but we have learned a great deal over the past few years and, hopefully, we will continue to learn a great deal more over the future years. Our major problem, at least the major problem that we recognise, is our lack of knowledge and understanding of Sri Lankan 'culture' particularly as it relates to business activities. While we have made a great deal of progress over the time we have been involved in setting up the Sri Lankan business we have made almost no progress in understanding how best to manage the people we employ there. We were intelligent enough to try and understand (from reading and observation) how other companies in Sri Lanka and India were operated by 'foreigners' and were astute enough to try and understand the sub text of everything that came our way but having zero experience the knowledge we have gained over the past few years remains very basic. It is now time to try and get much more out of the Sri Lankan company than we have managed to do to date - the progress to date has been more than acceptable but it has been heavily constrained by the 'controls' imposed - mainly by me but generally because of the way we set up the operation and our lack of understanding of how business, and therefore the people within business, act and to extend that to their career expectations is so from from my personal understanding it might as well be trying to understand 3rd millennium bce Egyptian hieroglyphics without the Rosetta stone. I am also very aware that in some future 'NBN2' era where everything in providing residential communications becomes 'a dull shade of gray' Exetel will need to find a way of keeping the highly qualified employees we have in Colombo 'intellectually stimulated' by their work and ensure they are able to continue to grow their careers beyond the current major plus of earning more money than they can find from any other Colombo employer while not being required to do very much (in intellectual terms) to earn that money. As the future success of the Colombo company will rely, just as the Australian company does, on retaining the intellectual 'capital' locked up in the minds of its personnel the future development of career paths for our personnel remains one of the key aspects of Exetel's future development as a company. A lot of 'food for thought' for the next few days. Copyright © Exetel Pty Ltd 2011 Friday, January 14. 2011It's Contract Re-Negotiation TimeJohn Linton This is the time of year that we begin the process of reviewing most of our major supply contracts that have either annual termination dates or longer contracts with annual review dates. We completed the re-signing of the only contract that has a December date (Verizon for IP) in late December and we have begun the process with most of the other suppliers with the aim of completing all discussions well before the end of February. One surprising issue has come to light in the preliminary phases is the reluctance/inability of all our current suppliers to provide services over 10 gbps infrastructures - all but our newest IP link from NTT is provided over multiple 1 gbps fibre from our different providers. I would be very surprised if Exetel is anything like the largest customer of our current providers in terms of things like carrier back haul, IP and other connections so it has come as a very great surprise for me to begin to understand that suppliers as large as Optus, AAPT and even Telstra have no 'standard' pricing to provide services over 10 gbps links. We have been using multiple 1 gbps links from both Telstra and Optus for some years now and are approaching the time when we need the same from AAPT. We have been asking for such services for well over a year but, at least to date, no progress has been made except for mutterings about "too costly...can't get capex approved" etc). This has resulted in us having to run three 1 gbps links in the case of one service from one carrier which is highly undesirable for all sorts of reasons and is becoming totally unsuitable for the current situation and will become a major barrier for the future if our current plans actually materialise. It is necessary for our network re-dimensioning to base both the Sydney and Melbourne PoPs on 10 gbps links to accommodate the continuing growth in our corporate business as well as the possible future effects of a residential NBN usage of higher data service links than are used today. For major carriers to imply that supplying 10 gbps links is somehow 'unusual' in 2011 is something I find surprising and will need to investigate what it is I am misunderstanding. Clearly there is something that I have completely misunderstood. The other, as usual, problem with renegotiating contracts is the fact that all suppliers to us have 'sales quotas' based on us buying more from them in the future than we done in the past. This is a problem because prices of services like IP and inter-State back haul have continued to fall which has passed the point where a company like Exetel can simply order more at a lower price and sustain the amount of dollars we are spending with our different providers. There are, currently, two major examples of how things change in this industry. The first is the effect on IP pricing that the appreciation of the Australian dollar has provided from this time last year and today. The exchange rate gain has reduced the carrier buy prices of Southern Cross by over 35% in that time but the carriers act as if no gain to them has taken place. All very well - except 'new' suppliers to companies like Exetel price SX IP (or other links) taking that appreciation in to consideration when they offer IP pricing. The other thing that 'new' suppliers offer is a 'rent free period' that further reduces the year one contract pricing by 25% or more on top of the currency appreciation leaving a yawning gap between what is being paid on 'old contracts' and what is available on new contracts at least for the first year. The second thing that is now evident is that the cost of inter-State back haul has 'fallen through the floor' over the past few months and by that I mean the price has dropped by more than 50% and closer to 85% on some routes. This just doesn't mean that the cost of simple inter-State connectivity has fallen but that services such as local IP in WA, SA, NT and even Queensland should also fall from the ridiculously high premiums charged on last year's contracts...... but that scenario is, again, made very hard by carriers only considering that they will provide services for more dollars per month than their current contracts deliver. I fully understand this problem - the actions of Telstra Retail and, to a lesser extent, TPG over the past 18 months have meant that companies like Exetel have to sell their services at much lower prices to our 'last year's' customers or watch as they find lower prices from some other provider more attractive and leave Exetel. But the reality is for us, and I suspect other end customer suppliers, is that we have far less money today than we did a year ago and we have to reduce our costs of wholesale services or cease providing services all together. Faced with the choice of matching, at least, the lower revenue per customer with lower costs of services (which are freely available from several sources) or ceasing to supply end user services our suppliers have to reach the view that they have to get lower revenue from us because we are getting lower revenue from our customers. Personally, in these very tough times, I would have thought our wholesale suppliers would have made similar plans to us for 2010 - reduce their expectations of any revenue growth from residential ADSL based services and looked for other opportunities - a requirement in any stagnant let alone shrinking let alone dominant player discount happy market place. Verizon 'retained' our business at the thirteenth hour - our hope is that doesn't prove to be the case with our other long term suppliers. Copyright © Exetel Pty Ltd 2011 Thursday, January 13. 2011Floods Receding......John Linton .....hopefully the damage to the infrastructures Exetel use to provide services will be repaired in the places most affected by this disaster and will return to service as the carriers can reach them. In general terms we and our customers in Queensland have, so far, got off very lightly with the supplies of diesel lasting in the 224 Queen Street Data Centre and the only down time being a sixty or so minute period at 5.30 pm yesterday as one of the inter-State fibre links had problems but the back up path out of Brisbane staying on line. Of course our customers on local exchanges that have been directly affected by floods (the most obvious being the towns you see on the 24 hour TV news) will remain without services until the water subsides and carriers can start repairing exchange and 'last mile' damage in those locations. The problems that will now exist will need to be dealt with over the coming month or so. Our problems will of course be totally trivial compared to the deeply personal problems faced by so many Queenslanders. The events in Brisbane over the past few days emphasise the need for the re-dimensioning of the Exetel network which which we undertook more than a year ago and are reaching the latter stages around Australia right now. We, hopefully, have escaped the consequences of not having a second PoP in Brisbane and triple rather than dual redundancy in the links connecting those PoPs to the rest of the 'world' which we are planning to add later this year after the work in Sydney, Melbourne and Auckland is completed. It does make crystal clear the need for such redundancy and has reminded everyone concerned that Brisbane is built on a flood plain and that Eagle Street and Queen Street cannot be considered for the second Brisbane PoP. We also need to re-examine the AAPT and NextGen paths for inter-State connections between Brisbane and Sydney for the same reasons. Perhaps it was a timely lesson although the single Brisbane PoP has remained operational and our previous thinking of a second PoP in Eagle Street would not have addressed a worse flood situation - being even lower than Queen Street. As usual when you are going away, even for a short time, the things you need to get done before you go seem to increase rather than decrease as you get nearer to your departure date. Even though I thought I had done everything I needed to do with time to spare this time it just hasn't turned out that way. We need to have the first board meeting of the year today which we will do, as is our custom, over lunch and, looking at the basic figures, it will be a pleasant occasion to start the year/end the new year and some indication that our 'strategies/tactics' to address the depradations of Telstra Retail are beginning to work despite the enormous costs of putting them in place. How those 'strategies/tactics' work out in this and subsequent months and just what new pressures come to bear in the residential ADSL market places is, of course, unknown to us at this stage. I continue to be disappointed in our inability to find the same level of graduate recruits as we have done over the past two years. We would have liked to recruit two new people before now but the people we have interviewed have just not been 'right' and I, like most sensible people, see absolutely no point in recruiting people who we are not certain are going to like the job and therefore make a success of it. I believe this is just as much in the applicants interests as it is in the employers. Nothing is more 'scarring' for someone entering the work force for the first time than being fired from their first job or even having to resign from their first job because they disliked it so much. It is becoming a 'serious' problem as our continued growth in our corporate businesses will be impacted if we are unable to recruit high calibre people for the positions. I am not quite sure how best to address this issue but it definitely needs to be addressed....going away for a week won't help that process. Copyright © Exetel Pty Ltd 2011
Wednesday, January 12. 2011Queensland Floods......Floods Anywhere.....John Linton ....put the minor problems we think are difficult in to perspective.....but apparently not to everyone. The first indication of how the unprecedented floods will affect such mundane services such as internet services was this report about Vodafone's issues yesterday: http://www.arnnet.com.au/article/373016/update_vodafone_queensland_network_restored_within_hours/ but the wider issues have now begun with the announcement that electricity was shut off to parts of the Brisbane CBD at 7 am this morning which will seriously test the diesel generating capacities of several of Brisbane's data centres which are mainly located close to the river in Eagle Street and Queen Street. In Exetel's case the cut in electricity will, sooner or later, affect all of our Queensland customers (residential and corporate). So while the major aspect of this flooding is the property devastation and personal tragedy of family deaths with the subsequent destruction of infrastructures on which whole communities depend and threaten the possible permanent loss of some of those the inability for many commercial enterprises outside the flood affected areas to operate will comprise an unknown amount of damage. How long all this destruction will continue is obviously unknown and watching the TV news only indicates that the opinions being expressed by the people most closely involved indicate that they have no sensible estimates of either the scope or the time frames that may be required to deal with the different levels of devastation. So no comments of mine or perhaps anyone else, no matter how deeply informed, are of any value right now and I will stop there with the exception of wondering, one more time, why the human race - since events have been recorded (where records have survived) - why do people continue to build in areas where recent history (let alone longer history) indicates that floods, or bush fires or, in the case of rural areas - droughts are a regular occurrence? The triumph of hope over experience? The extraordinary weather events in Northern Europe and much of the North East of the USA over the last month (which we tend to only hear about in terms of airport closures and flight delays) or the even more sparsely reported devastating floods in Pakistan and Northern India and China indicate just how dependent the whole world has become on 'basics' continuing to provide services. When roads become closed, trains no longer run and flights no longer take off and even all the appliances requiring electricity no longer work (one of the ditzes on the ABC news has just said that people should "get on line or turn on their radio" to check on where the power cuts are in Brisbane) it becomes obvious that weather is something that more people need to pay attention to when deciding where to live or where to locate a business or school. The Haitian earthquake (remember that? - 200,000 people killed - 1.9 million homeless - a 'government' totally unable to do anything about anything)..... Maybe the Amish are right after all. These terrible floods are truly awful for the people directly affected and no TV 'news' video let alone the accompanying facile comments by TV 'commentators' can begin to convey the devastating effects on the individuals concerned. But, realise it or not, every Australian is going to be directly affected, as part of the community that is Australia, by these personal tragedies. It won't be just the waste of tax payers dollars spent on rebuilding infrastructures that have been destroyed (on the same sites that the next flood will destroy) or the tax payer dollars that will have to be spent supporting the people affected nor even the lack of produce that will not find its way to market. It will be the countless effects of, for a few examples, the hundreds of non-Queensland truckies whose rigs are marooned and whose income has evaporated and the hotel, motels and other facilities that will have no tourists/visitors/business people paying money into their communities and even providers of services that depend on telephone lines and electricity whose customers now have neither....and in the case of telephone lines may well not have any facilities for an unknown amount of time....not to mention the painful deaths of the tens of thousands of animals, domestic and wild, for whom no resources are available to help. Every Australian will be negatively affected by the events in Queensland - it's only a question of just how badly. Copyright © Exetel Pty Ltd 2011 Tuesday, January 11. 2011TIO Complainants........John Linton .....are only tangentially related to the human race....if the attributes of a TIO complainant were generic to the species then we would have been extinct centuries ago. In the week or so before I go to do the quarterly reviews in Sri Lanka I start listing the topics and issues I need to cover in addition to the 'standard' topics that are a recurring part of any ongoing review process. Uppermost in this thinking is the improvement of customer satisfaction with the various services supplied by the Sri Lankan company and the measuring processes that are needed to ensure that these key aspects of Exetel's operations continue to improve. Steve has been improving many aspects of support during his visits and subsequent follow ups and I think we have been able to continually improve many aspects of what is done in Sri Lanka to levels that exceed most customer's expectations most of the time...but by no means always. One of the depressing things I still do is to look at the TIO complaints on a regular basis. It is depressing because it demonstrates how far Australian society has fallen in terms of ethics and morality and even good manners and literacy. If a customer TIO complaint is an accurate reflection on Australian society in general then amorality is pandemic and education stndards re non-existent. Transferring the TIO complaint dealing process to Sri Lanka was one decision we hesitated about making for a long time before deciding to do it. Our main reasons were the obnoxious nature of the people who file TIO complaints and their breathtaking lying and often the incredibly unacceptable language they use in addressing the Exetel personnel involved. I think TIO complainants, as a general rule, are total d***heads with the social graces and communication skills of a wild pig with one trotter caught in a gin trap, the ethics and morals of of a mass sex murderer and the English language skills of a slug. However the decision to move TIO complaint handling to Sri Lanka has been a major success - thanks to the inherent gentle natures of Buddhists and the technical and inter-relationship skills of the SL staff generally - plus the excellent training given by the person who did the training and supervised the transfer processes. Since we began the move of TIO complaint handling processes to Sri Lanka there are two, very evident, trends. The first is the total number of complaints has steadily declined although we have continued to increase the number of customers and the services have become more complex. The second, and much more revealing trend has been the reduction in Level 2 complaints which, over the past six month period reduced to zero - a quite remarkable achievement. While other aspects have contributed to this (suing the TIO for gross breaches of their constitution, recognising customers that are total d***heads early and 'losing' them as customers, modifying our complaint handling procedures) there appears to be little doubt that it is the calibre (education level, technical knowledge) plus the Buddhist attitude towards even the least pleasant of God's creatures that has made the difference. We will continue to look at ways we can improve the very good results already being achieved next week but the results so far have exceeded any expectation that I may have had. Perhaps we can even use the published figures relating to other ISPs as an example of, despite any other suppliers claims of excellence of service, Exetel's support personnel are better than them all on the least number of TIO complaints in total but, much more importantly, the fact that even if you are a complete idiot as a customer (outrageously lying and incredibly abusive) Exetel resolves even your outrageously lying and abusive claims more completely and in shorter time frames than the companies that claim to offer the best service in Australia....based on the TIO's annual report statistics. Something to think about on the long trip to Colombo. Another opinion on what I wrote about yesterday: http://www.smh.com.au/business/qe2-is-sailing-the-us-into-stormy-waters-20110110-19l6b.html Copyright © Exetel Pty Ltd 2011
Monday, January 10. 2011The Australian Economy Is Booming.......John Linton ......but it appears not all is well in every section of it. There are many indications in the financial press that things are not as good as the vested interests would try and make out. I have no more understanding of 'financial cycles' than I do of quantum physics so I can only comment on the more solid of the 'facts' that I am privy to. These include financial statistics the are produced within our own business and 'input' from people outside our own business who do have some firm grasp of elements of what is happening in the more general financial 'world'. There is also the Australian media that tends to be so unreliable in terms of comment and analysis but the actual figures are usually useful. I doubt whether the actualities of Australia's financial situation at any point of time mean anything to people in business and almost certainly not to people generally outside mortgage interest rates for those people who borrow money to buy the homes they live in and whether or not their employer stays in business and pays their superannuation on time. But I have noticed some signs that, at least to me, seem to indicate that all is no beer and skittles are the country. A very minor thing is that our bank keeps approaching us to do more business with them - always a sign that their business is tougher than they are comfortable with. For instance we do very little foreign currency transactions but what we do we recently moved to American Express simply because they approached us and said they would offer much better rates and much easier and faster services. After 2 or 3 months our bank noticed we had taken that business elsewhere. They called up and enquired why and immediately promised to 'beat any rate' we got quoted from another financial institution. So we have gave them two opportunities and on neither occasion was their quote better so we continued to use AMEX. They then 'got serious' and the next time they actually did give a better rate, after initially bidding too high. The net improvement they are now making is around 3% better than their 'old' rates. Not very spectacular you might say but after years of taking whatever we were offered a 3% improvement is very significant and anyone who has had any dealings with banks would know they don't reduce rates without a very good reason. While on, banking indications our 'other' bank has been pushing us to put in place a leasing facility for some many months now although we have continuously told them that we have, from the inception of the company, always paid cash for our capital purchases and we are well aware of all the reasons why we shouldn't do that but are too conservative to 'change our ways'. However they have persisted and continue to reduce their indicative rates and made their offer more attractive in other ways month by month to the point where we have eventually agreed to sign the documentation allowing us to lease up to $A2 million of capital equipment on a 'stand by' basis. We said that we never intended to use it but they were more than happy to go ahead on that basis. So they get $300.00 in 'documentation fees' and seem very happy about that. Within our own operations the number of people who didn't pay their December 1st residential ADSL invoices (and therefore had no internet for the whole of December) reached a record number of cancellations by us at the end of December. December always produces a much, much higher level of such cancellations than any other month and it is almost entirely due to foreign (and some Australian) students ending their tenancies at the end of the University year and just abandoning their ADSL services knowing that their providers won't be able to 'track them down' in their home country. We, like every other supplier to such people recognise their inherent dishonesty and live with the costs. However this year it was higher than usual (over 120 incidences) which is likely to mean something. Similarly we had a much higher number than usual number of business customers who didn't pay their bills on time which while not resulting in cancellations is not a good sign. There are many other instances of conditions being more financially difficult than you would expect in a 'boom' and I think the conclusion that we need to draw is that they may well become more obvious in the not too distant future. We need to be very careful.
Copyright © Exetel Pty Ltd 2011 Sunday, January 9. 2011The 'Other' ExetelJohn Linton I read the monthly report on Extel's Sri Lankan company earlier this morning. It is a very 'dry' report being essentially a series of tables distilling all elements of the operation to a series of analyses of personnel and company performance against a series of benchmarks. What it does show is what progress, or the lack of it, that is being made across they key elements of operating a business. It is by no means the best method of distilling the operations of 50 people over a 4 week period but its 'starkness' does allow someone 10,000 kms away to get a feeling for what is happening. I will go to Colombo next Saturday to do the periodic company review and I always find that process more useful having the statistics provided monthly. It is now a few weeks short of five years that we hired our first two engineers in Sri Lanka in January 2006 and then sent an Australian supervisor to Colombo in February 2006 to train them in their homes to do basic ticket responses. Since that first 'toe in the water' experiment a great deal has happened. First we hired another two work from home engineers in February 2008 and we visited Colombo for the first time to do that spending a week meeting with the relevant government departments, lawyers, solicitors, real estate agents, fit out specialists, and all the other sorts of suppliers that a start up business needs to deal with (averaging 9 face to face meetings a day) previously arranged by the Australian High commission personnel (who did a superb job for us).
We went back to Sri Lanka again in May and July of 2008 to complete all of the dozens of governmental, legal, accounting and operational processes required to set up a complex business in another country with very, very different conditions than exist in Australia and finally 'opened our doors' in early July 2008 with an Australian general manager and three employees.We also appointed a Sri Lankan as General Manager of the operation in February 2009 but continued to send a series of Australians to Colombo to transfer knowledge and to do specific training until December 2010. There are no 'permanent' Australians in our Colombo offices but we will continue to send people on short term (3 - 4 weeks) assignments throughout 2011. There are now more 'Exetel change over the coming months employees in Sri Lanka than there are in Australia and all of Exetel's back end processes are now done in Sri Lanka. While that ratio may Over the past two and a half years we expanded the initial floor space twice before moving 16 floors higher and, effectively, taking a complete floor in this quite large complex which you can get some idea of here: http://www.exetel.com.lk/facilities.php There are now more Exetel employees in Sri Lanka than in Australia with all back end functions now handled in Colombo and an increasing number of 'front end' sales functions beginning to be undertaken from Colombo. As we add more corporate sales and support people in North Sydney over the balance of 2011 this ratio may change but it is now an operational fact that Exetel can only 'exist' because of the cost savings and additional flexibility that having a Sri Lankan company brings to the Australian business. During my upcoming review in Colombo we will not be 'dwelling' on whatever achievements we have made over the last, almost, five years but will be concentrating on the immediate issues with which we are confronted and in ensuring that our planning for the current calendar year is as solid as we can make it. Our emphasis will be on adding outbound sales functionality for Exetel and, perhaps, back end provisioning and support for our growing number of 'visps' and even some of the smaller Australian ISPs that have approached us about providing such services to them. On a completely different topic what sort of wankerish company would claim that a general service upgrade by NBN (Tas) is somehow anything that they have had anything to do with putting in place: http://www.itnews.com.au/News/243257,internode-customers-get-nbn-uplink-win.aspx These upgrades had exactly zero to do with Internode - they were a service upgrade provided by NBN (Tas) and were simultaneously available to all resellers of that service - including Exetel. Copyright © Exetel Pty Ltd 2011 Saturday, January 8. 2011Can Exetel Ever Become A 'Commercial Entity?'John Linton .....is a question that has more and more become a question that has obtruded in to my thinking over the past few weeks. It was a quiet week in the office with most Exetel people still on holidays. We used the time to finish off some odds and ends and to tidy up the work on presenting and processing the new residential ADSL plans. Some of the time was spent bringing the new sales director up to speed which will continue to take much longer given the scope of the product set and the relatively different ways we operate compared to most if not all other companies (I am not saying our ways are better but they are very different). Perhaps it was having to explain what and why we did things to someone taking over some of my responsibilities as much as the overall planning processes that have engaged all my attention over the past 2 + months that caused me to consider just what I should be doing within the Exetel business in 2011. Over the past 18 months or so this primary objective has become very difficult to continue to achieve and it has cost us a great deal of money to remain 'true' to that objective - in fact it has cost us so much money we have had to acknowledge that Telstra and TPG (ignoring the significant downsides of doing business with those companies) will continue to make it impossible, at least in pure residential ADSL terms, to offer the "lowest cost" residential services any longer - at least in the simplistic "dollar for gb terms" we have always done. I am not 'blaming' anyone for this situation nor complaining that it exists; just considering what to do in these circumstances. In a purely 'business' sense we decided what to do over two years ago when we saw this scenario developing. That was to switch our main foci building the future of the business on hiring a corporate sales force and applying the obective of doing our small 'bit' towards a better Australia by offering the lowest priced services of the best or better quality than any other Australian provider and, over time, build the volumes of the corporate business to a greater level than our residential business volumes. It was, and is a pretty simplistic plan. We will have been executing it for two years come mid February and we have achieved some elements of that original plan. In February 2009 our ratio of business revenue to residential revenue was roughly 5% to 95%. Today it's roughly 18% to 82% on a total revenue growth over that time of roughly 25%.We now have 22 corporate sales personnel compared to one two years ago bringing in monthly revenues 800% - 1,000% greater than we did 2 years ago. So some very solid evidence of progress in this key project which we have planned to almost double over the coming year. However if we are successful in meeting these targets then Exetel will, inevitably, change dramatically from the company we set out to build and operate. This brings in to question just how and who would be best suited to operate such a 'commercial' company. So while we have some very comprehensive 'figures' (in their neat rows and columns) I am concerned that we don't have the commitment levels that allowed Exetel to grow and continue to meet its objectives against the slings and arrows of outrageous Roses and perfidious Carriers that raged against our small group of exceptionally dedicated 'warriors'. Do many of our newer employees really care (or even know) about the basic objectives that have driven the early Exetel to try and succeed despite the endless difficulties we encountered over the past seven years? Within a 'commercial company' is that even relevant? So, it seems to me, that many of the 'conditions' under which Exetel has operated over the last seven years will have to be 'ditched' because they are not relevant to a commercial operation. If that proves to be the case, and I'm pretty sure it will, then we will have to prepare more than a 'spread sheet' and some 'text' to make the transition from 'Exetel Past' to even 'Exetel Present'....let alone 'Exetel Future'. Copyright © Exetel Pty Ltd 2011
Friday, January 7. 2011Wireless Broadband Goes The Next Step......John Linton ....at least it does in the USA: and as reported in the Australian comms media both Telstra and Optus have been 'trialling' LTE on their Australian networks. While the dummies will scoff at this development with their stupid "wireless will never be as fast as fibre" nonsenses the point about this article is that wireless broadband has had a 'universally' accepted 'road map' of future technological development for the past almost ten years and delivered services have continued to have been commercially rolled out on time or ahead of those agreed schedules throughout that period. The fact is that a commercial wireless broadband service operating at current wire line broadband speeds is now being delivered in the USA and while it's current prices are highish - prices of technology services only go one way. Everything that has happened with 2G, 3G and now 4G has been agreed by the world's major carriers and equipment manufacturers years in advance and all of the agreed advances have been delivered to end users on time and within an ever reducing costing scenario. So as ADSL reaches its point of terminal decline wireless reaches another milestone - being able to deliver the speeds that ADSL reaches (and unlike ADSL with no current end in sight to how much faster wireless speeds will become - current plans are for in excess of 150 mbps). But what about the download 'restrictions'? 70% of Exetel's current users download less than 10 gbps per month and I would think that percentage would be higher for most other internet providers - possibly TPG would have a lower percentage but I have no idea. As wireless requires no wire line cost it has a built in $30.00 a month cost of use advantage that makes the CURRENT US pricing lower than ADSL (now at the equivalent speeds of ADSL) for a huge percentage of current users. So in general terms it has taken less than three years for wireless broadband to reach both the speeds and costs to something like 70% of end users and its only at the very beginning of its, universally agreed, development path. From being a few percent of the market for data services it has become close to 20% and rapidly growing. Its inherent advantage over wire line internet is, of course, its 'use anywhere at any time' capability and the 'anywhere' component continues to expand day by day. I, personally (and Exetel generally) were neither clever nor insightful to form the views three years ago that wireless would overtake ADSL in terms of user numbers within five years. We are now three years in to that prediction period and, from everything I can see, there is no reason to change that view. The ABS numbers due out in February will undoubtedly confirm that view. On a semi related topic (the difficulties in the ADSL residential business partly caused by the growth of wireless broadband) you can get a good laugh out of reading the latest EFtel 'announcement' and obfuscations here: Every single statement is totally misleading with the "top ten ISP" claim simply blatantly lying. What it is really saying about the company is up to you to determine if you bother to read it. A clue to what sort of company EFTel has become can be gleaned from their "new offices":
Copyright © Exetel Pty Ltd 2011 Thursday, January 6. 2011And So That Was Christmas One More TimeJohn Linton Australia is slowly 'coming back to life' in terms of business with the first two 'business' sales made yesterday and residential ADSL sales reaching the 'usual numbers' per day - both more quickly than last year and the year before. Exetel's people will not begin returning from their Christmas breaks until next Monday but already there is a sense of normality on the streets of North Sydney and all of the various food outlets in the area are open again and you have to pause before you cross the road as the traffic appears to be back to 'full on' mindlessness. Oh well....Christmas always comes with a rush and then 'disappears even more quickly. I will enjoy the light traffic on Military Road for two more days before it turns to its normal horrible state. We continue to make progress on finalising the 'odds and ends' of the new year's planning and, with a little bit of luck, will complete it by the end of this week. We are still dithering about signing the lease for the new floor - very un-Exetel like - but with all the problems we faced last year and the continuing unknowns of 2011 it is a major expense that we need if not everything then many things to 'go right' for it to be a sensible decision to make. Perhaps we have become too conservative due to the 'slings and arrows' of the last 18 - 24 months but our business is very much in transition and, while the signs are quite positive, the future is still very much an 'unknown territory'. From what I can see of the residential marketplaces that we are involved in nothing much, if anything, has changed over the 'Christmas Period'. As I remarked during late November/early December there continue to be signs that discount exhaustion has set in with the lies and obfuscation reaching levels I have never seen in a 'technical' marketplace before. Perhaps I'm quite wrong but it seems even the largest of the lying providers are getting appalled by their own mendacity, not because of any belated onset of ethics or morality but because the chickens are coming home to roost in that the customers who were conned by their lies are beginning to realise they have been conned. If you believe that Vodafone did anything but deliberately and knowingly under provision their 3G network for a very long time that has resulted in the current kerfuffle then you are very naive. Similarly the ever more rancorous protests from several other suppliers customers are simply more customers 'waking up' to the fact that they have been sold a pup by unethical suppliers who have made deliberate decisions not to provide the services their shrieking advertisements promise. Maybe justice will be done in terms of punishing these lying companies? If that happens it would be a first. I suppose the ultimate idiocy that is now allowed to exist in this industry as it has become ever more tawdry is that Ms Faustus is able to proclaim that the two people heading up her 'NBN2' were not involved in the bribery and corruption the company they previously ran has just fessed up to and paid meg fines. I mean how on Earth would she or Stupid Stephen know? Clearly they wouldn't and the fact that the Prime Minister of a theoretically sophisticated country is allowed to make such a stupid assessment says it all about how dumbed down the Australian populace has become. Copyright © Exetel Pty Ltd 2011
Wednesday, January 5. 2011First Day 'Back At Work'.....John Linton .....it seems I have never been away......mainly because, of course, I haven't. In this day and age 'work' is not a physical location but a computer screen anywhere in the world and working hours are determined by how often you log in to your intranet or your email. Personally, I would have preferred to have been in Las Vegas this week for the Consumer Electronics Show but although I had several invitations I decided it was not of any real interest to Exetel at this point in the company's development though that view was probably influenced by the appalling weather in most of the Northern USA and in Las Vegas itself that would make going on to Chicago and then getting back to Australia fraught with air line issues. So I contented myself with glamorous North Sydney and working through the start of year issues that we failed to complete before the start of the year which really annoyed me. In any event the work has to be done and hopefully we will finish it by the end of this week as I am very uncomfortable with 'loose ends'. We need to do many things differently over the coming quarter to better adapt to the current market conditions. One complete unknown, at least to us, is what 'speed' the 'NBN2' will become available in what areas. To date all we have is very wishy washy estimates with no firm or even 'semi' firm dates and absolutely no connectivity details or pricing. Now that is understandable but not helpful. Presumably Telstra and other larger providers have more, and more detailed and therefore usable, information. One of our priorities is to better understand the locations and time frames for actual service delivery and, naturally, the various costs and procedures involved in providing services via the 'NBN2'. Our experiences in the Tasmanian 'trial' have been far from encouraging in those respects. We did far better,in every respect, with the Telstra Point Cook trial in Victoria and it would be sensible to understand what will now happen with the 'NBN2' on the mainland now it must be getting closer to becoming a reality - at least in some places. Our other major priority this week is to put in place the revised pricing for pure IP and to set up the initial planning to develop the 'go to market' planning that will be necessary to make this a successful part of our corporate marketing. We had hoped to have this in place before now but there have been the, no unexpected, delays in getting our infrastructure in place to be able to deliver a sensibly priced service with the appropriate redundancies.The new Equinix Sydney PoP together with the additional NTT IP connection and diverse routing are the final pieces of new infrastructure we required to make a compelling case for a triply redundant service with the very best routing path options of any supplier to this new, for us, market place - those services will come on line 'shortly' and will allow us to begin offering pure IP services in earnest. It's a very important step for Exetel and will need a lot of effort....but it offers major ongoing advantages to us if we can be successful. So more than the usual challenges - but then when has that been any different to any previous start to a calendar year? Copyright © Exetel Pty Ltd 2011
Tuesday, January 4. 2011Exetel "Pricing Itself Out Of The Low Usage ADSL Market"....John Linton .....an opinion that has been expressed several times over the past few days.....where the low usage market is described as "$30.00 per month. Perhaps that's true. I am wondering which ISPs have buying and operating costs that allow ANY sort of ADSL service to be sold at $30.00 per month? Exetel has obviously fallen so far below reasonable 'buying power' that we obviously can no longer compete in these marketplaces - if "$30.00 per month is indeed the reasonable price for an ADSL service in 2011. The prices we pay for port costs alone are more than $30.00 for a 1500/256 ADSL1 service without telephone line rental (available widely) and are over $38.00 for an ADSL2 service including telephone line rental (available from around 400 exchanges).The cost of running Exetel (administration, support, billing, Pop costs) is around $1.50 per customer and back haul and IP is around $0.80 per gb. Assuming the low end user uses less than 3 gb per month (which they do) the lowest cost (without profit) for a service is: ADSL1 1500: $30.00 + $1.50 + $2.40 = $33.90 ADSL2: $38.50 + 1.50 +2.40 = $42.40 How does Exetel offer a "$30.00 per month service when the COSTS of such a 3 gb service are higher than such an end user price? The answer is it can't be done by Exetel and could only be done by a company with far lower component buying costs. If you were to look at the providers of ADSL in Australia which suppliers would you find that offer such a service? Personally I can't find one but then I am 'battle fatigued' from looking at pricing of ADSL services over the last two plus years. Please don't cite the TPG con of $29.95 for unlimited ADSL which any ethical company would advertise as being $59.95. Exetel can provide an AAPT service at below $30.00 (for a ADSL service only with the customer paying for the telephone line component to the provider of their choice) but the coverage is restricted to major exchanges in major cities and, because of the carrier subsidies this offer can only be provided to new customers. So, a $30.00 ADSL service is out of the question from Exetel and, as far as I can see, is out of the question from any other supplier who intends to fully provision their network to deliver full speeds at all times of the day and week......something some suppliers clearly have no intention of doing and rely on customers who either don't know or don't care that they are expecting a service that does not perform to the apparent speed and reliability description.But, even if that is not the case, Exetel's costs are greater than $30.00 a month so it is an impossible price for us to offer and as we need to make a profit to stay in business we can't begin to contemplate such a price point. Should there be providers that can offer such pricing, and make a profit, then it just confirms that Exetel should put its efforts in to products and services that can be competitive and sustainable in the longer term. Copyright © Exetel Pty Ltd 2011 Monday, January 3. 2011"The Future Ain't What It Used To Be".....John Linton .......but then it almost certainly never was.....even outside baseball in the major leagues. So the second day of the new calendar year passed quietly enough with no surprises and the obvious 'tidying up' will have to wait until tomorrow with the first three days only useful in pointing out the more obvious inadequacies of the most obvious 'mistakes' made in the very short term 'planning', or lack of it, with the major assumptions untestable at this early stage. We will do some minor adjustments tomorrow and then get on with the rest of the month attempting to make the first month's target in the new scenarios we have put in place - always a very interesting time of the year. I have some personal objectives that I need to achieve over the coming months of this 8th year of Exetel's existence - some of my choosing - some enforced on me by circumstances and 'domestic' influences. The major personal objective is to reduce the punishing working hours that have been involved in being part of a start up business and then a barely beyond start up business in a set of the most difficult marketplaces I have ever experienced. This has meant working 80 to 100 hour weeks for all of the past seven years with very few breaks throughout that time. I hired a 'researcher' at the beginning of 2010, who has worked out very well, but that didn't lessen the working hours despite removing those tasks - all it did was to provide more and better information on which to make decisions which because of the higher quality of the information took longer to make. I am hoping for more positive results from hiring a Sales Director as those tasks take at least one third of my time and I am aware that the time I give to these key activities is nowhere near enough and of nowhere near the quality that's required. To hand over these responsibilities (and the authorities that go with them) to a 'newcomer' is going to be very difficult and helping that 'newcomer' adapt to Exetel's speed of decision making and then implementation will be a challenge that will need to be well managed.....because I don't think it happens in many companies in our industry; and this will be a year of making more decisions than usual and then needing to carry them through more quickly than many people will have experienced in their previous working lives. We have an immense of amount of work to do based on our business plan changes and if we are to accomplish what we have set for ourselves then it will need the transformation we have been making to the general operations of the company over the past two years to 'bear real fruit' over the coming months. Growing a management capability from basically new graduate hires over the past seven years has been a major challenge all by itself. However, from my 'insider' observations it has slowly come in to existence but the real tests are yet to come. I am confident that the individuals concerned have the intellectual and personal abilities to perform successfully in more demanding environments ad that the 'culture' that has developed within our small company is conducive to more rather than less success than may exist in other, very differently, managed companies. As always, time will tell.
Copyright © Exetel Pty Ltd 2011
Sunday, January 2. 2011The Year Of The Rabbit......John Linton ......began quietly as is appropriate for its connotations. Though Arsenal played a better game than midweek and their very attractive style was fully displayed it was somehow a deeply unsatisfying game re-arousing the frustration of the Wigan fixture of dropping two points out of arrogance of selection (and a persistent lack of height in defence). Anyway - any win will do away from home and against a team that, for whatever reasons, they have trouble beating over the past few years. The very hot day in Sydney discouraged any desire to move out of the air conditioning or do anything that required physical effort so it was a very quiet day during which I did very little other than to read the physical and on line 'papers' and catch up on my personal/family correspondence - a pleasant way to spend a day. The only work related efforts I made yesterday were aimed at trying to make some sense out of the various information that has come my way of wireless activities around Australia by the various vendors and the widening array of resellers. We have made no real progress in offering wireless services over the past six months as the issues in the residential ADSL markets have absorbed so much time there has been none left to address anything else except superficially. Perhaps I'm missing understanding the subtleties of what is actually happening because I can't see that much has changed. Our new customer intake has slowed because we decided not to take the dishonest path of severely under provisioning the network that is employed by so many of our competitors including our wholesale supplier. Not out of stupidity, as some people allege, but because being that deliberately dishonest is something we were brought up not to be. So, having chosen to be honest, we obviously can't make promises we have no intention of keeping and therefore cannot match the apparent offers of our competitors. Our approach of making this reasoning clear on our web site is producing a very slowly increasing number of net new wireless customers and a steadily increasing number of emails from customers who have transferred from other carriers and resellers saying how delighted they are to actually get a consistently faster connection with fewer drop outs (most of these customers transferred from Optus, Virgin and Dodo) but there are Testra 'refugees' as well. So, maybe one day, honesty will pay off and more end users will realise that the patchy service they get from their wireless broadband service isn't due to "tower congestion" but to the cynical dishonesty of their carrier/reseller. I plugged the information I have been too lazy/busy with other things to do anything with over the past 2 - 3 months into my crude wireless broadband model and saw that things had changed quite a bit from August/September. We will have to wait until the ABS publishes its December 31st 2010 statistic update but it looks as though the patterns set in the USA and the EU (which seem to lead what happens in Australia by about 18 - 24 months over the past 5 years) are now becoming evident in Australia. As in those international markets the decline in residential wire line use is directly matched to the increase in wireless broadband use and the age group demographics matches those declines/increase almost exactly (18 - 35 - the unit dwelling/university accommodation using age group). What comes as a surprise to me is that the trend seems to have significantly quickened since I last 'assembled' the various data sources relating to these areas. As I said, I wouldn't begin to rely on my crude modeling with its inadequate inputs but it will be interested to see the ABS figures and Telstra's half yearly update when they become available. Not that it's, in any way, reliable but my model's output shows Australian residences without wire line telephony (and therefore ADSL) being close to 20% at the moment - not the 14/15% commonly reported. Copyright © Exetel Pty Ltd 2011
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