Monday, February 14. 2011A Definitive 'Mile Stone' In Exetel's DevelopmentJohn Linton We will advise approximately 50% of our customers today that we are changing their billing date - from the 1st of each month to the 28th of each month. We will accomplish this by only billing that 50% of our customers for 27/31 of their March monthly costs on March 1st and then billing them again on 28th April for the period 28th April to 27th May. We have only had one billing day since we commenced business over seven years ago but despite upgrading the hardware used to run the billing processes many times and rewriting the code more than a few times the number of customers and the number of services has kept increasing and the billing run has now passed 10 hours to complete and is heading for 12 hours within a few months. So the business has defined itself as no longer a start up by the number of billing transactions that have to be processed each month. The danger of the growth in billing transactions required to be processed was that if the bill run failed to complete, for whatever reason when it had reached 12 hours it couldn't be re-run on that day and that would eventually cause some major reconciliation head aches. So, probably the last, or almost the last one, of the 'givens' that were part of the 'immutables' in our operation of Exetel will disappear in April. All companies change over time if they continue to grow and this change will truly mark the change from Exetel as a 'start up' company to the next phase of corporate life - whatever that may be. I'm not sure what sort of company Exetel has become since it began but I understand it is very different to what it initially was although I can't actually see where that has happened - beyond the obvious growth in people working both here and now Sri Lanka. From my perspective Exetel has retained its 'small company ethos' where its founders still work at the jobs they had on January 1st 2004 and still retain the desire and put in the hours to create a 'perfect company' - while being as far away from that goal as we were on day one. If anything the hours per week have increased in responding directly to customer complaints and suggestions via the fora, complaint email address and suggestion address. I know more customers by name now than I did seven years ago and 'talk' to more customers every day now than I have done in the past. So in those respects Exetel has not changed at all....the 'gap' between dealing with the first line employee and the directors of the company is still one email answered almost immediately. In terms of how Exetel relates to the various marketplaces in which it operates there have been many changes. The major change is that virtually none/none of the very small companies that existed when Exetel began business exist today and a huge number of start up companies that began business over the past seven years have also ceased to exist. Of the not so small companies that existed in 2004 a handful still exist and have grown much bigger either by acquisition or by sound management and, at least if you listen to their own self promotion, are significant influences in today's residential marketplaces - though in truth there is only one major influence. The unchanging fact though is that Testra Retail again dominates the residential marketplaces in ways that it didn't in January 2004 and the likelihood of that pernicious dominance controlling those marketplaces more completely than at any previous time is much greater....if Telstra's attitudes today existed in January 2004 then Exetel would never have started it's residential ADSL business. So a new week has begun with several important decisions to be made - having already made the decision to split the billing dates. Perhaps it's just the general toughness of the current market places and therefore competitive actions that occur more frequently but I can't remember a time, ever, in my business career where so many difficult decisions have had to be made in such a relatively short space of time. I wonder whether other communications companies of Exetel's size have the same or similar issues? I suppose we can be grateful that we don't have to 'plan' to fire 60 of our middle and senior management from our head office (a difficult thing for us to do as our 'head office' only has 11 people in it including me). Copyright © Exetel Pty Ltd 2011 Sunday, February 13. 2011A Renewed Effort On Wireless Services.......John Linton ......or there really is no fool like an old fool? I have always believed that wireless broadband was going to play an increasingly important role in the delivery of data services to residential end users. Not exactly an exclusive insight in to technology development but at least it ensured that Exetel has made ongoing efforts to provide alternatives to the views that only 'NBN2' will provide a suitable transit for Australian's future data needs. To date, Exetel has made little progress in making wireless services a major part of our customer base or revenue but it does continue to increase and the customer base is very stable with many of our earliest wireless users still with us. We continue to try and find ways to provide wireless services to more lower download users and we will release new wireless plans next week. The new wireless plans will be simple re-sell of Optus own Layer 3 retail plans with the differentiation being we will use the Optus wholesale commissions to reduce the cost to the customer and will also add the benefits of the Exetel inclusions, very good wireless support and back end user facilities. By doing this we can offer 5 gbytes of 'traffic' for $25.00 a month which would currently exceed the traffic requirements of 35% of our current users at 50% of our current pricing. I would think that this new lower price per gb level coupled with the ongoing upgrading of the Optus broadband network would have a wider appeal than our current premium services - which are still selling very solidly with almost no churn away. Irrespective of what vested interests or just plain stupid/pig ignorant people may say the steady progress of wireless broadband is inevitable as prices decrease and speeds increase. A colleague sent me a slightly more detailed version of the US position yesterday: http://www.networkworld.com/news/2011/021011-obama-goal-98-percent-of.html which gives a sensible view of where 4G/LTE is going and how all encompassing it's usefulness is 'national' broadband deployments. In terms of the "tower danger" alarmist statements of the equally ignorant the future technologies use much smaller and far less environmentaly intrusive devices: It also is a chilling indication of the dangers of picking 'winners' when making investment decisions. Both Optus and Telstra will continue their 'war' with each other to build market shares in the various mobile markets one of which is, of course, mobile data services. At $25.00 for 5 gbytes the latest wireless broad band offer would exceed the requirements of a minimum of 35% of Exetel's current ADSL users and, in the case of the ADSL1 users also exceed the speeds they have available to them. In case that statement didn't register: In February 2011 35% Of Exetel's Current Users Can Get More Downloads At Greater Speeds For Less Monthly Cost than Any Other Supplier Including Exetel Can Offer Via ADSL. They can save even more money by ditching the PSTN line as an added bonus. To put that statement in true perspective try thinking back two and a half years to the speed/price/availability/reliability/latency of wireless broadband services and compare it to today. THEN go forward two and a half years and guesstimate what the price/speed/latency/availability will be then. If you were a vaguely sensible person with some basic understanding of markets and technologies you would pause for quite a while before making pronouncements on what you would use a fibre connection for and what you would use a wireless connection for. Unless you were very, very stupid you would reach the conclusion that the only advantage that fibre might have, for residential users, would be for 'entertainment' services currently delivered over FoxTel and similar services. While no-one can really accurately predict the future in terms of such complex scenarios involving as they do user perception and marketing lies the reality is certainly going to be that some percentage of data users will increasingly prefer lower cost wireless services to any sort of expensive wire line services. The inflexibility of a government monopoly will make that a certainty that has decided that speed is more important than price for 100% of all residential data users simply ignores market reality - based on 4,000 years of end user buying decision making. I will be very interested to see how 5 gbyte wireless broadband plans for $25.00 fare against ADSL2 in the market places of early 2011. Saturday, February 12. 2011A Good Week.......John Linton ....where nothing went even slightly 'wrong' and many positive things began to occur from the changes made to the business plan in late December and eventually completed in late January. It hasn't been often that I could make such a statement over the past two years so I will take the opportunity while it presents itself. The major 'news' of the week was, of course, the quantification of Telstra Retails 'win back' results. The 'head line' number of 1,000,000 new customers for mobile, mobile broadband and wire line broadband is a bit hard to actually understand because Telstra, for whatever reasons, chose to combine those numbers rather than list them separately so it isn't possible to really understand them. Growing mobile customer numbers by something over 500,000 (remembering that Optus also reported a growth in mobile customers) seems to indicate that Vodafone lost 500,000 customers which, depending on the next Vodafone report seems highly unlikely to mean that other mobile suppliers lost 500,000 customers. So what it does mean is unclear. Perhaps Telstra are double counting wireless broadband add ons as new customers? I certainly can't understand it. As for how many new/won back broadband customers are in the 1.000.000 number - who would know from the figures presented. I was almost certainly 'a lot'. In terms of 'winning back' ADSL customers - my 'inside Telstra' numbers information is that they exceeded their expectations and 'won back' over ten percent of the total ADSL base which is equivalent to all other providers of ADSL services losing 20% of their total customers. Can that be right? It sounds very, very high and with at least two of the larger ISPS (iinet and TPG) claiming to have INCREASED their ADSL customer bases (ignoring take over additions) then that would seem to mean that all other ISPs have lost 40% of their customers over the last 6 - 12 months or so......which I am pretty sure can't be right. It will be interesting to see future reports including the half yearly ABS statistics next month. Over the past week we saw a very strong growth in interest in practically every product/service in our range. There was a noticeable increase in very large companies showing serious interest in a range of services which can't be put down to y simply the time of year when business business picks up prior to the decision making season of May/June. While I have no doubt that much of this is not going to come to fruition there is a very definite change in the way that Exetel is regarded by larger corporate entities than at any time in the past. Perhaps a very positive sign for the future. It is also our contract renegotiation 'season' and our CFO resigned the smallest of our IP contracts on Friday at a 50% discount to the pricing for the past twelve months. While it won't make very much difference to our total monthly costs of itself it is a reasonable indication of the lower costs we will expect to achieve on our larger IP and other major transit contracts before end of 'season' on March 31st. One very pleasing event of the week was that we completed the hiring of the 4 new corporate sales trainees that had been taking so long over the 'Christmas period'. We have now finally completed the second stage (at least in terms of staffing) of the two year plan we established in January 2009. We now have three teams of six 'sales consultants' in North Sydney (team leader plus five) as well as three supervisors who are responsible for one North Sydney based sales team each plus having the responsibilities for building one Sri Lankan based sales support team over the next three months and then building one new North Sydney based 'specialist' sales team each before the end of this financial year. The training of new sales people on new 'missions' in Sri Lanka continued last week with Clare completing her two week assignment very successfully. Th e corporate sales personnel in Colombo are already delivering 'hot' sales leads to their 'partners' in North Sydney as well as improving the quality of information in our sales data base more completely and more quickly than has ever been achieved in the past. It is far too early to say just how successful these initiative will prove to be in the long run but they have begun very successfully. In every respect it was a very good week. Copyright © Exetel Pty Ltd 2011
Friday, February 11. 2011Telstra's Half Year ResultsJohn Linton I am assuming you read one of the many reports about Telstra's half year results or saw one of the 'news for the under fives' "reports" on television news programs. If not the a trip to the ASX web site and entering Telstra's code (TLS) will give you access to the three page document (alternately an early report can be found in the PS of yesterdays blog). I am not a Telstra shareholder so I don't know what impact the report would have on me if I were. What the Telstra CEO chose to say was that "Telstra has added more 'new' customers in the last six months of 2010 that at any six month in its history and that, despite a massive fall (36%) in the half years profit the half year dividend would be maintained at 14 cents per share. He went on to say that the fall in profit was caused by his previously announced huge expenditure on 'winning back' the huge number of customers but that was a one off expenditure that would produce ongoing benefits in future years. Fair enough - sounds good to the dumber of his company's share holders - no gain without pain - good future strategic thinking - well done you for a plan well executed. Get off the stage and into the coffee and biscuits before any awkward questions can be asked by anyone with basic numeracy........ ......like..... "if what you just said was a true picture of what you have achieved.....why did the top line revenue decline when you have added 1,000,000 new customers?"...... ......surely 1,000,000 extra customers must have increased the revenue? If you spent 750 million dollars, or whatever, on gaining these customers why did the revenue go DOWN by such a significant figure? Surely the drop in revenue means that the total customer base now pays less to Telstra for services than they did six months ago which means, unless you have also put in place massive new efficiency/redundancy programs over the past six months (which you have made no mention of in your announcement) what you have really done is to spend 750,000,000 dollars and destroyed your ARPU??? In other words, because you are charging less for services so that you could 'win back' 1,000,000 'new' customers (you had to cut the prices to your 'old customers) you are now getting less revenue than you did but your costs have actually increased (ignoring the one off marketing expense)? A subsidiary question might be - "did you really have to spend $750 to win back each customer?" Surely that must be the most expensive re-acquisition program in the history of Australian commerce? No wonder Thodey could say it was a record in Telstra's history - it reeks of panic and incompetence and a huge waste of money. My simplistic understanding of business is that if you get more customers but your gross revenue goes down (ignore the profit decrease caused by 'one off' additional 'marketing expense) you actually will continue to make less money (profit) than you did previously. Surely 1,000,000 additional customers MUST have increased revenue? It's all well beyond my simple minded understanding of business practices. Talking of which (poor understanding of simple business practices) how does any competent CEO/Board not notice that they had 60 too many "middle and senior management" in their head office: http://www.zdnet.com.au/iinet-culls-head-office-staff-339309090.htm I don't know how many "middle and senior managers" it takes to run a company of iinet's size but while i could understand that you wouldn't notice when you had 2 or 3 too many managers - but 60?? How do you miss the fact that you have SIXTY more middle and senior managers tan you need? If you take the likely average cost of such people (salary, floor space, benefits and other costs) you would have to assume that the yearly outlays would be of the order of $100,000 per person which is an annual total cost of something like $A6 million a year....and you didn't notice that you were actually not getting any value from this expenditure and could do without it in one fell swoop? Is this just getting rid of the Westnet managers they inherited? For a company that continually says how well it's doing this is a 'fact' that's very hard to understand. If the CEO/Board of a company didn't notice that they were 60 people too many in their head office you really have to wonder just how many people too many they have in other locations in their operations that don't fall into their immediate vision each day? Which also makes you wonder how much you have to over charge your customers to support such incredibly stupid hiring and day to day management policies. In normal commercial areas this would be a signal of a company ripe for takeover and the installation of competent management....but then so much occurs in the communications industry today that is simply beyond my comprehension that it is one more reminder that I should stop trying to understand anything. I wonder what they are going to do with all that empty floor space that is probably contracted for years to come? It will be interesting to see what the analysts have to say about Telstra's announcements when they get around to looking at the detail. Copyright © Exetel Pty Ltd 2011 Thursday, February 10. 2011Wireless Vesus "Fixed Line"John Linton For the stupidest 'article' I have seen to date (and the competition to be deemed "the stupidest" is quite fierce) about future technologies in relation to Krudd's arrant egotism which has put the Australian government back as the future monopoly supplier of data communications to Australian this piece of unreferenced nonsense currently takes the cake: http://www.crikey.com.au/2011/02/09/hosing-down-the-hype-on-wireless-internet-technology/ Firstly let me say that the SOLE reason I personally think letting Krudd or any other government apparatchik make decisions on ANY type of technology is that they don't have a !@#$%^ clue about it. The inevitable huge waste of taxpayer's money is also of no concern to me in my mild opposition and ridicule of Stupid Stephen's and Ms Faustus' ongoing pork barreling misuse of your and my money. The SOLE reason for being against government involvement in technology is that technology ALWAYS changes and government monopolies have neither the interest nor the necessity to adapt to the changes that have continually occurred in technology development in the second half of the 20th century and in the first decade of the 21st century. The ONLY reason that technology based infrastructures MUST be left in private hands is that ONLY private investment in competition with other private investment continues to deliver good results for end users. So a government monopoly of anything, let alone technology, will ALWAYS result in a constanty eroding service standard that is increasingly unsuitable and which costs more than any other version of the same service - you may remember that was the major reason for trying to disband the previous government communications monopoly. You and I already pay a small fortune for each of us in taxes that are grotesquely misused (by all political parties) in the name of "Defence Spending" that buys ships, aircraft, tanks, APCs and even uniforms that either never work at all or never fire a shot in anger in the defence of Australia. Does anyone actually believe that Krudds other loony decision to build 12 new submarines in Australia and a slew of other ships will ever see the light of day? Of course not because that lunatic's stupidity and lack of knowledge will ensure that his stupid commitment will be quietly buried without drawing the attention of the electorate's attention to just how for gone in metal stability he must have been to come up with such a crazy concept. So now you and I will shell out for his other 12 submarine insanity - the 'NBN2' - which you remember (or do you?) replaced the 'NBN1' infrastructure when that piece of craziness was exposed as the sheer lunacy people like me always said it was. Why is a government built and operated communications infrastructure as ludicrous as building 12 submarines? Isn't it another 'visionary 'Snowy River Hydro Scheme'? If you are inclined to that view why don't you compare the planning time frame and consultation ambit of the SRHS with the planning time frame of the 'NBN2'? If you still think the 'NBN2' was adequately researched and planned before Krudd's announcement of it then compare the other major difference - which, I would have thought, was the fact that the hydro scheme didn't have two other schemes competing with it to sell the same product to the same potential end users. Does anyone think that Telstra and Optus are going to 'throw away' their combined $A20 billion (and counting) investments in their networks after spending the best part of 20 years building them to the point that they provide the majority of their profits? Almost certainly not. So with more than two mobile devices for every man woman and child allegedly in operation in Australia already what market(s) are Telstra and Optus relying on to continue to grow that mobile sector of their business? Hmmmm...toughie. Of course it will be broadband data in the home. Telstra and Optus have already announced new low priced 10 gb+ wireless broadband plans and that is in December 2010 - 5 years before any sort of 'national' NBN coverage is contemplated. As Verizon and AT&T in the USA already have LTE being rolled out across that huge country (and several EU members are doing the same) it is not realistic to say just what speeds any end use sector will either require or what future technology can best and most economically deliver them. Which is the whole point of not betting the farm on any technology to provide cost effective services to 100% of all marketplaces. Let alone introduce the absolute least cost effective way of delivering such services - a government monopoly running a single technology infrastructure solution. It makes as much sense as Krudd's other most insane program - a 12 submarine project. Copyright © Exetel Pty Ltd 2011 PS: Telstra results as forecast: http://www.smh.com.au/business/telstra-posts-36-profit-drop-20110210-1anew.html Wednesday, February 9. 2011The Joys Of The Evil Empire Striking Back......John Linton ....are starting to become obvious to even the lesser intellectually equipped. The half year reporting period will shortly produce the latest Telstra figures that will, for the first time, spell out the devastation both to Telstra and to all other suppliers of communications services to Australian residential users the Telstra 'win back' programs have wrought. Telstra's own results are a negative nightmare and it will be interesting to see what Telstra's CEO is able to say about them that is even vaguely positive - other than we spent hundreds of millions of dollars reducing our top and bottom lines and all we have to show for it is that we've got more support and network costs to provide for the customers we 'won back'. One example of the problems Telstra has generated for almost all/all suppliers is the latest Internode announcement (unless it is an interesting early April Fool's day joke): http://www.itnews.com.au/News/247451,internode-touts-power-packs-for-upload-shaping-boost.aspx I don't know how a company can try and raise it's prices $10.00 or even $30.00 a month by offering "extra value" that is already standard for even small companies like Exetel: Static IP (costs the ISP nothing) Doesn't count uploads (downloads exceed uploads on ANY individual circuit by 3:1 so there is no reason to count uploads in the first place - they don't incur any cost at all) Excess usage charged at $5.00 a gigabyte (compared to Exetel's $1.00 per gigabyte) Now if that isn't desperation I don't know what is. The 600,000+ residential ADSL customers 'won back' by Telstra obviously came from other ISPs (including 10,000 over two years from Exetel) and it would seem from this joke of an announcement a fair few from Internode. Losing customers is always a bad thing but when the largest provider in any supply chain spends an amount of money greater than all of its competitor's (bar one or two) gross annual revenue to attack their customer bases then its an inevitable result. What is much, much worse for companies like Internode et alia is that they have charged such a heavy premium for their ADSL and other services for so many years that they have become fat, dumb and careless enough to allow their overheads to build too much and as they lose customers there is the double negative of losing the ability to cover the cost of all that 'fat'. Internode's "announcement" of "more value" is simply the desperation of a bunch of 'accountants' who say "we need more money to pay the bills but you can't incur any more cost" so the 'marketing people' find something(s) that cost nothing and try and charge the dumber customers for it by pretending it's got some value. Each of the 'items' offered by Internode for either $10.00 more or $30.00 more per month (FCS!) has a zero cost to Internode. You will see similar attempts by more and more suppliers in the not very distant future. It is part of the ever encroaching dishonesty in the selling of communication services to residential users that was always a problem but, thanks to Telstra's efforts over the past two years, has become endemic. My, personal as well as on behalf of Exetel's, key interest is what David Thodey and coterie are going to do now. They are halfway to two thirds the way through spending their billion dollars which has resulted in damaging the value of their own company - well played - (watch the share price after the half year announcement) and pretty much damaging to an equal extent every one of their competitors. What are they going to do now? It is going to be a really interesting half year announcement meeting with the analysts and key shareholders.....the amount of "spin" needed may well shift the planet's axis it will be so great. Copyright © Exetel Pty Ltd 2011 Tuesday, February 8. 2011Change Is A Recurring Element In Business 'Life'.....John Linton .......just as it is in 'real' life.(though perhaps I should have used the non-word "ellamunt" to fall into line with Australia's prime minister's execution of spoken English). Two years ago today the first corporate sales trainee commenced with Exetel. Some three months previously we had looked in to the future of residential ADSL and formed the view (now proven overwhelmingly correct) that there was no future for Exetel in being largely dependent on providing residential ADSL services and that the coming three years would see the most difficult times in residential communications markets we had ever encountered and would make surviving, let alone making even our modest profits, a challenge if we did not do something about it. Yesterday the twenty first corporate sales trainee commenced work at Exetel. Over the two year period we have 'lost' three of the people we recruited in to this continually growing part of Exetel's overall operation and have transferred one to another part of the business. Overall the program, to date, has been a success with each of the people developing their knowledge of communications and the skills to compete with their competitors to a level that in December produced over 80 new sales of data link services and monthly revenues from business data and related services now reaching over 20% of total revenues and almost 100% of Exetel's total monthly profits. Over the next four weeks the other three of the first trainees will reach their two year 'anniversary' with Exetel which in many ways is a very satisfactory achievement by the people themselves individually and the program of development we have put in place. So while it is unwise to ever indulge in 'self congratulation' it is a fact that if we had not seen so accurately in to the future in December 2008 and planned and executed as competently as we have we may not have survived as an ongoing business. Be that as it may - there is little doubt that the data communications business in Australia will continue to change even more rapidly as Telstra's assaults on the various residential markets reaches the conclusion of Phase II and whatever has been achieved over the past two plus years will need to be modified and improved upon. We have another two corporate sales trainees commencing with us before the end of February and will look for one more to complete the staffing of the three Sydney based sales teams. Last week we began the training of selected Sri Lankan personnel to, initially do the basic 'prospecting for the experienced Sydney based sales people and then, as they gain experience and skill, progress to selling in their own right to smaller businesses Exetel's small business services. We will complete the second phase of the training of the 8 current outbound Sri Lankan sales people this week and will continue to add 'corporate' sales people in Sri Lanka over the coming months eventually having 18 'sales partners' in Sri Lanka working with 18 sales people in North Sydney. That's the current plan and although we are bit behind the schedule we put in place in December 2008 we have made quite considerable process in building the 48 person corporate sales team we planned what seems like an eternity ago. Of course, an enormous amount of work, together with a not inconsiderable amount of luck, is still needed but we have come a long way in the past two years. Copyright © Exetel Pty Ltd 2011 PS: An early indication on how Telstra's constant 'win back strategies' have cost it and other providers dearly will become apparent when they officially release their half year figures - they are not pretty to read but it is a stark lesson in how 'successful' they have been in 'winning back' over 600,000 residential ADSL users. Telstra's half year figures remind me of the old joke about visiting Las Vegas: Q: How do you guarantee you can leave Las Vegas with $100,000? A: Take a million and leave $100,000 in an airport storage locker in the departure lounge. Monday, February 7. 2011Wireless TrendsJohn Linton We have been trying to find ways of making wireless broadband more 'usable' (affordable) for quite some time. Unless, in the light of ongoing 'discoveries' about how under provisioning/over subscribing is becoming endemic in the supply of both ADSL and wireless services, leads us to the dark side we have to persuade our current or some other wireless broadband provider to provide wireless services on a different basis to the simple pfwyu basis they do today. I was interested in comparing the usage graph in this article: (towards the end of the page) with the live usage graph we publish on our web side for prospective users of our Optus supplied wireless service: http://www.exetel.com.au/residential-hspa-pricing.php As you can see they are quite different to each other and quite different to our own residential ADSL graphs. Of course our publicly displayed graphs are for the last 24 hours, not an aggregate of the past six months so such a comparison is not specific but looking back over the past month the pattern doesn't change that much. My, relatively informed, guess is that the majority of Exetel's wireless customers use our wireless services as an ADSL replacement or supplement via a PC or laptop and the majority of Verizon's users use their service via a mobile telephone. While these differences probably should not be compared if only because of the huge difference in the size of the user bases they did 'trigger' a slightly new thought process in what remains of my mind. At the moment the carriers and their resellers offer very attractive pricing for wireless services that is beyond the ability of Exetel to compete with - on price. All the tests that we and our customers and prospective customers have run show that Exetel's Optus network wireless service is faster and more reliable than the Optus services sold through both Optus themselves and Optus/Virgin or other Optus re-sellers/wireless network users. However the majority of buyers of these services are not capable of making such a test (nor should they be expected to) so having that advantage of honesty and ethics is not an advantage at all and we tend to get the overwhelming majority of our business from people moving from other Optus network suppliers. I have thought about this ever since I confirmed that other Optus network providers were deliberately under provisioning their wireless back hauls and the chorus of user criticisms of 'tower density' was a lie that covered up, albeit very crudely, the real reason. (I have had to take a break to untangle a sulphur crested cockatoo from the net in our garden in which he had managed to get his/her neck and right foot entangled and which was slowly strangling him/her as he frantically tried to free him/herself. With Annette's help and a that of a sharp pair of scissors, under the interested gaze of around 20 fellow cockatoos attracted by the frantic screeching, we eventually freed him/her but not before I got a deep laceration from his/her very sharp and very large beak between the joints of my right index finger which makes it awkward and painful to type at the moment). We need to develop a much more attractive wireless broadband offering, without resorting to the dishonesty that is the necessary under pinning of so many competitive offerings we have tested, or had tested for us, to offer our current residential customers and also our small business customers. How that can be done needs some assistance from Optus and, probably more importantly, a new approach to support and 'advice and guidance' from our Sri Lankan sales and support personnel. Like everything else in these difficult times - major expenditures of effort and many changes are needed just to stand still. I wonder how a 'non-premium' version of wireless broadband would go? Copyright © Exetel Pty Ltd 2011 Sunday, February 6. 2011'NBN2' - The UpdateJohn Linton I have had a chance to read the various attendee notes and other documentation provided at the seminar last week as it was too hot in Sydney yesterday to contemplate very much else. I think, unlike the multitude of ignorant peole from Ms Faustus on down who make their pig ignorant and biased comments about the 'wonderfulness' and amazing future that another government owned utility will provide that the previous government owned utility (which had 90 years to prove otherwise) did not provide - I have a sensible background knowledge of not only what has happened in the Australian communications industry generally but for the past twenty years have been actively involved in delivering voice and data services to a wide variety of users from the largest government departments to the smallest residential user. That, by no means, makes me an 'expert' but it does make me someone who is as knowledgeable as anyone else and, as an additional 'benefit' also has the additional perspective of someone who has risked every cent accumulated over a life time of work in trying to deliver cost effective communication services to Australian corporate and residential users. I have read quite a considerable amount of material on first the 'NBN' and now the 'NBN2' (basically from the first day in 2007 when Krudd invented the concept of "I will provide $A4.9 billion so that no Australian living anywhere in Australia will live in broadband poverty by December 2009" subsequently followed seven months later by his even crazier and totally lying cover up of "make that $A49 billion by 2012". Throughout the period from September 2007 to today the only 'truth' is that 506 people have been connected to government fibre and that is via a billion dollar pork barrel in a federal 'swinging' electorate in that tiny State. OK, all major projects take time to get going but the Tasmanian pork barreling has clearly put into perspective that the 'NBN2' is driven purely by Labor's political requirements. Never forget that....however that is not really the practical issue as Australians get the governments they deserve by making their stupid self interest apparent to the con men in political party head quarters (of any persuasion) whose job it is to gull the stupid. Three or four (depending how you look at it) things become apparent from the little, apparent, fact published so far. Firstly the basic premise of the 'NBN2' being built by taxpayers money and then sold off to 'private industry' belongs in Lewis Carrol's first book....it simply can't be true even if the Red Queen insists that it is. In theory you can certainly spend billions of tax payers dollars and then give the results away to a private company who would never have invested that sort of money as there would be no commercial return but they would get a commercial return out of a zero investment. But what sort of government could give away billions of dollars of tax payers money without being lynched (figuratively if not unfortunately in reality). Apart from that gross silliness where is there an example, anywhere in the world, of a monopoly not exercising the abilities inherent monopoly brings to commerce? So that pathetic concept simply says that a bunch of self aggrandising wankers (the ALP in its desperation to keep its nose in the trough) will spend billions of tax payer dollars building a new monopoly to the one that was privatised over the past 10+ years on the basis that monopolies weren't good for the end user. Secondly the concept of a single per month port price, irrespective of the number of ports rented per month is something that appears to be overwhelmingly beneficial - even if the price is very high - when/if it actually hits an executable contract. But the 'announced' port price is so high that it provides a major disincentive for the majority of today's wire line and wireless broadband users in capital and other major cities to actually select an 'NBN2' connection over an ADSL or wireless connection and - the major problem - it gives absolutely no reason why the current major carriers of either technology should put efforts in to promoting an 'NBN2' service rather than their current and future enhanced fully owned services which provide them with the abilities to compete with the high priced 'NBN2' ports. Why would Telstra put themselves in the position of buying ports at the same price as the 'NBN2' will sell them to Exetel or companies even smaller than Exetel? Of course - it's a case of "damned if you do and damned if you don't" because if there is a 'volume discount' then all that you have succeeded in doing is handing back to Telstra the monopoly you spent the billions to break (again) in the first place - minus the USO. Thirdly - the USO and the concept of the 'NBN2' providing "cheap and fast broadband to all Australians". Does anyone really believe that impossibly absurd contradiction can actually occur? Despite the bare faced lying Krudd's statements and the morally and ethically bereft Ms Faustus' parroting of those statements subsequently, the fact remains that, as has always been the case, it costs a whole lot more money to provide telephone and data services to the Northern Territory than it does to the Sydney CBD. As part of the 'NBN2' deal is to relieve Telstra of the obligations to provide such services to regional and remote Australia who is going to do it? The 'NBN2'? I suppose that must be the answer - trouble with that answer is that if port costs anywhere in Australia are going to be priced the same how can that be possible? Only one answer to that of course which means the 'price gap' between an 'NBN2' port cost in the Sydney CBD and similar locations is going to have to be higher than it should have been and that means other technologies will become even more competitive than they should have been in the high population density areas. So I am not sure I am any the wiser having 'invested' the time in reading what has been provided. Until Telstra shareholders actually approve the sale terms it is all a bit moot anyway. Of course the real wild gamble in the 'NBN2' is the assumption that 70% of current users will choose to use it - at least that's fractionally more realistic than the union goon's original statement that 90% of user will use it because we will ensure they have no choice. However, from what is reported it seems that 7o% of CURRENT users don't use the PSTN so I'm not sure where that leaves the basis on which the 'NBN2' is being toted as financially viable. Democracy - what a ridiculous claim for Australia's methods of governance. Copyright © Exetel Pty Ltd 2011 Saturday, February 5. 2011A Strange Week......John Linton ....with some strange occurrences which leads to some disturbing considerations. Perhaps it was the 'disruption' of the week I spent in Colombo and Bangkok that made things look different to usual but I certainly didn't understand much of what happened this week. Maybe I have passed my use by date and should go and play golf and get up late in the mornings and wonder how to pass the time......or whatever you do when you realise you don't make a positive contribution to society any more and can spend your remaining time in even more meaningless, and far less arduous, pursuits. My puzzlement mainly centred around a series of, to me, bizarre approaches from people I had either never met before and in two instances people I had met but a long time ago. Late last year we had two quite serious, at least from what I could gather, approaches to buy Exetel or enter some arrangement that was closely equivalent to that. One of those approaches concluded in a firm offer that was rejected by Exetel's board and the other resulted in a "perhaps, but not yet" and an ongoing arrangement to work together to see what could be established in the future. We have had a series of such approaches in the past and they have never been really serious and have always been virtually summarily dismissed by us before getting past the 'initial enquiry' stage. So the three approaches over the past five days didn't conform to previous approaches as they were made by companies much larger than Exetel that, at least from the public record, had ample funding and all had an apparently sensible reason to look to expand their individual businesses via acquisition in two cases and for an easily understood 'strategic' reason in the third. So no 'strangeness' in that regard other than getting three such approaches in a single week. To me the strangeness came from different aspects of the approaches and the choice of ways of addressing the company generally and me (as the representative of the company) personally...ranging from oleaginously deferential through the "we've known each other for a long time" approach to abrupt almost to the point of rudeness. The approach that really intrigued me was the one where the rationale for approaching Exetel was that the putative 'acquirer' could benefit Exetel's ADSL1 and ADSL2 customers by offering them unlimited downloads at less than the plan prices we currently charged and therefore it was better for those customers if they were to be taken over by another provider. I suppose that would be true......if I didn't possess inside knowledge of how that particular company provisioned its back hauls and IP......which are the worst I have ever encountered and rival TPG in the mid 1990s for the most venal over subscription/under provisioning I have ever come across. I always thought that I, and many other Exetel personnel, worked very hard to provide, within the limitations of a company of Exetel's size, the highest possible quality services at the lowest possible prices. I was a little taken aback to be told that another company could provide unlimited download ADSL services at a lower cost and that two different companies within a few days could present a case that I am preventing Exetel's current customers enjoying those advantages and should get out the way of that happening. Perhaps a slightly skewed view of what I listened to but not by very much. So those three scenarios made me very uneasy from Monday (when I received the first approach) and make me wonder what on Earth I have been doing for the past seven years. I think I wrote last year how shocked I was when I finally figured out that other wireless suppliers (resellers and carriers) could offer the low prices they advertised only by deliberately under provisioning their back hauls and IP feeds and I was told that Exetel was stupid not to do the same. It seems that by fully provisioning our ADSL, and wireless, services we are "doing the wrong thing by our customers" because needing to cover the costs of those services we are charging too much and we should under provision so that customers could pay less "because they simply don't know they are getting a slower service". The more I consider it the more foolish I think I have forced Exetel to be....as two of those people said - 99% of customers never notice so why would you do anything else?......everyone does it. I wonder just how many ADSL suppliers actually do under provision? Copyright © Exetel Pty Ltd 2011 Friday, February 4. 2011'NBN2' UpdateJohn Linton For those readers of this blog who did not attend yesterday's NBN Co briefing (which included me) these are the observations of someone who did: 1,000 Fibre access nodes will be deployed each · Fixed wireless technology for next 4% will be based on · Satellite services for the last 3% will be based on 2 · I assume the same NTU will be used for · Future Gpon technologies include “4NGpon” which can · Network is Layer 2 only BUT they are using IGMP for · Developing full B2B now with various discussion papers · They have about 1,800 FTE staff now · We need to get a copy of the “Wholesale Broadband · POI capacity is shared amongst all WSP/RSP – the more · 120 POI’s – 80 Metro and 40 Regional · Aerial fibre will represent 18% of deployment · NBNCo is now responsible for Greenfield/New Estates as · All services will have a consistent POI, Interface, · NO VOLUME DISCOUNTS FOR ANY CUSTOMER…. · Each UNI-D (4) and UNI-V (2) on the ONT can be · The Connectivity Virtual Circuit is where the · Class of Service o 1 = Real Time = o 2 = Interactive = o 3 = Transactional = o 4 = Best Effort = Web · Recommended reading · Product roadmap has 5 releases every 6 months o 1 – Broadband and o 2 – IPTV o 3 – Business o 4 – Enterprise o 5 – Enhancements · CVC backhaul circuit is $20/Mbps · Sydney POI is in Global Switch · Migration of services has been studied in detail – So you can see how one 'industry participant' saw the various presentations. Another view is expressed here: http://www.smh.com.au/business/avoiding-a-monster-70-is-the-magic-number-20110203-1afg6.html Copyright © Exetel Pty Ltd 2011
Thursday, February 3. 2011Wireless Broadband - More The Likely Technology Of The 'Future'....John Linton ....than it has been seen to be at any time in the past.....unless you are technology challenged. Maybe its a 'slow technology news period of the year' but I have read a deluge of articles about 4G and LTE deployments over the past 5 weeks as well as the usual articles put out by the various hardware developers regarding new high speed records being set by the latest developments of wireless modems and other devices using LTE or 4G. Of course, the Australian communications media continues to report the ignorant opinions of either just plain ignorant people or the vested interests of just plain ignorant Labor politicians and their even more ignorant running dogs who to say they are technology challenged would be to wildly over state their comprehension of communications technologies.....or perhaps their abilities in any area of 'knowledge' other than self advancement. The most information about actual deployment and usage of LTE/4G comes from the US media and the particularly useful reporting comes from the most conservative of that media who have very knowledgeable contributors that actually have backgrounds in communications technology going back a long way. What they are reporting is that the three major carriers in the USA who provide data and voice services to residential users in all of the major cities across the USA are seeing rapid declines in fixed line services and rapid increases in wireless services - for voice and data and with data usage over wireless devices growing at rates between four and ten times the rate that data over fixed lines has ever grown and is predicted to grow even faster in the coming year. I made the point, the self evident to any one with more than a handful of neurons, some four years ago when Exetel began to look for a wireless 'solution' for residential customers that wherever wireless technology was in 2007 it represented only a tiny fraction of the capabilities that would be developed over the next five years and that, like all technologies with a world wide agreed development path it would exponentially improve, in terms of both capabilities and cost, as each year passed. Now, unless you are a Labor politician or a thirteen year old male, you would know that scenario applies to every aspect of life and there is no aspect of life where it applies more than in technology and it applies to no technology more than to the silicon, or artificial silicon, based technologies with their year on year track record of breaking the 'laws of physics'.....which of course were never 'laws' at all....simply convenient theories that met some tests at some point in time. So, since I first started looking at, working, wireless broad band solutions seriously four years ago we have seen the speed of actual, deliverable, user services increase by 10 times and the cost of those services fall by 80 - 90%. Such figures are not really meaningful except as an indication of trends because the future of wireless, as mapped out in published documentation, is for wireless broadband to improve by those percentages each 3 years for the next nine years given that the various carriers around the world are capable of developing the commercial cases within their individual organisations to deliver such services. If you are a technology illiterate like Krudd, Ms Faustus and Stupid Stephen (who only parrot what their 'departments prepare for them to justify whatever today's political position for them is) you conveniently ignore the 'facts' that are widely distributed in the world's media and even the statistics published by Australia's monopoly carrier and proceed to spend tens of billions of taxes ensuring that a new government owned monopoly is created using the wrong technology to ensure Australia is locked in to the wrong, very limited and expensive, future....based on election winning major lies and the subsequent consequences of being a pig ignorant liar (Krudd closely imitated by Ms Faustus who immediately demonstrated she would promise anything, to anyone, to become 'prime minister'). Fortunately for Australians, technology is not influenced by cheap (or that should be very, very expensive) politics, ignorant electorates and unprincipled self aggrandisers. I wonder whether it has crossed the mind of any of the 'NBN2' promoters that there is an absolutely fundamental major error of commercial judgment for a reason that has always 'dogged' the residential communications industry in this country? What would you think the single most important thing that Telstra would wish for if it could have only one wish? Do you think it would wish to have the USO removed? I couldn't possibly know but I would think that would be top of its list. Well, due to the ultimate stupidity of political vain glory, Telstra will get its most valuable wish - the government becomes responsible for the expenses of providing and maintaining services to remote and regional areas of Australia and Telstra (and other providers) can use their own wireless networks to sell to customers in the major Australian cities where population density makes the costs a fraction of those outside the cities and an almost infinite lesser cost than providing services in remote areas.
Copyright © Exetel Pty Ltd 2011 Wednesday, February 2. 2011Business Services Going The Way Of Residential ADSL?John Linton I read the report that M2 had bought Clear yesterday for around $A25 million. The rationale was that Clear had around $A70 million a year of revenue from business customers and is said to increase M2's annual revenues to around $A500 million annually. It's not a name that many retail buyers are aware of being mainly an agglomeration of failing or failed businesses that have been bought up over the years and put together as a more powerful whole - a rising (until very recently share price) and an interesting balance sheet. Like many other companies M2's principal income and profits are made from mobile sales and the generous carrier payments associated with them with ADSL being a relatively small part of their operations and wire line telephone (via their acquisition of the failed Commander group) comprising the bulk of the rest. I was interested in the update on M2's operations because they seem to out "iinet" "iinet" in their approach to growing their overall business via acquisition of other companies and it clearly has worked out very well for them assuming the reported figures are accurate and the share price continues to hold up. Of the companies that provide services to the residential marketplaces it seems only Dodo continues to rapidly grow from its own efforts and that always seems, at least to me, to be nothing short of miraculous when taken in the context of its apparent business practices. But I really have no idea of how they really operate only seeing what is reported in the media. In terms of 'industry consolidation' it may mean something but two companies that few outside the industry have ever heard of 'merging' their quite different businesses is not going to mean much. What it seems to mean, in terms of Exetel's interests, is that more emphasis is being given by various comms companies to business customers as the revenues, and more importantly profits, from residential ADSL and telephone services continues to shrink. While I think I know a reasonable amount about business customers, their motivations and imperatives, and how to sell to them I remain more than a little confused about what will really happen over the coming months and for the rest of this calendar year. As I commented about that TPG email to one of their customers a week or so ago; it is a very dangerous situation to find yourself in - a supplier that has a customer base that they have been ripping off for years suddenly being confronted with one or more competitors offering better services and much higher speeds for less than half what they are currently charging their customers. This is exemplified by a sale we made yesterday to a private school where we could provide 4 times more bandwidth at less than half the price the school was paying to Telstra and had been paying for years. That pretty much sums up the scenario for almost all business customers of Telstra and it doesn't really change a great deal as you go 'down' the supplier status list. It appears to me that all of the 'business' suppliers have been content to simply use Telstra's umbrella to charge "Telstra less 10 - 15%" as their pricing strategy. Practically every, if not every, business in Australia is paying more than twice as much as they could be for business data services because of this scenario. All of those suppliers will begin to face increasing customer loss and/or continually decreasing revenues from their current business customer bases as more and more business customers become aware of how they have been over charged for decades. It's a pretty 'frightening' scenario that doesn't happen very often in business. A whole industry that has spent the last ten years (at least) being over charged for simple services while the providers of those services simply increase their profits each year by 'pocketing' the lowering of supply costs delivered by new technology. Maybe that will simply continue but as Telstra eventually was forced to radically change its approach to the residential markets as competitors whittled away its 100% market shares to less than 40% the same thing will eventually (perhaps sooner rather than later) happen in the business marketplaces. It's really only a question of timing and how passive the current business decision makers on data services really are. Exetel has had a really good result from its decision two years ago to build a corporate sales team and we are currently rapidly expanding that out bound sales capability in both Australia and now in Sri Lanka. I have noticed the reaction of several current business data link suppliers reactions to Exetel's activities - which are typically "we will meet whatever price Exetel offers". It is a silly thing to do (simply confirming in the customer's mind that they have been paying way over the odds for a very long time) and will have to be replaced with something more sensible in the immediate future as more data companies make similar offers as they too move more 'heavily' in to the business marketplaces and/or take some sort of actions to protect their over paying customer bases. I will have to give more thought to how they might try and do that. Copyright © Exetel Pty Ltd 2011 Tuesday, February 1. 2011Tough For More Than A Few....John Linton ....and although this article is largely BS: it is a continuing indication of what the ABS reports every six months for free - that small ISPs can't compete at all and any sized ISPs are making less money than they once did from providing ADSL services. I don't know why a company like iinet would bother "researching" the small end of the ISP market (as I said the ABS publishes 6 monthly reports on that exact subject) so any statistics are likely to be - well - not really statistics and are just an obvious statement of what the ABS has been reporting for three or four years. Also the self serving comment that iinet have increased their ADSL customer base is undoubtedly untrue (and once you subtract the purchases will show that iinet lost customers over every six month period for the past four years) it continues to go South. Today is recurrent billing day and it was another record month for Exetel - unsurprising as the recent price increases for out of residential ADSL customers vastly overwhelmed the usual January slow down in telephone calls and excess usage charges and the student cancellations of ADSL services during the long university annual break. Our loss of residential customers turned out to be a little below my expectations and far below those of anyone else who predicted what they would be - for which we are all very grateful to our long term customers (surprisingly almost 20% of our residential customer base has been with us for more than six years). Our corporate revenue was solidly up - despite the embargo and our mobile revenue also grew strongly with all other services holding their own in the quietest billing month of the year. All in all it was a very positive start to what looks like being an even tougher six months to the July - December period of 2010. Though it would be best to wait until the larger companies make their half yearly reports and the ABS publishes their July 1 - December 31 2010 statistics. Perhaps all of the tiny ISPs will disappear this year - it has been a continuing trend for some four years and has to reach zero at some point in time. Perhaps some of the larger ISPs will get out of the residential ISP business this year - clearly Netspace didn't consider it worth the effort of remaining in a business they had been in for a very long time. But, I would have thought, that there aren't going to be any real communications companies getting out of residential ADSL in the current year because no matter how far away the 'NBN2' is in reality the medium sized ISPs that are left will take the view that it is closer to being 'switched on' in some real places than it was last year and if they have made the efforts required to survive last year they may as well hang on a little longer to see if Ms Faustus desperation to make it appear to be viable results in better port pricing than is being offered by Telstra and Optus and their own DLAMs. So, my guess would be that none of the small medium/medium sized ADSL service providers would fold their tents and disappear into the night this year. If Ms Faustus wants to get "re-elected" (bearing in mind she wasn't actually elected last time) she will have to make it 'look' like the 'NBN2' is being delivered which means that she will have to take a deep breath and make the pricing artificially low to attract any current ISP to use it. By definition this almost certainly means that she will have to offer 'NBN2' ports at significantly lower costs than current ADSL2 ports with equivalently attractive back haul options or no-one will bother to make the switch. This in turn will result in most wholesale ISPs 'fire saling' their ADSL ports to scrape the last money they will ever get from those DSLAMs where 'NBN2' is turned on. That's the way I currently see it. Then, of course, for those people who continue to think that wireless is not really something a fibre network has to worry about articles such as this: http://www.betanews.com/article/Ericsson-sets-MCHSPA-speed-record-with-prototype-device/1296497667 keep those with less blinkered vision aware that wireless is going to become very much a preferred option for some, as yet unknown, percentage of the residential data marketplace. If you don't believe that check the next set of ABS statistics. So, a new month and new targets and new 'challenges' - fortunately it's a lovely summer's day in Sydney. Copyright © Exetel Pty Ltd 2011 |
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