Wednesday, March 16. 2011Unlimited Data + Free Telephone Calls For $70.00 Is Now Available.....John Linton .....from next Thursday.......assuming you live in the USA......and its available over a 4G wireless network: If you had said 3 years ago (as I did and anyone else who had been involved with technology for more than five minutes) that this sort of offering would be available over a wireless network you would have received a chorus of "look how slow, unreliable and expensive wireless is today". The unwavering aspect of 'new' technology is that it just improves over time. In the case of GSM there aren't even any surprises - there is a published 'road map' of how the technology will improve and when the improvements are likely to become available to end users - and has been for almost 30 years. I can have no idea what speeds will be available over the Verizon network but they will undoubtedly be much faster and available in more locations than they were three years ago. What is equally certain is that in three years time they will be faster than they are today and will be available in even more places and the price will be much cheaper than it is today.......Oh, and for those people who say "but spectrum is finite so wireless will never be able to cope with the growing demand" they should visit central London or New York or even Singapore to demonstrate to themselves how stupid they are to make such statements now or at any time in the past or future. Once upon a time, a long time ago in a technology far, far away similar people predicted the end of the ever faster chips used in all the world's computers because of the laws of physics applicable to Silicon - so a synthetic substance, gallium arsenide, was 'invented' and all the nay sayers just looked as stupid as nay sayers always do when they open their mouths about the limitations of technology. What I found interesting is that the latest Verizon announcement represents the 'cross over' point (at least in the USA) where wireless broadband becomes cheaper for a very significant percentage of customers to use than ADSL broadband - and obviously far more functional than a service restricted to one physical location. With the addition of the phone calls at very low prices (plus the use of MoIP) the reason for any future user to install and pay for a telephone line disappears....and with it the use of ADSL. It is the point in time where ADSL will begin a rapid decline in terms of a residential data communications service. Maybe the ABS statistics due in a couple of weeks will begin to show this but I will take any bets that the ABS stats will clearly demonstrate this in April 2012. It doesn't mean as much in Australia as we tend to lag the rest of the mobile world by around eighteen months to two years but it does reinforce the inexorable progress of wireless as a preferred data service as the technology continues to develop and the usage continues to grow driving down the cost of delivery and capacity provisioning. If you have an idle moment and a reasonable memory try drawing a rough graph of wireless speed and another one for price per gigabyte starting in July 2009 and 'ending' in March 2011. You may be surprised at the results. Copyright © Exetel Pty Ltd 2011 Tuesday, March 15. 2011Too Much 'Me Tooism' Is Afflicting ExetelJohn Linton Exetel has never offered telephone voice services when it sold/sells ADSL1, and now ADSL2, services using Telstra Wholesale services in the seven years we have been providing those services. This was because, unlike the Optus Wholesale services where we offered a telephone line and calls from the beginning of that initiative there was no benefit that Exetel could add to the Telstra based service and there was no way we could offer a cost benefit at the pricing available to us - it just added revenue - but revenue that came with support costs without profit is not a sensible way of operating a business. Over the years that situation, as far as we were concerned, remained static and the steadily increasing take up of VoIP by residential users rendered telephone VoIP services increasingly less important. However, since Telstra Retail started its 'win back' campaigns over two years ago the 'concept' of "one bill" has been heavily promoted and, illogical as it is, it obviously appeals to some relatively large section of the marketplace - particularly when it attracts 'bundled' discounts - which probably is far more important than having 'one bill' for telephone line related services. For whatever reason the 'one bill' reason was often given when we contacted Exetel customers who had churned away to Telstra Retail. So on the last round of 'discussions' with Telstra we included the ability to offer Telstra's telephone line rental and call services with ADSL1 and ADSL2. It's a laborious process to actually put those services in to operation but we will offer them to current and future users from COB today. I have no idea whether this will produce any positive results for us but it does allow us to 'remove' one apparent negative being perceived by some percentage of our current customers and presumably by some percentage of future customers. We also figured that, after five plus years of resolving telephone voice issues on Telstra PSTN services via Optus it won't be any harder than resolving such issues directly with Telstra and while that may represent a triumph of hope over experience it remains a logical view. I only mention it because, like offering Optus mobile capped plans, both decisions represent a 180 degree change of view, at least on my part, as I have always believed Exetel shouldn't offer services that it couldn't deliver and price better than its competitors. Simply reselling 'retail' plans isn't going to do either of those things in any meaningful ways - however times change and 'old' views sometimes need changing with the times and the different circumstances they bring. I will be interested in seeing how many of our current customers who use other providers for their telephone lines actually do swap to using Exetel. Along the same 'me too' lines we will discuss today how we can improve the take up of residential VoIP to which we have never done anything other than make a rock solid service available. We recently decided on the Siemens 'boxes' and hand sets as being the most suitable current 'off the shelf' hardware for non-technically aware users and we now need to make progress in offering a more complete VoIP service - which sounds contradictory to offering telephone line rental at first sight but it is one of the issues with ADSL that it requires a telephone line although no-one with a scintilla of intelligence should not be using VoIP for actual voice calls. Far too much sameness is invading what was once a new and exciting field of opportunity. I yearn to do exciting things again. Copyright © Exetel Pty Ltd 2011 Monday, March 14. 2011Providing Services To Small Businesses.........John Linton ......easy to do as long as you're prepared to lose your family and friends and know your limitations. I have been having an exchange of views with a long time business acquaintance about how best to approach the very small business market over the past ten days. His company is a long term, 20 plus years, supplier to small businesses (not data communications products) and he has a customer base of over 40,000 users in NSW whose average longevity is over ten years - an impressive performance over a very long time. We have, from time to time since Exetel was 'created' talked about 'joint ventures' but we have always agreed that it was not sensible as he had his hands more than full (and was making very good profits) from his relatively simple products and 'going to market' methods which have included the ability to undercut all competitors by very substantial margins from the day he 'opened for business' by using a then very new approach and being able to sustain it over all of that time. From my, limited, experience it's unusual for any supplier of any product to build a sizable business and maintain a relatively large market share for such a significant length of time. However, obviously, it can be done without the aid of big marketing budgets or 'brand names' if you know what you're doing and work constantly to achieve what you set out to achieve. He has a database of almost 500,000 possible users of his products and uses a Philippines based call centre service (long before that approach became commonplace) to contact possible new customers as well as contacting his current customers to take orders for products (which are consumable so need constant replenishment). He developed the list in the simplest way possible - by initially using the Telstra Yellow Pages and then their various electronic replacements over the last two decades to 'canvass' for new business. He has never used advertising or any other form of marketing and his Sydney personnel are less than thirty to operate a $100 million a year or so business....he says the number of people he contacts for in the Philippines varies from 100 to 200 depending on a variety of circumstances. I remember when he decided to start this venture with his wife as he worked with me at the time and had done for more than a few years. It seemed both risky and very mundane compared to what he had been doing for more than 20 years at that time but he had thought it through and he believed that it would be successful and though 'mundane' would allow him to achieve financial rewards far greater than he had achieved up to that time - he was more than right about that though I dimly remember that he had his very bad moments that cost him his marriage and most of his 'old' friends quite early in to his venture. However he fought his way through all bad times and has, for many years, succeeded far beyond his expectations. Our recent email exchanges have returned to his newly rekindled desire to now offer his 40,000 customers and his over 400,000 'contacts' the sort of services that Exetel provides to agents and a few VISPs. Exetel is happy enough to seriously consider such a methodology but, as we discussed, it's a far cry from what he has done so successfully for so long. I doubt that we will actually find a way of him becoming an Exetel VISP but it has been an interesting exchange of views on successful ways to approach small businesses - I have learned a lot from his advice including his experiences of using Philippines based services and hopefully he has got something of value in return - if only a much more detailed understanding of the 'dangers' inherent in providing complex services to users with no real expertise in their use. My interest was and is to get access to his prospect data base at a reasonable price but those discussions will have to wait until he decides whether or not to enter the communications market using his own company. It's heartening to see that a start up operation can win and keep a large share of a particular market by the simple methods, and excellence of execution, employed by someone whose major abilities are fortitude and hard work over an extended period of time - and always offering the lowest costs. Copyright © Exetel Pty Ltd 2011 Sunday, March 13. 2011Statistics Aren't What They Used To Be........John Linton ......and even ignoring one of the better known condemnations of statistics they almost certainly never were. I don't do as much 'research' as I used to having passed that responsibility on to someone with a much more incisive mind than I have which reduces the 'numbers' information gathering quite substantially. I still read quite widely and scan the information sources I have used for a very long time to attempt to keep up to date with the major moves in the data communications industry. The ABS will release their report on data communications numbers in early April which, despite the dubious sources of its information, represents one of the key indicators of overall trends in Australia. Having a nit picking mind I always keep the half year results reported by Telstra and Optus, and a couple of other companies that might be judged to report accurately, in a rough table form which I share with two other long term acquaintances who, for their past sins, are still actively involved in the Australian Communications business. Over the years we have jointly 'improved' this tracking table to the point that, at least for us, it has some meaning and is useful within our own businesses as some sort of guide to the future. Like all tools it has constantly changed in scope (and size) over the years but it is useful to put the time into as it is far more accurate than anything publicly available...at least for my and my acquaintance's limited purposes....if for no other reason than we each incorporate our own different company's data as the principal correlation 'vector'. The half yearly ABS statistics are always 'later' than the half yearly ASX reports so this minor marketplace analysis exercise is never going to be timely enough to provide real value to companies of Exetel's size but the rigidity and rigour of only using 'real numbers' is useful in ensuring that we have a better idea of where the Australian industry is moving towards. As simplistic examples of how this basic analysis has influenced Exetel over the last seven years our investments in wireless broadband, business data services and non-Australian back office services all originally came from this 'analysis'. Similarly our decisions NOT to invest in residential DSLAMs and to pull back from pursuing ADSL residential growth over the past three years was also 'suggested' by this report. I am not claiming that any of those decisions was either correct or couldn't/wouldn't have made by other means - just as examples of how 'research' does produce interesting information sometimes. The recent reporting season (I haven't seen TPG's figures yet) showed that, irrespective of the spin attached to them, almost all communications companies had a pretty forgettable Jul - Dec 2010. Some, like Telstra, had their worst six month period that I can remember and Optus' results were, at best, disappointing. Exetel's own half year results were, at the kindest evaluation, dreary and those of the other two 'contributors' were even drearier than Exetel's. If you were going to 'rate' Exetel's results for the half year, purely on figures with no 'spin', a sensible analyst would rate them as somewhere in the bottom half of the 10 companies evaluated.The only good thing, if there can be a good thing in such a performance, was that Exetel actually finished two places 'higher' than was predicted in June 2010. So much for statistics - the better way to look at the period is that the company survived one of the toughest six months I can remember without any 'damage' and, spin aside, put in place several major developments that may well 'pay off' throughout 2011. Now, it's past time to drag myself away from my computer and enjoy this early Autumn day in Sydney which, fortunately, is not located on an earthquake fault line nor located in an area where cyclones and floods, nor bush fires and droughts wreak havoc on a regular basis....but then I am not as optimistic as the people who do and I can read signs that say "Flood Plain" or notice blackened trees by the side of the road and I do understand what "ring of fire" means and where the areas that it affects are located. Copyright © Exetel Pty Ltd 2011 Saturday, March 12. 2011One Of The 'Best' Weeks For Some TimeJohn Linton It has been such a 'slog' participating in the Australian communications business for so long now that when you have a week without any 'downs' and so many 'ups' you begin to remember why you have spent so much of your life involved in it. Not that anything particularly good happened but nothing bad occurred and everything else was very positive. I haven't had a week like that for a very long time. We even got the new NTT IP transit installed after more than two months of 'delays'. We had the first week with over 30 new corporate sales and had our best week for mobile sales since we began that program. There were many other small, but very pleasing 'wins' of that type which seemed to increase the 'smile levels' round the company by a fair amount. Perhaps it was the generally happy and optimistic atmosphere around the company, both in Australia and in Sri Lanka, that allowed us to make two fairly important decisions that we had been hesitating about for some months - increasing our floor space in both countries. Such decisions are obviously based on what we see as our future needs and our business plans have always shown that Exetel has to grow in new directions which will need more people than our Sydney space can sensibly accommodate. The Sri Lankan decision was more complex because we have enough space to accommodate our current and planned personnel levels until later this year but the end of the civil war has seen a rapid increase in multi-nationals returning to Sri Lanka and business office space of the standard we need is clearly becoming scarcer. We also promoted two of our longer serving people to positions of much greater responsibility in anticipation of a more rapid growth of the overall business. Larry was promoted to Director - Sales of the rapidly expanding Colombo based sales operations and will return to Sri Lanka at the end of this month. He will become responsible for over seeing the growth of the SL sales teams from the current 20 people to a planned 108 people by this time in 2012. This will be a fearsomely challenging but very exciting time in the development of the SL company generally and equally exciting for everyone involved in it. In many ways I envy Larry this fantastic opportunity. We also promoted Paul from his longstanding position of Manager - Provisioning to Manager - Operations taking over the role and workload that I have carried for most of the past five years. Paul's knowledge of our interfaces to all of our suppliers and all of our customers who have some sort of problem with the infrastructure they use is extensive and he has a more intimate knowledge of those procedures and processes (and the people involved in them) than anyone else in the company. He will now be given responsibility for all other similar processes within Exetel. Apart from recognising the really excellent work that Paul has done over the years it will be an immense relief to me to get some time back to do other things that need a lot more attention over the coming months. Now we have had some time to analyse the latest billing figures we also achieved a very important milestone - the 'profit' we make from business services slightly exceeded the profit we make from residential services for the first time. This coincided almost exactly with the two year 'anniversary' of the current program to intensify our efforts in business services and their various marketplaces. We have steadily built that capability from one corporate sales person two years ago to 24 people today - almost half way towards the original plan of 48 people by late 2011. In many ways a gratifying sign of planned progress. So, a much more enjoyable week than almost every other week since October 2008. Copyright © Exetel Pty Ltd 2011 Friday, March 11. 2011A Sobering Example Of Failed 'Re-Invention'John Linton I doubt that many people remember AOL's much trumpeted 'entry' in to the Australian internet marketplace and their bizarre 'go to market' approaches and even fewer probably recall their eventual demise in this country but it is interesting in as far as a one time "dominant player" in the USA (in movies and TV shows "AOL" was used as being synonymous with "internet") that was the first champion of the ISP concept that "content is king" should become so irrelevant: Long a dominant presence in the USA internet market (though never more than an irrelevancy in Australia eventually being 'bought' by iPrimus) they were the first internet company to go down the content is more important than speed/downloads/pricing in the USA/EU and, in a very stupid way in Australia where that concept was never going to fly. As the 'NBN2' government monopoly inches closer you tend to hear more and more people in the Australian media talking about how "content" will become the dominant supplier differentiator in a bland one internet distribution world - what a total crock. AOL's descent from dominance to irrelevance illustrates the dangers of this particularly stupid view. I don't have the specific knowledge (let alone the time) to develop the argument against 'content models' beyond the base concept that 'exclusivity' and 'the internet' are mutually exclusive and cannot be used in the same sentence. Those people who believe (and invest in) re-inventing AOL with similar ideas simply don't understand what the internet actually is, how it continually changes or what it will become - in particular I will take bets that the internet is not morphing in to another form of cable TV service......anyone who does, lives in a cable TV world that doesn't show "The Social Network" or doesn't understand the lessons it displays. Re-invention is a 'corporate nonsense word for failure....along the lines of "oops, this doesn't work anymore what can we do now?" It's trying to use an 'infrastructure' purpose built and staffed for one thing to do something very different and to compete with other companies that purpose built their own organisations to address the markets and provide the services that the 're-invented' company is going to try and address. It can work and you may very well cite Apple as an example - except Apple is an exception rather than the rule and Apple did use almost all of its long term core skills to compete in areas that had no dominant or even really strong 'players'. I suppose I could be terribly wrong - it wouldn't be the first time or the last time. Perhaps, against every example I can think of and every cogent reason I have come across I still think that humanity is not epitomised by the brain dead TV watchers/RPG zombies and lives their individual lives in more sensible and purposeful ways. Doubtless, and Foxtel's "progress" in Australia proves this is true, there is a significant market for peddling old movies and TV shows to be watched for the nnnth time by people who can think of nothing better to do with their 'spare' time.....but is even that demographic going to pay even more money than they currently do for such a 'service'? I have no idea but for those people who believe 'content' will determine what internet provider a sizable percentage of the market will use it might be best if they did a little research in to AOL's rise and fall. Copyright © Exetel Pty Ltd 2011 Thursday, March 10. 2011Monopolies Have Different 'Rules'........John Linton ....government monopolies have completely different 'rules'. I read this yesterday: http://www.computerworld.com.au/article/379187/optus_calls_nbn_volume_discounts/ which I had long realised would only been a matter of time for it to be raised overtly but I was disappointed that Exetel's largest supplier was the one to do it. Perhaps they were only doing it to ensure Telstra didn't quietly reach some 'special relationship' deal? The points against such price structuring have all been made in the article - in the days of automated systems there is no cost benefit of 'volume' - each transaction is 'unique' in that it addresses the need to 'turn on' a service to a unique location via some process that incurs the same cost for each unique end user location. In a competitive commercial environment the scenario is very different where two or more suppliers are vying for business from multiple wholesale buyers and need to make their different offerings more attractive to gain and retain wholesale customers in that competitive environment. In the case of the 'NBN2' no such competition exists and therefore no 'special pleading' exists. With the 'NBN2' you either buy the service at the price nominated or you don't buy the service at all. As Julia Roberts' character remarked to the Richard Gere character in Pretty Woman - "I appreciate this whole seduction thing you've got goin' here, but let me give you a tip - I'm a sure thing. Okay?".....and that, I thought, was the one and only benefit of the government monopoly as far as the end user was concerned - they actually knew what the COST of the 'NBN2' port was to the wholesale provider and could clearly see what 'mark up' the various resellers were asking them to pay and whether they felt inclined to pay for the supplier's advertising campaigns and internal wastefulness and......... Now the actual COST charged by the 'NBN2' may well be too high simply because a government monopoly is easily, and without a shadow of a doubt, the most inefficient way of delivering anything. However, that is history now as the electorate at the last election chose, well sort of if you count two renegade, pork barreling hayseeds and a couple of princesses, to allow the 'NBN2' to happen and therefore "democracy" has elected to pay far too much money to eliminate all future competition for a residential fibre service. Done and dusted - like the $27 billion of tax payers money annually p***ed away on militarism it is simply one more burden imposed on tax paying Australians because they are collectively stupid enough to allow it to happen (that's what stupid people/sheep are for - to allow the unscrupulous and venal to shear them until they bleed). But a government monopoly that introduces a volume cost structure is about as sensible as inviting President Marcos back to 'power share' in the democratic government of the Philippines. I thought the whole point of wasting $50 billion building another fibre network with tax payer money was to eliminate Telstra from ensuring there was only one viable supplier of communications services in Australia? And now Optus is suggesting that that tenuous advantage is legislated away? Can anyone in this benighted country keep their lying stories straight for longer than it takes a politician to pocket a brown envelope? Or is their judgment that the whole country is so incredibly stupid that no-one has enough memory capacity to remember what they said last time they were offered some justification for doing something? Clearly the latter. PS: ....and the mind blowingly unbelievable hypocrisy of the year award goes to.......Telstra ......yet again: http://www.smh.com.au/business/community-card-dealt-in-plea-against-monopoly-20110309-1bnzz.html Copyright © Exetel Pty Ltd 2011 Wednesday, March 9. 2011Some Tangible Progress IndicatorsJohn Linton We, finally, 'turned on' the new supplier's (NTT) IP transit late yesterday at the new PoP located at Equinix which adds a further 1.25 gbps to our total IP bringing it to over 9gbps. When the 'live testing' is completed the new bandwidth will provide the third set of transit paths to the US and Asia and complete the redundancy plans for our IP offerings (and just as importantly will provide a fourth Sydney PoP) for both business and residential users. The delays caused by one supplier having to divert "all" available engineering resources to repairing infrastructure damage caused by the Queensland floods are finally over. We will update the network diagram to reflect these additions 'shortly'. The current Exetel network is light years away from our initial single PoP with a few 'boxes' and one tiny IP link in January 2004. The Exetel network now has four PoPs in Sydney, is soon to get second PoPs in Melbourne and Brisbane, PoPs in all other Australian State capitals plus the ACT and will shortly have a new PoP in Auckland followed by PoPs in Wellington, Chicago and the outskirts of London before the end of the year - as well as a 'PoP' in Colombo. These PoPs are linked by back hauls (in Australia) provided by NextGen which will shortly be duplicated by much larger back hauls from AAPT. With IP transit now provided by Optus (all Australian PoPs), Verizon and NTT (four different Sydney PoPs) the Exetel network is a highly functional and multiply redundant transit service. A large, continuous and continuing, investment for a company that only commenced in business seven years ago....and its almost flawless performance from day one is a great tribute to its designer and overall manager throughout that time. We also moved a step closer to signing new leases for floor space in both North Sydney and Colombo. Subject to final approvals by Exetel's directors we will double the people housing capacity in North Sydney by renting a whole new floor and will add more than 30% to our SL people capacity in Columbo by renting the remaining space on the very large floor we already occupy. The North Sydney space will be needed as we will expand the Data Centre capacity on the floor we purchased almost three years ago and we already are at close to people capacity - doubling the current data centre space will make it impossible to house our current North Sydney based personnel - let alone the planned growth in people in North Sydney over the balance of 2011 and beyond. We continue to quite significantly increase the rate of hiring additional people - mainly in Colombo, but also in North Sydney. Having only quite recently passed the 100 personnel 'mark' it will not be that long, assuming we continue to grow at the anticipated rates, that we will have more than 200 people employed in our 'start up' communications business - still insignificant in comparison to our competitors but a long, long way from where we started. However there are so many dependencies, not all within our direct control, for that to happen that it only serves as an indication that we are still on track to planned aspirations rather than having to contemplate a "strategic change of direction".....let's hope I'm not getting ahead of myself. So much to do....... so little brain power left. Copyright © Exetel Pty Ltd 2011
Tuesday, March 8. 2011Is IP Transit Actually Worth Paying For These Days?......John Linton .......based on a strange 'conversation' I had last night I am beginning to wonder about that ....or something far more important. Sometimes it seems you just can't win no matter how hard you try. I have always tried to be a plain spoken person having being brought up and educated to be that way and being continually puzzled all my business life by people who used obfuscation as a principal method of communication in both verbal and written forms.....which means I should not be as surprised as I am by being continually confronted by people who communicate in ways that I simply don't understand what they mean or even what it is they want. Then, lately, I am more inclined to believe that I have lost the capability of spelling out what I mean, assuming that there was a time when I had that capacity, as so many people I speak to don't seem to understand what I'm saying. I conducted an email 'conversation' with a possible new supplier last night who certainly got my attention by sending me an 'offer' to provide IP transit at a price that was around 50% less than the offer we are currently considering accepting. Not only was the current price being offered far lower than any other I have seen to date the 'offer' implied that pricing would fall 25% each year providing a minimum annual spend was maintained. Really exciting offer that would make our future plans for business services much easier to provide. However after exchanging six emails over a two hour period I remain completely unclear as to what 'he' (I use the inverted commas as the writer's gender was unclear using names I am not familiar with) is offering and am wondering why what I thought were simple questions on my behalf seemed to be so confusing to 'him' that I still don't know on what basis the service is to be provided. It apparently is not as simple as our usual buyer/seller relationship where we offer to buy n gbps for $n per gbps per month delivered to x POI via y gbps interconnect....if it was I would think we would be buying from a new supplier in the very near future. Having watched "Yes, Minister" many decades ago and then seeing that fiction is actually fact when it comes to Labour government ministers and, to a lesser extent, Coalition government ministers I am familiar with the deliberate obfuscatory technique of answering any question by simply repeating a previous statement unrelated to the question or asking a different question instead of providing an answer. It is so standard in political life now, Ms Faustus uses it 100% of the time, that a sensible person never expects any political question to be answered - but I have never encountered it to that extent in business life nor have I ever seen it in written 'dialogue'. I always use the crude method of numbering my questions so there can be no misunderstanding and replying to even dense blocks of text by splitting it up with my own numbering and then framing the reply using answers corresponding to that numbering. Even allowing for English obviously not being the first language of my correspondent I don't think that we managed to progress my understanding of what was being offered and I'm certain 'he' was no more enlightened than I was as to whether we could accept what 'he' was offering after the email exchanges than before he sent me the first indication that we might be able to do business. While last night's baffling incomprehension may be an extreme example it does raise the issue, at least for me, as to whether it is past the time that I should involve myself in 'negotiations'. It isn't the first time that I have decided that I just wasn't able to express Exetel's requirements in ways that were being understood by the people, both inside and outside Exetel, to whom I was attempting to convey a clear 'message'. I'm not sure how to address this, unbelievably important, issue. Copyright © Exetel Pty Ltd 2011 Monday, March 7. 2011Being Number One Has No Hazards.........John Linton ....when marketing slogans need to be used. Times/things continue to change in the data communications industry, as they always have, but not from my personal experiences as fast as they have over the past two years or so. Some people may say that's because the current federal government has decided to re-enter the monopoly communications market causing the current monopolist to panic and change its approach to pricing to re-establish its market shares prior to having to abandon its copper network. That must be part of what is causing so many changes but that is a 'long game' (any real delivery of 'NBN2' services is several years away on current estimates - by the 'NBN2') and the changes that are having most effect are very much those of a succession of 'short games'.....ongoing discounting and more and more 'free' offers that actually include some real free components. I am wondering whether the recent ACCC ruling that Telstra must reduce it's wholesale charges for a PSTN line to a flat $22.00 will actually produce any sort of price decrease from Telstra Retail to its customers or from Telstra wholesale customers - assuming they get the reduced monthly charge. At the same time it will be interesting to see what effect the ACCC's ruling that Telstra must reduce the wholesale charge for providing a ULL service (whereby the wholesale buyer takes over responsibility for the PSTN line from Telstra) will produce lower charges from Optus who, if the reported pricing is correct, will be charging Exetel greater than 100% mark up for the ADSL2 services we buy from them........an unsustainable pricing approach in a very difficult market. We have made initial approaches to both Telstra and Optus as to their intentions regarding prices of these services but, not unexpectedly, have received the usual BS replies of "we don't know anything about this/we'll check with legal" - do they really think we are so stupid as to believe that sort of nonsense? I mean if I read it in the media are they really trying to say they know nothing about it? These reported prices represent considerable reductions as far as I can see and are symptomatic of what has been happening over the past two years. If my understanding is correct then, together with the fall in IP and back haul costs over the past two years the basic building block costs of providing telephone and data services to residential customers has fallen quite dramatically during that period - but not as much as the end user prices being charged by the various suppliers have fallen (assuming anyone can remember what they were paying for data and telephone services 2 years ago). Telstra Retail has lead the way in slashing its prices for telephone/mobile/ADSL services for the past two years and has made life more difficult for any company with which it competes - which I assume is every company. It will now be interesting to see whether the beneficiaries of the ACCC ruling will now drop their prices or whether they will try to hang on to the windfall profits that have been dumped in to their bank accounts. It is becoming very hard to actually follow what is happening in the Australian data communications industry even if, like me, you spend a sensible amount of time studying publicly and privately available and ask a lot of questions of people who are also in the business an, novel concept, actually listen to their replies (I assume the reason nobody I talk to listens to what I say is based on their immensely superior knowledge). On a lighter note I saw the new iinet ad yesterday while driving. Perhaps the people who designed this ad live in Perth and were unaware of the last company to use "Number Two" as a theme in Sydney. No, it wasn't Avis.....the previous user was a septic tank pump out company that had the smile inducing "We're Number One In The Number Two Business" painted on the sides of its sewage pump out trucks. Does iinet's new slogan then mean that its company is a piece of......? Copyright © Exetel Pty Ltd 2011 Sunday, March 6. 2011Why Are There 'Poor' People In Australia......John Linton ......65 years after the Australian version of the "welfare" state was created? This thought entered my mind because over half a weekend I received three very thoughtfully worded emails requesting cut price internet to three different groups of financially disadvantaged people (one from a retirement home, one from an Aboriginal youth group and one from an unmarried mother's support group) - all in Sydney - one of the world's wealthier locations. Obviously bad luck in life can deal one or more severely cruel blows to almost everyone who lives past the age of 18 (before 18 most teens seem to think life is one long cruel blow directed at them personally) but it appears that Australians have more bad luck than most Western societies when I whiled away some time actually looking at various statistics on the web. I just typed in "number of people on pensions in Australia and selected the sixth suggestion Google provided and was treated to a succinct summary of some extraordinary figures here: The first astonishing statement that I found was this one: "Around 2.7 million working-age Australians are on income support — over There are several other horrific statements in this short summary but I couldn't get over the fact that 20% of adult Australians need Federal Government payments to be able to stay alive.....and that horrific percentage is increasing. If you want to see where these trends may well lead you just need to look at the most 'socialised' nation on the planet, Sweden, to see where 'pensions' can end up. If you have the time look at: http://ideas.repec.org/h/nbr/nberch/7256.html ....very dry and long but an appalling case study. So; what does it mean? Part of what it means is that the creation of welfare dependency has no end and only increases year on year for the nicest of 'humanitarian' reasons but at the cost not merely of money to the nation's tax payers but at the far more 'expensive' cost of the destruction of the very basic human ethos of its recipients. In 'humanitarian' terms 'welfare' can only be seen, in the short term, as a 'good' thing - feed the starving, clothe the naked, shelter the homeless and every other inarguable catch phrase applicable to charitable intentions and actions. No-one, no matter how stupid could ever argue against those concepts. But as Sweden has found out for well over three decades now - all social services have a finite end - the ability to pay for them by an ever diminishing amount of tax payer dollars that can only come from people who are not receiving welfare (I refuse to use the stupid cover up phrase "income support"). There are several things that can be used to prop up the welfare budgets in the shorter term. Sweden like Australia has a disproportionately high military budget - despite the fact that Sweden hasn't been involved in an armed conflict since Admiral Horatio Nelson demonstrated the stupidity of making bad alliances almost two hundred years ago and Australia hasn't had any sort of military threat for the past 65 years nor is ever likely to have one. Perhaps both countries should wind down their military expenditures (and let's never forget how that money is spent on total nonsense - Krudd's 12 Australian built submarines spring to mind) to give some taxation breathing space to carefully look at welfare spending. I know it will never happen but there actually is absolutely no reason for either of those countries to waste money on armaments and the people trained to use them just as there is no real reason to expend so much of their GDP (over 25% in Sweden) on an ever growing number of welfare programs. But my original point is why are there any poor people in a country such as Australia where there is a continuing shortage of labour and there is no barrier to any person who actually wanted to earn their own living being able to do so - bar those unfortunate persons who physically cannot do that? I can only think of one but as I am personally, apparently paying for 20% of another Australian's living expenses already I don't feel that I should have to work even harder to allow Exetel to add to the payments to people I am already giving 40% of my personal income to. Perhaps I am just uncharitable. Copyright © Exetel Pty Ltd 2011 Saturday, March 5. 2011Wireless Broadband Continues It's Inexorable 'March'.....John Linton .......towards overtaking PSTN based broadband. I read this: (amazingly in the paper version of the paper before having to search to find it on the online version) which, while it doesn't add all that much to the general knowledge about the progress of wireless generally it does put Telstra's more outrageous claims about its "technology lead" in deploying wireless networks in some sort of perspective. As I have said on several occasions, every time I test my Exetel/Optus wireless service against Optus own wireless service or Telstra's wireless service the Exetel/Optus wireless service is always faster and sometimes by a quite noticeable margin. So it was nice to see that this set of tests showed that the Optus service is now pretty close to the Telstra service in terms of 'general use' in a relatively thorough test. However, irrespective of the reality, it will make no difference to the lying 'marketing' and stupid exaggeration that characterises all consumer separation from their money activities. Exetel, finally, made the new wireless 'Standard' plans available on our web site and user facilities late last week. These are simply Layer 3 're-sells' of the equivalent Optus retail plans at a lesser cost (typically 20% or so). It allows us to offer a 5 gbyte plan for $25.00 a month and similarly low prices for 9, 12 and 18 gbyte plans. The target market for these plans is the residential user who uses the internet for web browsing and email with a few gigabytes of downloading. Over 40% of Exetel's current ADSL user base downloads less than 5 gbytes per month and $25.00 is far less than an ADSL service costs. Using wireless also allows those people to disconnect their PSTN line and save themselves the $30.00 or so they pay monthly for something they don't really use any more to make calls (using their mobile or voip for that purpose). It will be interesting to see an update on what percentage of Australian residences have no PSTN or other telephone line and also see where the updated trend is heading.....in terms of percentage. The ABS statistics are still a month away but I would be surprised if they show anything other than a significant increase in wireless users and a further decline in ADSL users - for whatever those figures are worth. It would be nice to have some trusted repository of user statistics that seem so readily available in the EU countries and in the USA but a need for such information is apparently unnecessary in this country. Apart from making new wireless broadband plans available last week we made progress towards finalising new IP and inter-State back haul provisioning. While its true that IP pricing continues to fall like a stone dropped from the top of a very high cliff it is equally (perhaps more so?) true that inter-State back haul is falling even faster. So we will gain some financial benefits from the new deals that we hope to put in place by the end of March which will be one positive in these 'end of days' ADSL marketplaces. Our recruiting is going much better now - almost certainly due to the time of year (past the end of university year long lay off) - and our challenge now becomes training and a need to find more sales team leaders - particularly in Colombo. We will address the Colombo problem by sending an Australian to head up the development and training of an 80 or so person addition to the business sales force over the coming twelve months to support the 40 person business and corporate sales force we are half way through building in Australia - assuming we can stay on track in doing that. Overall it was a productive week. Copyright © Exetel Pty Ltd 2011 Friday, March 4. 2011End Of The Half Year Reporting Season.......John Linton .......always a time for great amusement as the dregs of the ASX reluctantly reveal their status after COB on February 28th. I always get an early morning dose of amusement each six months when the complete fiction of aanet/EFTel's latest chapter of pure nonsense is finally sent to the ASX at the very last minute. The latest farrago of total inconsistency can be found here: http://www.asx.com.au/asx/statistics/announcements.do?by=asxCode&asxCode=eft&timeframe=D&period=W As always the real 'news' is on page 8 where the immediate debts to the company's suppliers (at over $A8 million) now exceed 300% of monthly revenue and the huge discrepancy between net assets and net liabilities has been 'hidden' by listing the huge debt to Huawei for the DSLAM hardware being also listed as an 'asset' because the company is now being forced by its creditors to try and find a buyer as they want their long overdue money. There could be other interpretations of these plain as day figures but it would be hard to go past the one I have suggested. The heavily 'spun' statements on the second half of page 12 have the directors of the company, for the first time though the company's auditors have been saying it for several years, admitting that it just MAY not all be as 'rosy' as they are trying to say it it on all the other pages ("the consolidated entity continues to require the ongoing support of its suppliers"). You should never take pleasure in other's misfortunes but I have always seriously disliked this particular company and their ASX reporting is, for me, a six monthly occasion for serious mirth (if that is not an oxymoron) How anyone with half a brain can describe a company with falling revenues, greater half yearly losses and a balance sheet that shows levels of debt that simply are not credibly repayable is beyond my simple mind.Yet again the auditor's report (the last page of the PDF) calls in to question whether the company can continue. Doubtless the share price (if you can call 1 cent a price) properly reflects what the shareholders think about the company though as the annual report shows the net asset backing for each share has fallen to minus .63 cents even the current share price is an act of faith. Undoubtedly it will all end in tears before bed time. So with that comic act the curtain falls on the half yearly reporting season. What can be made of it? Telstra's results dominated it just as Telstra dominates the Australian communications industry. They showed that if you spend enough money you can increase your market share at the expense of both your top and bottom lines but that all you are using is your previously banked monopoly profits to give your competitors a taste of what they should have always been experiencing - true competition which will prevent them continuing to enjoy their fat, dumb and happy lethargy by 'sheltering under Telstra's price umbrella'. With only TPG's reporting to come the overall impression is that more spin than usual was used to explain away the overall trend of lower profits and higher costs of operation. What does it mean for the balance of this financial year? I wouldn't have a clue. From what can be seen from our very narrow perspective we see little innovation by anyone beyond Telstra's money give aways and ever more Byzantine pricing/bundling/obfuscation presentations of what used to be simple and pretty prosaic services. Personally, I would expect more of the same over the coming months. I look forward to seeing the ABS statistics due in early April to see what differences there are between what has been reported to them versus what has been reported to the ASX. Copyright © Exetel Pty Ltd 2011 Thursday, March 3. 2011Exetel II.........John Linton .......or in the old language - Phase IV of Exetel's original plans.....which actually only went to Phase III. We continue to 'test' just what can be accomplished from 'outbound' selling in Sri Lanka and are pretty satisfied with the results to date though, as always, they certainly could be better. We will complete the VoIP small business training today and Michael will 'come home' tomorrow. We will send the head of corporate sales to Colombo on Sunday and he will spend two weeks sitting along side each of the outbound sales people mentoring them on improving the 'approach', 'development and 'closing' techniques. The number of outbound sales people has grown from two in early December 2010 to ten today with the intention of growing to fourteen by the end of March and twenty four by the end of April.....assuming the planned progress in terms of sales are made on a day by day basis. These outbound activities are overwhelmingly directed at small/medium business with some projects aimed at Exetel's current customers in terms of mobiles. Depending on who you believe there are between 1,000,000 and 2,400,000 'businesses' in Australia, the vast majority of which would be one or two person part time operations. However their needs are different to those of residential users and very different to the needs of medium and larger sized businesses. Give or take some mis-classification, Exetel has something like 5,000 small businesses (those that sign up with a company name rather than a personal name) using our current residential services. A growing number of business name customers each day are signing up for our "B" small business plans and those, plus VoIP, will be the ones we will use the outbound sales teams to sell. For over a year we have been considering some sort of 'consulting/trouble shooting' service for very small businesses along the lines of those announced by Apple in the USA today: I think that as an add on service at the right price this could become a 'key differentiater' if it was done effectively. No-one either inside or outside Exetel has anything positive to say about this concept so we will do nothing about it for the time being - it isn't as if we don't have enough to do already. However I will continue to think about how this could be done. We are still having trouble sourcing suitable hardware for very small businesses though we decided that the entry level Siemens hardware was the most suitable VoIP set up for a small business and, unlike the 'magic box' at a very affordable price. Low cost handsets and a pre-configured CTU would make it very simple to install 'out of the box'. We still hope to have an 'all in one' box to provide to very small businesses but as all of them will already have an ADSL modem/router it seems an appropriate first step to provide a very low cost 'add on ATA' box with low cost, but high quality, handsets. We need to make more effort in developing a small business hardware suite over the coming months - but then I have been saying that for a very long time....the Siemens boxes are a simple and cost/effective solution. https://www.exetel.com.au/modemorder/index.php We have begun the process of developing an 'exploratory' business plan for an "Exetel II" and will spend more time and effort on that once we have some sensible data regarding how to successfully approach the very small and small business market places as well as further refining and improving our medium/large business offerings. We are also in the latter stages of redeveloping the residential offerings to make them more appropriate to the new positioning that appears to be required in 2011. It's a very demanding time for everyone at Exetel at the moment. The key issue, as always, is can we get and then continually develop the right people to make these very ambitious plans realities? Really good people are not easy to come by as everyone involved with hiring well knows. How to hire 300+ really good people within a relatively short time frame is a challenge I have never faced personally nor observed done by another entity though it would be commonplace around the planet. Are you ever too old to learn new skills? Copyright © Exetel Pty Ltd 2011 Wednesday, March 2. 2011Pay Nothing Now........John Linton ....leave the debts to your children. I attended an 'exclusive seminar' yesterday to discuss new concepts of providing lower cost residential ADSL services, or for that matter any sort of services, to residential users. It was slickly done and had a good set of 'persuasions' in the ways that only American presenters seem able to 'put across' that almost completely conceal the gaping holes in the logic being applied to the 'sell'. From long custom I paid little attention to the smoke and mirrors which left very little to actually concentrate on other than the inane and annoying fellow attendees who disrupted the smoothness of the presentation with meaningless questions and statements. Of the 17 other people attending one was someone I recognised from a Victorian based ISP and one from a hardware distributor. Two other people seemed to recognise me but I couldn't recall them, a perennial failing of mine that is both very rude and very annoying for all concerned. In essence it appeared to me to be some sort of version of the Harvey Norman "no payments until the 22 century" type financing offer applied to the future abilities of a residential customer to pay more for less in the future by offering serious lengths of "pay nothing now" financing. The concept has obviously worked for Harvey Norman, and others, for a very long time and I suppose it was only time before it would be extended to other parts of consumer purchasing. In essence I suppose it's no different to the current multiplicity of credit card offers. In fact, with not too much of a stretch, it isn't that much different to Telstra Retail's 'win back' campaigns. When you think about it the concept is identical to Telstra's, and others, campaigns in the past and is basically the basis of the 'free handset' offers that have built the mobile business of carriers around the world. It was interesting in some respects and, I said previously, it was very competently put across.....one day you will be able to get something for nothing? It was simply substituting the indigent residential customer's loan collateral with the supplying company's ability to take the obligation for that debt using a company's much better credit rating and capacity to pay and, doubtless if I looked in any depth, horrendously onerous, sign your life away, financial commitments on behalf of the supplier. However, briefly, and if you didn't look too closely, it was a pretty appealing concept and it did seem to make some sort of sense......until you think about how any residential customer that would take up such an offer would ever find the capability of paying back 12 months of 'free' ADSL costs. Maybe I've missed something key to the use of this sort of financing. I suppose Exetel's residential business base could be rapidly grown using a "no payment for the first 12 months" approach but the nightmare scenario at the end of twelve months prevents me even contemplating such an approach. Maybe that's just one more sign that I am not the right person to make such decisions within our business - come to think of it I almost certainly never was. I can't see, for one moment, how a company like Exetel could use those concepts but clearly they are working, at least for the moment, in the USA and I would think that they will start to be offered here in the not too distant future - especially by companies like Harvey Norman who are already very familiar with using extended credit to make sales. I can also see the attraction to some of the more 'daring' ADSL providers as a quick fix to their falling residential user bases and as a way of getting better discounts from their suppliers. Free ADSL for the first three, six or twelve months would do it in quite a big way. Copyright © Exetel Pty Ltd 2011 |
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