John Linton A bit blurry eyed from watching the soccer much earlier this morning. A mesmerising game which was only ever going to have one result in retrospect but which, at least for the first half held out some promise of an upset....not to be. There's always next year. Well...lets hope so.
One of the things that has been exercising my mind as we look at what we might do next year is to return to the way we started - and, yes, I do remember what an unmitigated disaster that became of that. For those that don't know what I'm referring to Exetel started providing ADSL services in collaboration with another start up company because at that time Telstra Wholesale had a 'published' wholesale price that gave significant discounts at 1,000, 3,000 and 5,000 ports per month. The price drop at 1,000 was about ten dollars or so in those early days which was a great deal of money. The next two price drops were not as great but they made a huge difference to the viability of a start up company's ability to make any sort of profits.
Unfortunately, for all concerned, only one company could have the contract with Telstra Wholesale and that wasn't Exetel so 12 months later as Exetel was beginning to 'boom' (relatively speaking) the other company behaved despicably and nearly drove Exetel out of business and indeed it took us a long time to recover from their actions. Justice was served by that company going broke shortly thereafter. The scars are still very fresh and I never expected to be contemplating a similar scenario some six years later - but I am. The reasons are the same as they were in late 2003/early 2004 - Telstra Wholesale is selling ADSL ports to some/all of their wholesale customers at prices that are ten to thirteen dollars less a month (more than likely lower than that for all I can tell) than they are to Exetel.
I have no problem with Telstra Wholesale selling to other companies, with which Exetel competes, at whatever prices they deem to be in their best interests - that is entirely their decision. However the fact that they do means that Exetel cannot offer Telstra based ADSL services and remain in business. Again, not a problem, if any commercial entity can't compete in any market then it should get out of that market while it still controls its own destiny. There are only three scenarios as far as I can see. Firstly we could keep providing Telstra Wholesale ADSL services at competive market prices and make a loss on doing that - very unattractive proposition. Seconly, we could 'sell' our Telstra Wholesale provided services to another ADSL provider that buys at $10.00 - $13.00 less than we do who could continue to provide the services at our prices and make a profit.....sensible for us but maybe not so highly regarded by at least some of our customers. Thirdly, despite our experiences of April 2004, we could buy the services currently provided by Telstra Wholesale through another company which (like the old arrangement) may allow both companies to buy at a lower price from Telstra Wholesale.
A dangerous arrangement for many reasons that are immediately obvious and for a whole lot more that would soon become apparent. We have had two approaches to do something like option three over the past 12 months but the companies making the approaches have not been very different to the original company which nearly ended our existence all those years ago. On Friday of last week it occurred to me that there was an option to taking the extreme risks involved in such a decision and while watching the soccer earlier this morning it occurred to me that there were possibly two 'versions' of option three that had far less risky than the options we have currently been presented with.
The risk of 'buying' services through another company, as fully demonstrated in April 2005, is a major, major deterrent. However if that risk can be eliminated by buying services through a totally trustworthy company then the 'risk' elements are eliminated and the price advantages are achieved. Simple really.
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