Sunday, October 16. 2011Back To Colombo......John Linton ......after the longest 'gap' since we first set up the Sri Lankan operation in January 2008.....some five months instead of the regular trip each three months....leaving a beautiful, almost hot, Sydney day in marked contrast to yesterday. We will leave in a few hours to make the 16 hour trip from Sydney to the centre of Colombo where, after a few hours sleep Annette will commence the 'quarterly' review of each of the SL employees and I will deal with the various aspects of checking on the overall operations of our operations and dealing with the fiduciary and regulatory aspects of the company there. There are now almost eighty people employed in the Colombo office so the personnel review schedule itself is very demanding. I have purposely delayed returning to Colombo after carrying out the always unpleasant task of advising the Sri Lankan General Manager we originally appointed (after a thorough investigation process) that we would not be renewing his annual employment contract for a second time. Steve has been to Colombo twice in the intervening period to ensure the problems we sought to correct by appointing a new GM were in fact being carried out and to begin to mend the damage done by that incorrect appointment - generally no problems. We have begun to move to the next phase of operations in Colombo (as I have mentioned in these ramblings previously) and my principal objective is to ensure that the building blocks of how to accomplish this result are fully understood. More importantly, I am attempting to understand whether the very ambitious standards we are attempting to put in place can be accomplished using the people we have taken so much trouble to put in place over the past three plus years. Personally, I have no doubt that they have the intellectual and work ethics to accomplish what is going to be attempted but I have no idea whether the overall career satisfaction can be achieved and the career progress satisfaction can be delivered by being so ambitious. We will be aiming to deliver 100% satisfaction, 100% of the time to residential customers who call for technical, provisioning and account resolution. Given the current customer base's wide disparities in technical abilities, attitudes, language/communication skills and a myriad other characteristics this is an 'impossibly' ambitious project. However we don't see it that way and we have spent over three years 'doing the very large amount of ground work' to make it possible. The process we started more than three years ago has a long way to go, assuming we get through this stage. Our future aim is to build the skills and processes of our current support personnel to 'consultant' level which will require us to work with at least one of our carrier suppliers to improve the diagnostic tools currently in place and achieve the completely different level of 'trust' that is required to make that possible. That's in the future - the next, major, step is to resolve all customer technical issues within the first telephone call or email response. I am also looking forward to seeing the progress that has been made by Clarissa and Clare (and Diana and Kokila) in developing the processes that will allow the more rapid expansion of our small business and medium business sales teams in Colombo. We have invested quite heavily, both in financial terms and in management time and effort, in building our business customer sales and support functions as well as in very heavily investing in the infrastructures to support business services over the past year. We are in the final stages of reaching an agreement with a much larger 'partner' to accelerate this investment in 2012 and to move to the next stage of becoming a much larger provider of data and VoIP services to business and corporate customers. Before we can finalise that 'partnership' status we need to complete the building of the 60 person, Phase One, sales and support organisation that we need to put in place as the required "proof of concept" that is required before we can expect another 'party' to co-invest with us in Phase Two of this ambitious program. So, it promises to be an exciting 5 days....pity about the first 20 hours. Copyright © Exetel Pty Ltd 2011 Saturday, October 15. 2011Marketing Flim Flam/Carelessness With OP's MoneyJohn Linton A truly miserable day in Sydney which provided no inclination to get out of bed at the usual hour. A strange October in weather terms generally - far from the blue skies and balmy breezes that have marked most Octobers in Sydney over the years. A similarly strange 'business' week with average results in terms of numbers of new orders for our various services but those order volumes containing a much higher ratio of 'big' orders than usual. Several suppliers also demonstrated a 'much keener interest' in doing business with us than in the past which is somewhat surprising and indicates the ongoing troubled nature of the communications marketplaces generally. So, as I alluded to yesterday, there is great uncertainty in the supplier ranks with indications of greater uncertainty in the future. The increase in the number of unsolicited CVs I receive exceeded double figures this week for the first time I can remember (I actually can't remember any time when I have received so many) which is the strongest indication yet of things not going well in our industry. The other strong indication is that even Telstra is slashing its prices for business services to prevent the 'defection' of its customers from the "safety of a Tier One supplier to the dangers of a cut price operator"....now there's a major market place change if ever there was one. I have often wondered what a "Tier One Supplier" actually is? I know that what it REALLY is - a piece of marketing gobbledigook coined to influence the stupid and the gullible who lack the commonsense to understand the basics of communications technology and spend other people's money rather than understanding how to carry out their duties. I have always extended total respect to other people in the communications industry and have always assumed that anyone who holds a decision making position in selecting communications solutions has at least an equal knowledge to mine in understanding just how the various carriers and suppliers networks actually work and what their relative strengths and weaknesses are. But when the term 'TIER One Supplier" is used it is obvious that the person using it has no idea at all as to what they are talking about when it comes to very basic networking architecture or operations. It seems that as we enter this new phase of business/corporate selling we have begun to annoy more and more of the suppliers who our young sales people are wining business from and now they regularly achieve sales volumes of more than 100 a month (150 in August) even suppliers such as Telstra are having to change their attitudes. (one can only wonder what will happen if we manage to reach our 2012 target of 400 sales per month). This is hardly a surprise, it was obviously inevitable at some stage, but it does mean we will now have to modify our approach if we are to continue to build this key aspect of our future business. I am thinking, among many other things, of addressing this issue of "being a Tier One supplier" much more directly and would welcome any assistance as to what a network decision maker considers "Tier One" to actually mean and what the perceived values a "Tier One" actually confers because I have been buying communications services for almost twenty years and I am damned if I know a single one. Let me take the obvious example of IP from Southern Cross which we have bought from Telstra, Optus, Verizon, AAPT and NTT....all "Tier One" suppliers. Is there any difference except price per mbps? Absolutely not. Is one supplier more reliable than the others? Yes. All of those carriers over the last ten years have had problems ranging from a few minutes to more than two days. Does that make them not a "Tier One" supplier? I would think it does on the basis of the "Tier One" description so carelessly bandied about. But what about Exetel? Well, against any criterion/criteria that the "Tier One Bandiers" care to apply - Exetel is superior to each of those communications providers because we have triply redundant IP services sourced from (currently) Optus, Verizon and NTT because we KNOW from long experience that none of those suppliers is able to keep their service to us up 100% of the time....so we have to use three of them simultaneously. I could ask if the Cisco NTUs provided by a "Tier One" supplier are superior to the Cisco NTUs provided by Exetel or whether the back hauls provided by a "Tier One" supplier to an end user are better than the back hauls provided by a "Tier One" supplier to Exetel that connect an end user but it would be self evident nonsense. Similarly is any end user with a few links going to be treated by any carrier any better than Exetel who has closing on 2,000 links and spends more than a million dollars a month with them? I could go on but you get the point. However, because this marketing con of "Tier One" provider has been allowed to go unchallenged for so long it will take more than common sense to deal with. I would welcome any assistance anyone might be able to provide. Copyright © Exetel Pty Ltd 2011 Friday, October 14. 2011Today's Socialist Lunatics Will Cause The Same Chaos....John Linton .....as that previous crazed socialist Gavrilo Princip. It is almost mid way through the month and the 'slowness' evident in the first half of September is evident in the first half of October and although September finished up OK I think the trend is not as positive as was the case in both July and August....at least for us. In some ways things are much better for Exetel than they have been for some time but that is more to do with the 'desperation' of our suppliers than general market conditions. I suppose the two can't be separated - slowing market conditions generate 'desperation' in suppliers and someone benefits but seldom companies like Exetel.....but this time we seem to be at least one of the beneficiaries which is a very welcome situation and more than mitigates the effects of a slowing set of residential market places. What is going to happen over the coming months is uncertain but what looks like happening is that a significant number of chickens are going to come home to roost (though in this monstrous period of "battery hen farming" that aphorism is probably no longer relevant). In a period where carriers are having to write off tens of millions to prop up some of their wholesale customer's ludicrous and commercially suicidal adventurism it is certain that many of the current crazier 'promotions' are going to end in tears. If you read David Thodey's comments in the latest BRW (and were capable of interpreting what was reported as being said in terms what was actually meant) you would have seen the 'final admission' of just how drastic the Labor government's intervention in the communications actually is. So the verdict is in; from Telstra on down no-one really knows how to address the communications markets from now until some future certainty is established. So many communications services suppliers have built their businesses on supply scenarios that will not exist for much longer and even now are being cannibalised that it's hard to see which of them will survive....at least in their current form. Exetel is by no means immune to the negative results of these massive changes but, in our own limited ways, we have been planning, and executing that planning, to protect ourselves from the inevitable results of them for more than three years....while it seems that so many other suppliers have simply continued on apparently expecting nothing to change very much. I have no knowledge whatsoever of any other company's future planning but it is possible to deduce likely future actions from self evident current actions. At the risk of being melodramatic the current time appears to share much of the characteristics that Barbara Tuchman described so vividly in the opening chapters of "The Guns Of August"....a way of life and an expectation of longevity was about to be 'blown away', literally, for ever in a matter of months and by the end of four years almost no trace of those previous century old expectations remained. Irrespective of what may, or may not, be happening around the industry there remains the prosaic day to day actions of managing changing circumstances to optimise the chances of continuing to have a viable future. One key objective for Exetel is to change our support processes and Annette and I will be going to Colombo on the weekend to put in place the next part of that radical program as well as reviewing the progress we are making in scaling up the business and corporate sales programs in Sri Lanka. Those are the twin 'planks' for ensuring Exetel is best able to meet the rapid changes in today's communications business and to ensure we can improve our abilities to handle the new 'world' that has so carelessly and thoughtlessly been brought in to being. However much planning is done, the problem remains that the inevitable changes now occurring are causing more and more unknowns as the larger influences that have not made the correct 'calls' seek to catch up with those that have - in the mean time companies of Exetel's size have to avoid the tumbling building blocks or get flattened. Copyright © Exetel Pty Ltd 2011
Thursday, October 13. 2011What If There Actually Is A Recession?John Linton It seems, from the 'facts', that irrespective of what statements are made to the contrary that there are harder times ahead than we have seen in Australia for a very long time. Perhaps that isn't the case but everywhere I look all I see are negatives - and not just in the communications industry but everywhere I take the trouble to notice what is going on. The EU media appears to be more financially responsible than its counterpart in Australia and, ignoring the current PIIGS problems (so widely reported on in so many contradictory ways) both the UK and France continually report massive societal changing negative issues that are truly appalling in their magnitude. Of course what happens to the Europeans is not going to affect Australia in the same ways but subtract the income from exporting the base substance of the actual continent and what difference is there between the EU at this time and Australia? Only the desire and ability of the Chinese to pay for building materials? I don't know how much sympathy you have for the striking Qantas engineers at the moment or the Wollongong steel workers who are losing their jobs or the NSW public servants who keep threatening to strike over redundancy and pay conditions....perhaps total or perhaps somewhere in between total and zero. Whatever you feel about whatever you see happening in those various situations perhaps you have noticed that there appear to be more of that sort of reporting at this time than you can remember for quite a while? While we were in England very recently we noticed many signs of financial problems from the number of mortgagee sales in the pretty villages to the number of homeless people on the London streets - and of course the media reports. Articles like this: were a daily occurrences and reported very significant societal changes - not just blips in the ever running good times. What does happen if a whole generation doesn't get any work? What does happen if a pension dependent generation doesn't get paid because their country's government simply can't borrow the money to make the promised payments? It could never happen. But after decades of profligacy it is a very real possibility in more than one EU country and the effects of such a thing happening will certainly make radical impacts on Australia...though of course that is all in the long distant future. Unless you're a Qantas engineer, a Wollongong steel worker a...... It's way above my head to attempt to understand any aspect of Australia's, let alone any other country's, economy but as a realistically responsible person I have a responsibility to get some sort of idea about the direction of the economy and therefore the sorts of actions that our irrelevant (to everyone but us) company should take. From what 'facts' are being published, every indication is that more people are losing their jobs than in the past few years and more people are concerned from what they see within their immediate work places that their jobs are not as secure as they once were. I see an increasing amount of 'job attrition' within Exetel's suppliers and also within some of Exetel's customers and therefore I have little reason to believe that it is not more widespread than my immediate 'vision'. I am not yet concerned about any aspect of our business yet - but I think that having concern is not far in to the future. Copyright © Exetel Pty Ltd 2011
Wednesday, October 12. 2011'NBN2'/Support/Restricted CompetitionJohn Linton At the risk of being really boring I am finishing sharing the thought processes on some of the changes we are making to the ways we are considering addressing the future of providing residential communications services if most of our assumptions concerning the likely political future of Labor's destruction of the current supply of such services survives the next Federal election - a call beyond our ability to evaluate either now or, I expect, before the result of that election is known. I think that one of the grossest mis-assumptions by the current government, 100% of the media and more than a few of the communications companies that have been quoted on the topic is that "very little will change in terms of services supplied to the end user" and that pretty much the same commercial companies will continue to provide data and voice and entertainment services to the same sorts of numbers of people as they do today.....just the 'NBN2' will redistribute who gets how much of the profits. Perhaps I'm wrong in that belief and most people really do understand that will not be the case and Exetel's assumptions are all wrong. The first thing that will happen if the 'NBN2' proceeds to delivering the infrastructure to 90% of Australian residences is that Telstra will not play any major part in providing services to those customers. How could it possibly do so? If the stricty limited competition that has existed in the Australian communications market over the past 8 years has shown anything it has shown that a bloated Telstra simply can't compete with even start up companies using its own over priced wholesale services. Sure, over the past 3 years, when Telstra has actually competed on price it has slowed/slightly reversed that situation but ONLY at a loss of $A800 million in FY2011 and ONLY by even more grossly overcharging its remaining wholesale customers to restrict competition against it. If the 'NBN2' continues to provide a much greater coverage then Telstra has no base cost advantage over ANY other 'NBN2' wholesaler but it retains its grossly bloated cost structure without being able to force its wholesale customers to pay too much for base services. The same, to various lesser extents, applies to the next largest few data and telephony providers - in different ways. They each lose any operational advantages they have developed from investing in their own infrastructures and therefore they each lose any infrastructure cost advantage and are left to compete on 'added values' because, if the Labor mantra survives, then every 'NBN2' buyer buys at the same price. This leaves "support" and IP costs as two issues of cost differentiation and 'entertainment' services as content supply differentiators. This is unfortunate for at least some current suppliers of data services as they are, at least currently, locked in to situations where they are paying too much for both IP and for support and have no real 'content' supply ability - FoxTel remains the only game 'in town' and that's locked up by you know who....and, of course, the government funded 'NBN2' will solve FoxTel's wider distribution coverage problems. To succeed in providing NBNCo services we believe two things will be primary drivers. The first is sensible/low pricing (there are virtually no real differentiators between an NBNCo service provided by any wholesaler) and the second is fast and effective problem resolution (support). What isn't available to anyone is any claim of some sort of superiority of delivery and therefore no ability to ameliorate the bloated costs accumulated by those current suppliers who have been foolish enough to allow that to happen. I could be totally wrong about every thing I have written. However I don't believe that is the case and Exetel will proceed on the bases of what I have shared with you over the past three maunderings. Unlike so many other people - I am not a casual, disinterested observer.
Copyright © Exetel Pty Ltd 2011
Tuesday, October 11. 2011Things 'NBN2'John Linton I commented yesterday on how things may change over the coming years, irrespective of any possible change of Federal Government, but shortly after I completed that piece of writing I read this: While any media writing these days, even in a relatively well regarded journal such as the Economist Intelligence Unit, is simply some lesser or better credentialed 'opinion piece' this one has more facts that appear real and less opinions than most - particularly those appearing in Australia over the past four years which have had absolutely no facts and are entirely self serving opinions. Exetel has no option but to keep considering the 'NBN2' and to actively participate in and continuing to try and understand what the ongoing 'NBN2' adventure means to our company and what immediate and future actions we may need to take to deal with the consequences of this industry breaking government adventurism. The cited article is probably, at least as far as I am aware, the only piece of writing that spells out some 'facts' that allow the scope of what may change to be looked at in a sensible perspective. I read this article shortly after Exetel had attended a 'de-briefing' held by NBNCo on the feedback from a survey they conducted of Exetel, iinet and Internode trial customers (only these three NBNCo customers attended the briefing as the other participating ISPs did not give permission for their trial customers to participate). Nothing very interesting was shared by NBNCo on the results of their survey - perhaps there was nothing interesting to share. Trial customers overwhelmingly liked the speed and business customers really liked the much faster upload speeds. No-one liked the NTU and many found the need to have the NTU in a particular place annoying. You actually didn't need a survey to establish those two 100% predictable results. I know its very early days, and things will get more organised as time elapses, but it is very much amateur hour over the road in North Sydney at this particular time. Which is a concern for an organisation that is spending tax payer money and borrowed money at a furious rate with only political advantage as the rationale for expenditure. If you read the cited article, it's quite brief, you will see just how much more money Ms Faustus et alia are spending compared to ANY other country in the world and you will see how expensive what any end result will cost compared to any other country in the world. Even those rabidly illogical, and completely pig ignorant, "supporters" of Labor craziness must be having second thoughts by now (assuming they are actually capable of semi-rational thought - which I suppose is questionable). Irrespective of what anyone writes (and irrespective of whatever are the actual facts) companies like Exetel have to continue to invest in the 'NBN2' because, in the event it does even partially succeed in some form or another it will change the way wire line internet and associated services is provided to residential users over time. This will have to be done for at least another two years (though its peculiar to think the future of the country's rational communications infrastructure depends on one union thug staying clear of criminal prosecution). If the 'NBN2' does continue then the changes already becoming evident in the supply of residential communication services are going to become massive....and they aren't going to benefit any type of end user......and the cost is going to be very high. I, personally and on behalf of Exetel, have no idea how it will all turn out - I suspect badly - but I see little option but to 'play the game' for at least the coming months. Copyright © Exetel Pty Ltd 2011 Monday, October 10. 2011Now The 'NBN2' Is 'Operational".....John Linton ....what, if anything, has changed? Exetel has begun to get a trickle of orders for NBNCo fibre services from users of other ISPs over the past week as it became possible for any end user who had access to NBNCo infrastructure to order fibre services from any NBNCo reseller (as opposed to during the trial only being able to order a fibre service from their current ADSL provider). However the number of premises where NBNCo fibre is actually available is still scarcely more than a 'handful' so there can be no remotely significant number of new fibre orders for quite some time yet. Of the customers who ordered a trial service only one so far has canceled it and decided to stay with ADSL though we expect that to increase as people return from school holidays....to what extent we currently have no idea but are currently doubting that will exceed 10 - 15%. One of the things I noticed while I was in the UK (which has no government interference in the communications market) was it had a more fractured ADSL set of offerings than I had noticed the previous year (there was even a new "Yorkshire" based ISP offering "real Yorkshire based support speaking plain Yorkshire"). It was almost strange, after Australia for the past 4 years, to see absolutely no mention of fibre internet in the UK communications media dealing with residential services. What you did see was pricing way lower than the lowest available here and quite incredibly low telephony pricing. What you also saw was a plethora of wireless broadband offerings at the 20 gb/12 mbps+ speeds for around the ten pound per month price levels which re-emphasised that not every advanced country in the world thinks like Australia's Labor government....actually none do. So in Australia, now the NBNCo services are 'generally available' wherever the NBN has been turned on and that program will now accelerate, it will be interesting to see just how many services are activated each month....and more interesting to see what investments the various ISPs make in promoting those services in the relatively few places they are currently available. I have been contacted by more than a couple of journalists writing articles about the 'general availability' of NBNCo fibre services for the October 1st editions of their publications but I didn't notice anything particular. They seemed to be expecting massive advertising and promotion campaigns which seemed to indicate that they had no idea of how tiny the current marketplaces are in terms of actual numbers of fibred premises. The relentless hyperbole deployed by Ms Faustus and Stupid Stephen certainly seems to have worked on the less intellectually abled of the media who apparently believed that there were tens of thousands of people just waiting to be allowed to connect - they seemed quite taken aback to be told that the number was probably less than 600 or 700. Over the coming months the actual take up of NBNCo fibre services will be interesting to read about as the louder mouthed ISPs spruik their successes or at least their claimed successes. Without Telstra or Optus being involved it will not provide any real indications of what the take up will be like when it is 'real' but will give some sort of indication. One key future ingredient will be the re-wholesale of NBNCo fibre in terms of the sort of pricing that will be made available - particularly from Optus and NextGen - but I have seen no sign of that as yet. Despite all the millions of column centimeters to date to the contrary - NBNCo fibre take up is a long, long way below what is ignorantly claimed. No problem - it is only now that the actual numbers will need to slowly begin to stack up against the media myths. The actual numbers/percentages will begin to tell a story sometime next year at the earliest. Copyright © Exetel Pty Ltd 2011 Sunday, October 9. 2011Where Is Mobile Broadband Heading?John Linton I haven't looked at the mobile broadband market lately as much as I used to. This has been partly because of time constraints and partly because of Exetel's lack of ability to develop any sort of 'marketing plan' that allows us to meet a carrier's needs for high volumes of unit sales to mass markets. Our current users, particularly the premium users, seem to like what we provide and the prices at which we provide it and business users tend to stay with their Exetel services and gradually increase the number of services they use while residential customers tend to come and go. While I was in the EU recently my brief observations were that coverage and speed had continued to improve and costs had continued to fall - however my needs have always been covered each year for sub twenty pounds reaching a new low this year of five pounds for wifi connectivity (to the ubiquitous BTZone) for 24 user hours which was more than I need for two weeks of emailing, blogging and intranet usage. Telstra have recently set the price standard in Australia of $A29.95 for either 4 gb of traffic (up and down) or 5 gb for the same price on a 'promotional' deal. Given their 'legitimate' claims to having the widest coverage and the fastest speed it will be pretty tough for Optus and Vodafone to compete with given both those companies current retail and wholesale pricing. It seems highly likely, even if there is a change of Federal Government at the next election that Telstra will continue to place more emphasis on mobile telephony (if that is in fact possible) and especially on mobile broadband from now to any 'denouement' of just what the 'NBN2' will turn out to be. The obvious advantage of mobile broadband in several major market sectors could continue to be leveraged by Telstra to the huge disadvantage of 'NBN2'....possibly terminal disadvantage. If, as seems likely, 5 gb at $20 - $30 per month with no need for a PSTN line will become readily available in the not too distant future then the take up of MBB as a replacement for ADSL will undoubtedly increase at the lower end of the usage scale. A rough estimate of our own customer usage indicates that over 10% of our residential data users are wireless subscribers who increasingly discontinue their PSTN services. If that percentage increases, for all ISPs, then it would significantly change the current market demographics. It is ppointless to aver, as so many ignorant people do, that "wireless will never replace wire line" - the unambivalent fact is that it has done and continues to do so in the market sectors where it has happened and is happening. How big those market sectors may be is not known to me but you don't have to speculate too wildly to say that it is likely to be some 30% or greater than the the current total ADSL market. Whatever happens over the coming year, I would put money on a quickening of mobile broadband replacing ADSL as well as a quickening of usage of data applications on telephone hand sets that used to be solely on ADSL services. Who will supply such mobile broadband services is much tougher to answer. If I was an Optus or Vodafone mobile broadband product manager I would be extremely uneasy.An Exetel mobile broadband product manager would probably be even less easy as they contemplate the future. I don't know whether Exetel can find a way of increasing our, profitable, provision of mobile broadband services but if we can't then we will not invest more money in trying to do that. Copyright © Exetel Pty Ltd 2011
Saturday, October 8. 2011A Quiet Week.....John Linton .....school holidays are always a 'dampening' influence but, even allowing for that, it was quieter than expected this 'week'. Perhaps the very poor business conditions in NSW, Queensland and Victoria are continuing to reduce business activities generally. Certainly in the UK the overall reduction of household expenditures is making an ever greater impact on an ever wider range of businesses and, from what I can make out of my reading of the French and German language financial news media the same is occurring in both those countries (particularly France. I was quite surprised how a week in France lifted my French reading comprehension and also vocabulary - though it did nothing about my atrocious French accent so I remained reluctant to attempt to vocalise it). We did make some progress in moving on to the next stage of residential support and made good progress in developing the new control and reporting systems needed to ensure the new goal of resolving all customer problems within the first phone contact (with the exception of issues that need the involvement of the carrier). Our first few days of implementing this change are indicating that the starting point looks like being that a little over 50% of all support calls can be resolved within about 8 minutes. This indication is very rough and will be refined over the balance of October as the support managers and supervisors in Colombo get a better 'handle' on the call statistics and become more aware of the issues that need to be addressed. However we have made a start and every complex objective ever attempted requires that first step. It will be interesting to see how successful we can become in resolving 100% of support issues (that don't require carrier actions) within the first call....and how long, on average, that call becomes. We also reached some conclusions about how/if we should provide mobile telephone services to our current customers and to possible new customers over the coming year. For twelve months we have been trying to find ways of providing mobile telephone services to our current customers. A big decision in that program was moving from Vodafone (our supplier for the first seven years of our existence) to Optus and then going through the process of 'migrating' some 5,000 customers from Vodafone to Optus. Over a twelve month period we managed to migrate the majority of the Vodafone users to our new Optus plans and in the process more than double the total number of Exetel ADSL users who also used Exetel as a mobile supplier. On the surface a relatively successful 'program' - apart from one minor thing - the business is only profitable because Optus pays such large 'commissions'. That is not a sustainable way of operating a business and it makes no sense to only obtain customers by showering them with Optus' money. So we will end the far too generous Optus promotion program and replace it with something that makes financial common sense. Clarissa and Clare go to Colombo on Sunday to begin a two week training school for 16 out bound sales reps to begin the transition from selling small business services to medium business services. They have trained the first four Colombo based reps by bringing them to Sydney two at a time and will now accelerate this training program by teaching more people at a time as well as ensuring that the training previously done in North Sydney is working out as planned. Assuming this program continues to be successful we will reach our 'establishment' objectives of having a 64 person business sales force before the end on the 2012 calendar year - assuming that we continue to be successful with this three year program....there are many, many obstacles along this complex path. So, as with most 'four day weeks', they are over before they have begun. Copyright © Exetel Pty Ltd 2011
Friday, October 7. 2011An Information Dissemination ExplosionJohn Linton Steve attended the NTT annual 'state of communications' seminar in Tokyo this week on his way back from a review of operations in Colombo. It provides one of the world's largest telecommunications company's views of what is going on in our industry and, sometimes, some interesting insights from other attendees. There were many interesting things in Steve's trip summary but the overwhelming point was the huge surge in IP usage over the past three years in both fixed line and mobile services - some 400%+ growth over that time. The other point was the 'closing of the gap' between IP used for mobile services and that used for fixed 'wire' services. Over the past month Exetel's own use of IP transit passed the 9 gbps level for the first time - a notable mile stone of itself having passed 8 gbps only a 'heart beat ago'. If you look at the MRTG reports in the Exetel User Facilities you can see how IP usage has increased over the past 12 months - a continuously steepening curve with the current 'limit' of 10 gbps likely to be exceeded some time in the new calendar year if growth continues at the current rate. The recent growth has surprised us (and it appears to have surprised more than us) and I have yet to read in any media as to why this has and is occurring. Steve's notes did not contain much in the way of an explanation from NTT as to why this should be the case. It is the time of year when we look at the IP providers to determine what we might do when our current IP contracts reach their annual review points in March next year. We make a practice of making an in principle decision about whether or not to change one or more of our three providers before the end of December because if we do decide to change it takes around three months to make the necessary arrangements...new connectivity circuits at the current 10 gbps level are not quick to install. First pass, without trying very hard, indicates that pure IP costs have fallen significantly since we 'negotiated' our last contracts which simply follows a long established pattern going back in our experience to 1995. What any final price might be is not possible to estimate at the moment but it will be considerably less than we currently pay. ...which is just as well because we now need to plan to deploy double the capacity we currently have in place and maybe more than treble before the end of the next calendar year. One of the significant changes that has, at least partially, mitigated the cost to the end user of all this extra usage is that well over a third of the IP used by our residential internet customers is delivered via one or other of the caching engines we deploy (Akamai, Google, Pipe and several smaller resources). The growth in cache usage by our customers has been surprising over the past three years and without it we would have struggled to fund the provision of our residential services. However the current 1 gbps per caching cluster is now proving to be a barrier which we need to address with Akamai, Google etc. Doubtless there is a solution which we will need to find over the coming months. It would be interesting to find an 'authentic' view on how future use of IP will develop over the coming two years. Copyright © Exetel Pty Ltd 2011 Thursday, October 6. 2011Perhaps The Sky Is Really Falling......John Linton ......but I've been too busy to notice? There are so many negative aspects of commercial life at the moment it is becoming more difficult to maintain sensible perspectives about many of the major operations and plans for new operations that are currently occupying my, and other Exetel people's, time. Let me say that I do not believe a word printed in the financial media and I never listen to radio or watch TV financial news because, at the end of the day, anyone who actually could understand anything real about finance is making money using their knowledge not printing it/speaking it for free on public media. However the torrents of uninformed, almost entirely negative, opinions that wash over every business conversation I seem to become involved with since I have returned from holidays is becoming unsettling. It's as if there is no 'good news' at all. Announcements (as opposed to pronouncements, like this are the real concern: Perhaps now the football is over, and was over for many team's supporters/followers some weeks ago, 'financial news' has been used to fill the conversational voids - there is only so much speculation on the team's prospects for next season that can be done at this time. I have no other explanation as to why so many totally uninformed people I have spoken with lately seem to think they have a valid opinion on what will happen to the world's finances generally, Australia's in particular and our industry's in detail. But if the people I have spoken to over the last ten days are right then everything is about to fall apart...and probably stay that way for the foreseeable future. Personally I don't see that immediately happening in the very few/limited areas of commerce that Exetel is involved in but the constant deluge of negativity is beginning to 'fray my nerves'....and that's after only ending my holiday only a few days ago. There is no doubt that very significant changes began to happen in our industry from the time Krudd began to meddle in the industry in an attempt to bolster the chances of replacing the Howard government. This was either the trigger, or at least part of it, for Telstra to make massive changes to the way it does business - essentially to eliminate wholesaling services and to prepare to re-capture its eroding monopoly. This 'seismic' change has been making its way through various aspects of the communications industry for the past few years destroying many of the previous methods of doing business and ensuring that doing any sort of business became more difficult for everyone - including Telstra. While I think it's pretty clear how this will turn out to be in three years time, perhaps a little longer, it is much, much harder to see what will happen quarter by quarter between now and then. This is neither a good nor a bad thing - if anything it's simply a cyclical thing which is easy to say but very difficult to 'live through'. We had rough years in FY2009, FY2010 and again in FY2011 - but survived them intact and having made some good progress towards the major changes to Exetel that we have been pursuing for almost three years now. The first three months of the new year turned out slightly above target and the acceleration of our corporate growth has continued. Our ambitious plans are on target, admittedly with a huge, and increasing, amount of work to be done every day into the wild blue yonder but that is all positive. Of course we have huge challenges to overcome but then any business that plans to grow will always face huge challenges - particularly in financially challenging times. I think the most sensible thing now is to stop talking with people who express negative views based on too little knowledge. It proved to be a sensible antidote to Chicken Little. Copyright © Exetel Pty Ltd 2011
Wednesday, October 5. 2011The Christmas Quarter......John Linton ....already five days old. Although it is still 'September' school holidays (at least it is in NSW) the first days of the new quarter are already lost to a weekend, a NSW public holiday and then the four day weekend combined with a public holiday. I saw Christmas decorations in one of our local shops yesterday and leave forms for December/January dates will shortly appear no doubt. So many people seem to run their lives in anticipation of some future event they almost seem to verge on 'wishing your life away' a grandmother used to comment on one or other of my sisters sillier statements when we were very young. I always enjoy October and November as, since I first came to Australia and worked in a 'business sales organisation' (National Cash Register that became NCR) because they were two "sales" months for that world wide company which meant double commissions and bonuses as well as some really nice additional sales prizes. Miraculously sales seem to double over night, everyone made big bonuses and there were almost constant celebrations. I don't know why these two months were the best sales months of the year, every year, at NCR but when I subsequently moved on to IBM and then other companies it has always been the same. "Everybody" knows that the four best 'sales' month of the year are May/June and October/November for 'capital goods' in Australia. Why that may be so is not known to me and although I have heard many theories over the years I really think it is simply that a commercial company some time between the two major wars of the 20th Century (perhaps before that) "made it so" and momentum kept building year after year and decade after decade. So the next 12 weeks (counting the one that's half over) are generally regarded as the 'run up to Christmas' by a surprising number of people. The office party seemingly takes more planning than an Olympic games (and that excludes what each person will wear) and what time is left from that is devoted to either planning a summer vacation or, having planned it, discussing why various other options and alternatives were not selected in preference to the settled/about to be unsettled itinerary. Perhaps I am exaggerating a little but then I have left out the Melbourne Cup planning and activities which will serve to correct any time inflation I may have imputed. Unfortunately 'real' business doesn't have time for these activities as they tend to get in the way of achieving even the basics demanded by most commercial undertakings in difficult financial times - and the current times are very definitely becoming financially difficult according to the financial media I read. Perhaps it will all blow over and Australia's "special" place in the world will protect each Australian from the vicissitudes currently being visited on so many other of the world's denizens (I hesitated to use the word 'citizen' because it connotes attitudes and actions that seem very foreign to most people in 2011). I am of the opinion that this may not be a very merry Christmas for all sorts of people whom you would never expect to be 'visited by hard times'. A little bird told me yesterday that the unemployment queue may soon be graced by one of the very highest in this land of OZ together with several of her fellow trough snouters with a cascade of other less fortunate people rapidly joining them before ever a note of midnight mass is heard. Copyright © Exetel Pty Ltd 2011
Tuesday, October 4. 2011Internet Usage In 2011......John Linton ....seems to be different to previous years. One thing that seemed anomalous in the latest ABS figures was the huge jump reported in average usage per customer over the past 12 months. While I very much doubt that the figures provided by any of the ISPs (except Exetel) are particularly accurate I did wonder what the reported huge, getting on for 100%, increase over the past 12 months actually meant - assuming it was in any way accurate. Did it simply mean that the average internet user was just ramping up their daily usage? That is a possibility but what changed over the past twelve months to make such a huge difference? Is it just that the majority of ISPs (including Telstra Retail) have inflated their download allowance so much over the last twelve months that a relatively small proportion of end users are encouraged to download so much more that it distorts the 'average' figure? It would be very useful to be able to understand the download bases of any customer base and track it more forensically than at least we do. We have always used relatively crude analyses of usage by customer and don't understand any of the 'whys and wherefores' of usage at all beyond percentage bands of usage across the whole customer base. What we do know, but unlike what the ABS statistics seem to show, is that all of the download growth is within the top 10 - 15% of the customer base with the bottom 85% still downloading at the rates they did three years ago. It is quite hard to understand why this would be the case and it should be changing in line with the facilities that are available. Why this isn't yet the case can be surmised but not proven. In stark contrast to residential services, business services downloads do not seem to grow at all. Most business services provided by Exetel have unlimited or very high included download allowances and the trend in our business sales is to sell higher and higher speed connections - 100mbps is becoming quite 'common' as a business service - but the 'average usage' per customer per month remains where it was more than two years ago. Perhaps this will begin to change over the coming year or so but, right now, there is absolutely no indication that will happen. Although the cost of pure IP has fallen significantly over the past two years and, as far as I can see from early indications in the 'negotiating season, is likely to continue to fall, the major 'saviour' for the increased residential usage is the caching provided by Google, Akamai, Pipe and other peering points which is now approaching almost 50% of total IP bandwidth presented to customers. The cost of this bandwidth is sub $10.00 per mbps compared to 2 to 3 times that for pure IP. As the pure IP price continues to fall so do the peering costs which has lead to an overall drop of almost stair step proportions over the past 18 - 24 months. Interestingly enough (despite MS and other major software caching) business users don't seem to use the cache as much as residential users). The question that we are attempting to deal with is what happens if the 'average' residential user (at least as described in the ABS statistics) doubles their usage over the coming year. An indication of why that might be an issue was Internode's statement that they were having to raise some plan prices because their customers had begun to use "all of their allocated allowances" It sounded wrong but you understand what was meant. Is that happening to 'more aggressive' offerings from other providers? The next two ABS reports might be quite interesting. Copyright © Exetel Pty Ltd 2011 Monday, October 3. 2011All Of Life's A Circle.....John Linton ....sunrise and sundown......one of Harry Chapin's less memorable songs from the day. I noticed when Annette and I went out for a quiet lunch yesterday that there was a very high tide - I assume a Spring tide which we have seen over the years but it is yet another reminder that a year has elapsed since we last remarked on it. Much of business (perhaps according to Harry - much of life) consists of ebbs and flows with businesses reaching peaks from which they fall away over various time frames.There are a few exceptions over time but they are, obviously, the exceptions with the overwhelming majority of commercial enterprises fading often before they have bloomed to use yet another, not very accurate, metaphor. One of the things I often remark on when I take a holiday in the UK are the number of 'shops' you come across that are still doing the same things they did centuries ago and surprisingly often it at least appears that the same 'family' continues to operate the business. The famous examples are Hatchards or Fortnum and Masons in London or even Crocket and Jones where I got my first 'boarding school' shoes from - they have been around for 200 plus years. When we were village hopping around the Cotswolds we lost track of the number of premises that had "Since 1635" type dates on their lintels and, of course, the number of inns and churches that dated back to the 1200s were too numerous to begin to keep track of. Perhaps the provision of spiritual inspiration, hunger sating and thirst quenching services contains the essence of longevity based on basic human needs and, in the case of villages, limited or no competition and that explains why there is so little 'turnover' over the centuries. When I read the latest ABS figures I was struck by the apparent contrast (perhaps because it had made such a recent impression) between what I had been experiencing on holdays and what I live my Australian business live within. With the sole exception of Telstra/Telecom/GPO no other organisation has been even vaguely associated with providing telecommunications services for more than the proverbial five minutes. While that is not surprising (how could it be otherwise?) it does mean that (with the possible exception of Optus and Vodafone) none of the current purveyors of communications services in Australia has any 'stake' or even any real reason to be in the communications businesses....and certainly no reason to stay in them. I am not sure it matters in the 21st century CE (I wonder if it is now offensive to various people in Australia to date everything from a religious event that they are not part of?) about corporate longevity but I can't help wondering about it being a tiny part of it. In the event that Labor does get to recreate the original GPO in Australia what will really happen? Does anyone know? Does anyone actually remember what Australian communications was like (and cost) before the Optus license was granted? Does anyone relate to the way a bunch of venal political party hacks have run the Australian military for their personal enrichment since Federation being a mirror for the latest bulging bribery NBN2 trough? Does anyone care? Apparently not. Copyright © Exetel Pty Ltd 2011 Sunday, October 2. 2011'NBN2' Milestone?John Linton The Cat's did in fact "c'arn'a" yesterday and a third premiership in five years is a more than remarkable achievement - so a truly great day. It is also a truly miserable long weekend Sunday in this part of Sydney pouring down with rain and bitterly cold and I had forgotten (not remembered) that it was daylight saving clock adjustment today so I am feeling that the day has sped past without me doing all of the usual start of Sunday things. I suppose that means I won't have time for them now so may as well just go out to an early lunch and watch the rain stream down the windows. There seems to be an even more inordinate interest in the 'NBN2' going live yesterday than I thought was merited by a few hundred users in a few country towns moving from a free service to a chargeable service with nothing else changing either yesterday or for the forseeable future. I was interested to see the first of our NBN trialists ask us to switch off the NBN fibre service and I must find out why that was next week. Several 'journalists' contacted me via email for my comments which I provided to them via answering their questions but I can't see how they can make any sort of 'news story' out such a prosaic event. Doubtless they will do that - just as they made a story out of those infantile wankers at Internode "being the first to announce NBN pricing" as a mindless and totally stupid publicity stunt by setting the pricing way high and as I, and anyone else with a brain said at the time - they will be substantially cut before a bill is sent 'in anger' as they were just a childish foot stamping publicity stunt...difficult to slash prices you have never charged - or ever intended to charge. So where is the 'NBN2' today after four years of Labor huffing and puffing? It's absolutely nowhere as you would expect any Labor government 'project' to be. Will it survive beyond any possible change of government? I wouldn't have thought so but then I never think the Australian electorate will ever elect the crooks, scam merchants, uneducated bums and just plain lunatics that comprise the Australian Labor Party in the first place - but am forced to acknowledge that continues to happen so anything becomes possible in this apocalypse approaching world we currently live in. Is it only me that vaguely comprehends that when you will have to borrow 20 billion or so to pay for something that has no return you will have trouble finding some entity to lend to you? As predicted (at least by me and I'm pretty sure by everyone else with an IQ greater than their shoe size and two minutes reading on communications technologies) some four years ago the most expensive and most competition restricting way of providing communications services is by creating a government monopoly from the ground up thus ensuring that it is not only the most expensive and restricted way of proceeding but it will take an enormously long time in the event it is ever begun. Four plus years later what do you see?......errr....well......I mean.......absolutely nothing? Sorry, 1/10/11, you get an announcement that several hundred end users are now receiving a 'commercial service'....except they aren't at all.....they are receiving an gigantically subsidised service that cannot be replicated in to the future. Over the time between today and the result of the next election (assuming there is one this time) it doesn't seem likely that a great deal of progress will be made on "building the most significant infrastructure this country has ever seen". What seems more likely is that Telstra will continue to delay any 'sign off' on helping the 'NBN2' in any way and the 'public' (even the ones promised super fast anti-social 'gaming' and copyright theft) will begin to realise that it will all cost much more than they thought. Perhaps even a few more people will actually look at the roll out time frames and realise that 11 years was a serious under estimate.....or maybe not because the number of people who think rationally about any aspect of life is a lot less than any community needs since the world's social engineering changes that have taken place over the past 60 or so years.....the Western version of cargo cult. So having won my bet on the fearless and peerless felines yesterday I am inclined to double up that money on betting the 'NBN2' will be sold off to a commercial operator at whatever point it has reached come 2014. If I can't find a bookie I may make the book myself. Copyright © Exetel Pty Ltd 2011 |
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