John Linton's Personal Musings

John Linton

......what has been will be again, what has been done will be done again - there is nothing new under the sun.Those 3,000 year or so old words are so apt they might have been written for today's Australian telecommunications industry financial reporting periods.

The last working day of the month with nothing to be done except to see just how much icing will be added to the cake. One of the new Sri Lankan sales reps has sold nine data links so far in January and it would be great if she could get to ten in a single month....an unheard of achievement in only a fifth month on quota. We have been told that we will receive the first 1,000 mbps pure IP order today - which will also be a major milestone in that newish sector of our business. There are also two other very large corporate orders that may well come in today as well as the end of much corporate order 'surge'. Residential ADSL orders have already broken the January record by a long way as have new wire line services - so well past time to focus on February.

February always poses challenges for reasons other than it being the shortest month of the year. In the corporate business these challenges are 'state of the buyer's mind'  mostly with the hangover of uncompleted work in the previous December being caught up in January and then a hiatus inevitably seems to follow. Partly this is due to 'new thinking' engendered by the Christmas break but mainly it seems to be due to budgets and revised pans and the belief that there is up to June to make any further decisions for the financial year. In the residential businesses competitors seem to assess what went wrong with the first half of the year (for those for whom it did go wrong) over January and start various programs to make more frantic attempts to reach their full financial year targets in early February. This usually results in increased advertising together with even more esoteric 'special offers'.

One of the 'changes' we expect to see is a renewed 'marketing effort' by Telstra Retail. Over the last three months their advertising and marketing expenditures seem to have dwindled with the ratio of churn aways to churn tos moving more and more in Exetel's favour. There is also a noticeable level of Exetel customers who churned to Telstra Retail returning to Exetel after their two year contracts are up and the financial and other freebies that 'encouraged' them to churn are no longer present. That is particularly satisfying to us as it indicates that Telstra doesn't have the money to continuously buy market share from a company like Exetel but it will continue to 'weaken' the higher priced ISPs.

The other changes that we expect to see in the very near future are to Optus own internet offerings and what they offer to their larger ISP/mobile wholesale customers. From the little we can observe, Optus, together with iinet and TPG, have had less than stellar achievements over the first six months of the current financial year. It will be interesting to see what those three companies report in the half year results - I expect the entertainment value I used to get from Eftel's half yearly tissue of misdirection will be more than amply made up by reading what Optus, TPG and, especially iinet's "spokespeople" are going to regale their investors with in their half yearly dissertations.

I am looking forward to February.

Copyright © Exetel Pty Ltd 2012
ABN 350 979 865 46

John Linton

I had a pleasant weekend and residential ADSL sales were the highest they've been on any weekend for over two years which contributed to the pleasantness. It is nice having Catherine 'home' from the UK on a two week holiday and catching up with her general and IBM 'news'. My years at IBM were always interesting and I've kept up with that company's progress ever since I left via people who stayed there much longer than my almost ten years and then via the extensive media coverage and shareholder news letters and annual reports - I never sold the shares I accumulated while being an IBM employee....easily the best investment I ever made. January will finish up tomorrow as the best start to any year that Exetel has been in business which also very pleasant.....we have already exceeded almost all targets - some by a very long way.

February is a difficult month in some ways - mainly by being the shortest month of any in the year though there will be a '29th' this year. We have a large 'prospect list at the moment and our new SL based corporate sales force will begin to contribute to corporate sales more strongly as February develops. We are also in the final testing stages of the new 'SME/Soho' marketing program that should be completed by the end of this week. We will then evaluate what we need to do to address that, theoretical, 2 million user marketplace and then put in place the program to do it. We have put in place the sales people who will commence this program and will develop the training processes to assist them address this new, for Exetel, set of market places.

Our main engineering objectives in February are to prepare for a change of major IP provider and to begin the year long process of the next upgrade to our core network. We have used Optus to provide the majority of or IP connectivity for virtually the whole of Exetel's 'existence'. However, for whatever reasons, Optus' pricing, which we have always been happy enough to pay a premium for, has now become far too expensive compared to other IP sources and come 31st March we need to replace all of the Optus links with something different. We will retain the Verizon and NTT links for the time being as we can never base the core network on a single IP provider (for all the obvious reasons). So that will be a big task(s) for our engineers over the coming two months and one that I am very concerned about.

Our other key February 'task' is to put in place a corporate/business sales program in Tasmania and New Zealand. We have had a PoP in Hobart for over four years now which we originally justified on the basis of the 'NBN2' project that we, at the time, believed would have to have presented a competitor to Telstra and we needed to be part of that development. In that respect it has been a total waste of money and had it not been for a couple of very large corporate sales we could not have continued to justify the costs of continuing to operate in Tasmania. So we need to significantly grow our revenue from Tasmania, if that is possible, and the only way we can do that is via business customers. We need to do the same in New Zealand (for similar reasons) - with a little more urgency because we need to establish 'new country guidelines' to allow us to open an office in the UK some time later this year and, if we can make a success of that, an office in Chicago late 2012 or, more probably, first quarter 2013. Many 'ifs' attached to those objectives....

....so a very busy and demanding month ahead.

Copyright © Exetel Pty Ltd 2012
ABN 350 979 865 46

John Linton

......now thats a unique scenario - end of life marketplaces getting saturated....must be a real and 'sudden' surprise to the brilliantly informed people providing internet and other services.

I read some of the submissions on whining about Telstra to the ACCC yesterday to see if there was any general information that could be gathered - there wasn't. I found TPG's submission of more interest than the others:

http://www.accc.gov.au/content/item.phtml?itemId=1028701&nodeId=b09d738f5016447f2a3d999591b4b494&fn=TPG%20-%20Public%20submission%2025%20January%202012.pdf

if only for what the figures they cared to include indicated about marketplaces in general and what sort of scenarios TPG may now be facing. You can read the quite brief report to make up your own mind as to what any of the comments/numbers may or may or may not mean but what they meant to me was that the people at TPG who compiled the response were either being mischievous or running such a tight 'misinformation agenda' they were being downright illogical.

By conforming to the line run by the few other ISP's submissions I bothered to read (Telstra must give 'unfettered' access via whatever infrastructure it possesses at the lowest possible price to every end user irrespective of where they are located) they make total fools of themselves and attempt to fight a 'battle' they, or any other ISP, hasn't any chance of winning....and, if you are a rational person, neither should they have any chance of 'winning'. I am no fan of Telstra's business practices (I think I may may have made the odd comment that would give that indication over the years) but I definitely see no requirement to allow competitors to build DSLAMs where it is easy to make money and then bitch about Telstra's practices where that isn't the case. I have no firm figures but I would think that having access to more than 80% of any market and being "excluded" from the 20% where you choose not to compete is hardly a draconian burden on any commercial enterprise.

However, I am sure the ACCC will produce some edict on what will happen and that will be that - from what I read in the various submissions nothing has been submitted of any insight or value. My understanding of the submissions is that the ISPs who made them are deeply concerned that they have already reached a point where not only are they no longer growing but that Telstra has taken back some percentage of their current ADSL customers and they are actually shrinking (in TPG's case this is not yet the situation but it appears to be approaching). The other point, based on observing ADSL pricing to the various ADSL marketplaces, is that the financial models operated by all the submitting ISPs are not working as well as the used to in a set of 'saturated' marketplaces. So - that's commercial life over the cycle....get used to it.....adapt or die.

Perhaps its the current state of nannyism in Australian society in general - always be looking for a 'government' hand out that now applies to commercial life as every other part of 'society'. Personally, I think trying to further 'regulate' ADSL in its post sunset years is as pointless as trying to get a better deck chair on the Titanic after 11.40 pm on 14th April 1912.....but maybe it's a sign of the increasing desperation among the remaining residential ADSL providers.

Copyright © Exetel Pty Ltd 2012
ABN 350 979 865 46

John Linton

.....all monthly targets exceeded or far exceeded and still much to come over the last two 'working days' next week......if the current forecasts are to be believed. So a very successful month in terms of new sales and a really satisfying start to the new calendar year and the last sx months of the financial year.

We also moved in to our new floor space in Sri Lanka over the Australia Day holiday with all SL based sales personnel moving to the dizzying heights on Level 35 of the East Tower of the WTC (our 'old' floor space is on Level 25 of the West Tower). It is 'just in time' planning as we have five new engineers starting next week and when I was in Sri Lanka earlier this month we were down to one or two spare desks on Level 25 and that may have been because people were on leave. Despite starting five new sales trainees and three new engineers in Australia over the past few weeks we now have twice as many people in Colombo as we do in North Sydney. Exetel in Sri Lanka has come a long way since we hired two work from home support email ticket answerers almost five years ago to the day.

We have some quite frightening targets to achieve over the coming months of 2012 and it will be the biggest challenge of Exetel's 'short life' to complete the transition of the company from a supplier of telecommunications services to residential users to one with the majority of its revenue coming from business and corporate users. We have made significant progress in deploying ever more redundant and greater capacity infrastructure to deliver ever larger, and far more, business and corporate customer connections. We have an ever growing list of customers who now use Exetel for 100, 200 and now 300 mbps pure IP services and are getting closer to signing our first 1 gbps pure IP service. It wasn't that long ago when 1 gbps was more bandwidth than Exetel used to provide its then tens of thousands of residential customers with ADSL connections.

Our major challenge (among so many) is to get Exetel better known around Australia. We have never done any real advertising apart from 'playing' with the concepts every year or so and will probably never do any advertising in the future. We do need to get more people to know about Exetel than we have accomplished over the first eight years of our existence. As with every major 'challenge' in business life there are seldom, maybe never, "new ways of doing things". Perhaps all 'the new things' are done by people who have never done anything before so they actually think they are doing something new? So, either from having no 'new' ideas or because one idea (far from new) that I have used in the past on four occasions to rapidly build companies from the ground up to something relatively substantial (once with Exetel, once in the UK and twice in previous 'lives' in Australia) has worked very effectively we will use that as the basis for developing Exetel as a much better known presence around Australia.    

Perhaps there is nothing new in selling products or services to widely spread market places?

Copyright © Exetel Pty Ltd 2012
ABN 350 979 865 46

John Linton

We had a very pleasant Australia Day, getting up late and then going to a pleasant restaurant for a family lunch - our small family was strengthened by Catherine's return from the UK for a brief holiday and weakened by Andrew's absence in Japan on a ski-ing plus other things holiday with his friends from school days. The RAAF was courteous enough to perform one of their fly by and zoom ups in full view of our table and the food and wine were very enjoyable. And that was as 'patriotic' as we got - probably like many other people who inhabit this country.

I have been very grateful to 'Australia' since I arrived here before my 18th birthday totally on my own (not knowing a living, or dead, soul). My gratitude was for the teenage girls on Maroubra beach, the constant sun shine and the large and amazingly diverse number of people who were kind to me as I adjusted from being a spoiled brat from an elitist English public school to something that eventually resembled  a contributing member of the areas in which I lived - that took a while. Being a sole migrant at an incredibly young age is not the easiest way of completing your teen age years but it was made possible by a benign country and many very kind Australians. I don't "Love my country" in that nauseatingly expressed American way - firstly because even after all these decades it can never be "my" country....despite my constant traveling and almost 50 years of living in Australia - England, that part of it past Junction 18 on the M4 to before you hit the Devon border will always be where my 'body and soul' yearns to be. But Australia has been, since those first days of total bewilderment, always the country I have recognised and understood I owe a great deal to.

For a male, I grew up at quite a young physical age - for me it was a little after my 40th birthday. I attribute that early 'maturing' to  a variety of positive and negative factors and experiences which aren't worth enumerating but they coincided with my decision that I should stop working for large multi-national companies whose only interest was in taking as much money out of the country as possible and try to apply my very limited array of knowledge and abilities to 'giving something back' to the country that had been so kind to me. So I began the process of trying to earn as much money as I had been used to receiving from large US employers and one Japanese employer but doing something that would make a positive contribution. I almost succeeded at least twice in making some ongoing positive contributions to the people who bought the products and services I was instrumental in proving before my hubris and incompetence caused those ventures to fail. I wish I could say I learned from those first mistakes but I don't think I did - age eventually did that.

Some eight years ago I decided to try to return some value to all the kindness and good fortune I have benefited from over the previous 40ish years and, with Steve and Annette, I became part of creating Exetel.  This was/is to be my last attempt at delivering some value to the country that has been so kind to me for almost five decades - before what remains of what  I have been told was once a first class mind turns to mush - if it will in fact last that long. If this doesn't work out well enough to achieve that minor goal then at least I did try to do something "for Australia" rather than simply accept inordinate sums of money from international paymasters to financially rape and loot the Australian people (which I unthinkingly did for many years).

So - I hope everyone had a happy Australia day - perhaps we could all make some sort of contribution to making this country as generous and helpful to new comers as it was to me almost 50 years ago....who knows - when they eventually stop speaking with their funny accent and eating their odd food, if they ever do, they might even make a contribution to making the country even better than they found it...if not, then I am pretty sure their children will.....or perhaps their grand children.

Copyright © Exetel Pty Ltd 2012
ABN 350 979 865 46

.

John Linton

Two of our new Australian based corporate reps made their first sales yesterday on the 7th day of their employment and the third of the five 'newbies' in North Sydney will receive her first two orders on Friday (today being a public holiday) having been told the paperwork is in the process of being completed. The Exetel record for a new hire getting out of probation (making ten sales) is a little short of two months and the current intake shows very positive signs of giving that incredible achievement a real shake. In Sri Lanka the fourth rep to get off probation has set a new record for the number of sales made in a month by an SL based sales person and all but one of the 18 new hires since mid December has made at least one sale in the most difficult time of the year. With three working days to go corporate sales may well reach close to 150% of a very demanding January quota.

We have a very long way to go to 'convert' Exetel from being a company that mainly derives its revenues from providing residential ADSL services to a company that overwhelmingly derives its revenues from providing business and corporate services but we are now making faster progress towards that objective. More than half of Exetel's total personnel will be directly involved with corporate sales and support before the end of February 2012. This will have been accomplished over almost exactly three years from the start of our 'program' to transform Exetels 'business model'. The coming fourth year is the time where we plan for business/corporate revenues to become 50% of Exetel's total revenues - a very ambitious target and a very dangerous assumption as we become 'more visible' to the competitors from whom we are taking more than 100 of their customers a month - even in December and January which barely have two weeks of real 'selling time' in each of them.

I am, absolutely not, taking ANYTHING for granted but, right now, but I can see that we are far more likely to succeed in our ambitions in building a business/corporate presence in the Australian market places than at any previous time in my commercial life and, without remotely overstating the cases, I have been part of some pretty spectacular successes in such 'ventures' over the years. I can see now, as in retrospect was the case in the previous three ventures I have participated in, that success came from training, from the ground up, a dedicated sales force that was complemented by an highly supportive, and very good, engineering group. Growing Exetel up to date has been very, very difficult - almost too hard on more than one occasion over the past few years. Right now, for the first time in a long time, it is beginning to feel that it has been worth all the back breaking work and harsh experiences.

Australia Day is an appropriate day to consider one of Jack Kennedy's more memorable lines. While the urgers and nincompoops (who but Juliar Faustus could come up with a vastly overpaid expatriate movie actor as Australian of the year?) do nothing but leech off the work of others, real Australians make a real difference to this country and its future. So, perhaps the best way of 'celebrating' Australia day is to spare a small amount of time (in a completely non-jingoistic way) to contemplate "what you can do for your country".....by making the most of whatever abilities God and a non contributory heredity has blessed you with.

I wonder if anyone gives a toss any more?

Copyright © Exetel Pty Ltd 2012
ABN 350 979 865 46

John Linton

......a recurring challenge that determines the level of success any commercial company is capable of attaining.

Stating the obvious? Undoubtedly. Does stating the obvious mean that every company that recruits new people does the absolutely best possible job of ensuring that the people it hires are the best possible it can attract for any specific position? Somehow I very much doubt that is the case. I read this article earlier this morning:

http://online.wsj.com/article/SB10001424052970204624204577178941034941330.html?mod=WSJAsia_hpp_MIDDLE_Video_Top

which didn't surprise me but did remind me how careful any company, especially smaller ones, needs to be in constantly refining their methods of attracting and selecting new people and how every company, irrespective of size, seldom finds the best ways of carrying out  this "obvious" key function. So, if it stating the obvious, why do large companies need to try and do this job via software and smaller companies do it via very senior personnel (who are seldom good choices to select people) for the most part?

Exetel, being by no measure a 'large' company does continuously recruit and over the past year and especially over the coming twelve months will possibly recruit more people than we currently employ if our plans to double our personnel come to fruition. So recruiting really good people on an ongoing basis is very high on our methodology agenda. We would never use something as crude as software (although we are 'major fans' of automating everything possible) to do any part of the job. Nor would we use any senior person (actually any person) who does not have the time to do the recruiting in the time frame and detail that is required. We use much simpler methods that, over a very long time now, have proven to be more successful than any other methods.

We do the obvious. We establish a personal and business experience profile for each position we are looking to hire for and, using a human being, we match those criteria against the resumes we receive. My personal experience over several decades is that a 100% match of the resume to the established criteria will produce a 100% successful candidate. Anything else might not. It takes something less than 60 seconds to read a resume looking for the criteria matches. Sometimes no required percentage of matches can be found - so an hour or so has been 'wasted' in 'resume reading'. Not exactly an onerous burden. If you get lucky and find 100% matches for the number of positions you wish to hire then you only need to continue to on the process to find 'back ups' for those 'candidates' who although they have applied for the position you are advertising will find something that suits them better. Simple, quick and 100% effective.

Despite what may be claimed by other people when addressing this overwhelmingly important issue the resume tells a 'recruiter' everything they need to know about any applicant. Sure, some applicants don't know how to write a sensible resume and will not be considered even though if they had written a better summary of their back ground and experience they would have been - but that is not something a 'recruiter' can fix. How many candidates who match the hiring criteria will not 'work out'? Virtually none and those that don't will not work out for reasons that are beyond any hiring processes ability to determine. So there is no need to read that many resumes - if you are looking for x number of people then 1.5x will provide you with a choice of new hires and allow for those who will decide not to accept the job having had the interview.

This process has always worked for me.

Copyright © Exetel Pty Ltd 2012
ABN 350 979 865 46

John Linton

......in any previous January and the Telstra induced fog that has suffused so much of the past three plus years shows some signs of lifting.

Yesterday was a pleasant enough day and, like most days this January, sales and order results were much better than expected. We had the best January residential ADSL order day 'ever' which adds to the other very strong January 2012 days pushing residential ADSL sleas to well over 250% more than last January with the increase trend line  continually growing stronger. Churns from Internode have now surpassed those from TPG making Internode the second highest source of residential churns behind Telstra residential....something you would never have expected to see prior to the sell out and plan price increases. VoIP sales have also been much stronger than in any previous month which is strategically more important than residential ADSL sales and indicates something or another that needs to be better understood.....actually understood at all.

We are also about to sign, I hope I haven't jinxed them by saying that, some very large corporate accounts and corporate sales for January have already comfortably exceeded those made in January 2011. We will re-look at our business and corporate pricing over the few remaining January days to ensure it is as sensible as we can make it but at the moment it seems better, on a like for like basis, than any competitors and our methods of adding 'incentives' are working well. The level of 'interest' in our business/corporate services has increased markedly over the past few months, almost in direct proportion to our addition of new sales personnel, and we will now add more 'promotional tools' to our direct contact methods from mid February after we finish testing two new ideas. One of those ideas 'solved' the problem of how to contact the alleged 2,000,000 small business customers in sch a unique and 'different' way it makes you very happy to be in the problem solving business.

In a time where so many ISPs (including Exetel) are really struggling to add any new ADSL customers at all it seems quite strange to contemplate serious plans to attempt to add 100,000 new ADSL users over the coming 24 months....maybe I've become totally delusional. However as I completed the 'arithmetic' (following finding the solution to contacting the alleged 2 million small business users) it didn't/doesn't seem too outrageous to aim at selling 5% of the total small business market given that we could provide the best solution, by a considerable margin, than those provided by any other competitor...and that isn't wishful thinking - it is solid point by point comparison. So we will continue testing over the next week or so to determine what offering will be optimal in appeal, at this stage, and how much more appealing it can be made - progressively over the coming months.

Perhaps its just the 'novelty' of planning positive things rather than just planning 'defensively' that is lifting the mood that has become part of 'business life' for a very long time now? Maybe that is just my minds 'rebellion' against so much dullness inflicted on the industry by Telstra's mega dollar 'promotional' budgets and their crushing ambitions? Perhaps it's all just wishful thinking? Whatever it is,or isn't, it's engendering a more pleasant set of feelings than I can remember in Januaries of the past few years.

Copyright © Exetel Pty Ltd 2012
ABN 350 979 865 46

John Linton

.....they continue out of habit with no major issue to bring them to either a revival or a conclusion.

The last 'full' week of January has begun and the 'new year' is well under way - before many commercial entities have properly returned to work. Even this week, with Australia Day turning it into a three day week for many 'working people' is still significantly affected by the Christmas Break scenarios so 'real work' will not begin in many companies until next Monday. I suppose January is our equivalent to the EU's August but never having worked anywhere but Australia I have no knowledge of other country's working habits - or lack of them. With a week or so to go, Exetel will have a very good January and that will get the new calendar year away to a very good start which is far more desirable than trying to catch up for the whole of the first quarter and beyond.

As I mentioned yesterday, we will complete whatever arrangements we can 'negotiate' in terms of revising our 'pure' IP and inter capital connectivity over the next few days to ensure we progress the development of that infrastructure before the March 31st 'dead line'. We have completed the re-structure of our supply relationship with AAPT via the partnership to develop the corporate and business sales capabilities in Colombo which got off to a 'formal start last week and is making some early progress. We now need to look at our long overdue for review relationships with Testra and Optus. We have gained very little from those relationships over the past few years and have only continued them out of 'habit' under the stresses and strains of Telstra's market assaults that left little or no time for strategic thinking let alone planning or actually doing anything about developing those key sources of services.

In Telstra's case we would never have entered in to a relationship with them in January 2004 if they behaved then as they behave today.There is simply no advantage to Exetel in dealing with their predatory practices and their stone wall supplier relationship methodologies. Our problem is that we did start dealing with them eight years ago and this relationship went past its 'honey moon period' within the first three years and is now a 'marriage' from Hell. How we arrange a suitable 'divorce' without hurting the 'children' is the only thing that keeps us in the relationship and that has become so expensive (to us) over the past few years it is reaching the intolerable stage.

If Telstra is the 'wife' then having a 'mistress' in Optus has long ago lost its  allure - on both sides. We are obviously not going to 'marry her' and 'she' long ago began to share her favours with other more likely candidates to the point where its hard to even arrange time together without the embarrassment of seeing signs around her apartment of other 'activities' that make you realise how far from that intoxicating initial  favour you have fallen. Is it possible to rekindle those first giddy experiences with either wife or mistress by actually sitting down and thrashing out where it all went wrong? For the sake of the kids I suppose we have to try - but I'm not encouraged by the chances of success.

My personal problem is that I am too old, perhaps too cynical, to believe anything either 'wife' or 'mistress' have to say - and I'm pretty sure that belief is mutual. Under such circumstances, short of another pregnancy, it seems to be something for the lawyers.

Copyright © Exetel Pty Ltd 2012
ABN 350 979 865 46

John Linton

....was once the major cost of providing an internet service to a residential, or a business, user.

Back in the day (1995) when internet was delivered to residential and 'business' users over 28.8 kbps modems the cost of a 2 mbps link to the USA was around $US900,000 per mbps and comapanies like OzeMail charged up to $A10.00 per megabyte for downloads. Today current offers vary between $A15.00 and $A20.00 per mbps - one of the greatest improvements in industrial history - even if you remove the incredible price gouging applied to international telecommunications services throughout the past 40 years. Add to that the fact that even a company of Exetel's size delivers over one third of total end user IP though caching (Google, Akamai, Various peering points) the cost of delivering data to an end user is now lower than it has ever been.

It would be much lower than it is today if it weren't for the cost of 'back haul' - the cost paid by wholesale customers of the large carriers to deliver traffic from the end user to the ISP's carrier interconnect point....that cost varies between twice the cost of the IP traffic to four times the cost depending on which carrier is providing the 'back haul'. By far the highest cost of delivering traffic to a residential end user is the carrier's back haul charges followed by their 'port' charges. Many ISPs have addressed this problem by building their own DSLAM network which, courtesy of the ACCC, have allowed back haul and port costs to be reduced which, allied to the dramatic fall in IP costs should have allowed much lower prices for residential ADSL services to be offered than has proven to be the case....it isn't the case because of all the obvious reasons (Telstra less 10% remains the pricing mantra for the ISP industry in Australia).

Exetel will shortly make a decision on IP suppliers for the coming 12 month period starting April 1st 2012. We expect our 'pure' IP costs will fall around 50% from what they are today....we are already receiving the benefits of a continually growing percentage of IP delivery via caching which is saving us what would have been the previous costs of over 4 gbps of 'pure' IP bought from IP wholesalers. We will replace the current 'pure' IP bandwidth with 8 gbps of 'new' band width which will generate considerable monthly savings for us. However the port costs and back haul costs, particularly for our Telstra services will remain unchanged and will need to be subject to a review of whether we can continue to offer those services at their current costs going forward.

We have delayed, and then delayed again, more than once, making any decision on continuing to do business with Telstra while we tried to get some grip on when an 'NBN2' service might offer a viable replacement. Apart from the fact that 'NBN2' port costs and backhaul prices are even more expensive than Telstra's prices we were taking the optimistic view that they would at least be the same to every wholesale buyer (from Telstra's to Exetel's 'size'). That was always pretty naive, I admit, but it was the premise on which the 'NBN2' was promised. What is a Juliar promise worth? Nothing - but then I am as naive as the average person and did want to believe that particualar promise while always conceding it would not eventuate.

So, with some sort of real coverage delivery by NBNCo way in the undefined far future the decision on whether to continue a relationship with Telstra remains 'on the table'. We started a trial program yesterday to see if we could accelerate the change in 'balance' between our Optus and AAPT residential customers and our Telstra customers - we have never differentiated before - and over the next 2 - 3 months we will see if it is in fact possible to rapidly increase our Optus and AAPT residential ADSL customers as a percentage of our total residential ADSL customers. If this can be done then we could continue to 'hang on' to the Telstra relationship until the 'NBN2' becomes a viable alternative - or at least for another year while some definition is available on the future of the 'NBN2'. In the mean time the cost of back haul and port costs from Telstra make it very, very hard for a company lilke Exetel to continue to offer Telstra wholesale services and current negotiations simply, yet again, underline how difficult it is (for a company of Exetel's size) to deal with such a company.

Copyright © Exetel Pty Ltd 2012
ABN 350 979 865 46

John Linton

....a pretty good one.

We had our best new order week for residential ADSL for over a year and the best 'January' week for four years as well as all other services having excellent order weeks so whatever has changed in the various different market places continues on into a third week. That is, of course, very pleasing but not knowing what is causing it remains a source of unease as to when it is going to end - assuming it is an aberration which seems to be the only view to take right now. We also had the best ever day and week for corporate data orders in any January with the contribution from the 'new' corporate sales people in Colombo contributing to that result which is really good to see in these very early days....but that is far more easily understood - more sales people = more sales. In any event - it is much nicer to have a surprising, if inexplicable, increase in orders than to try and puzzle out the reverse.

I was invited to a very pleasant lunch yesterday with someone who 'studies' the ISP industry as part of his investment service advice business life to exchange views on what might happen over the coming year. My views are, of necessity, very 'micro' while his are by and large very 'macro' based; although they are relatively tightly focused on the various actions of iinet and TPG and the development of the 'NBN2'. It was a pleasant and useful discussion producing some new considerations and certainly gave me a much better understanding, at least financially, of what those two companies could do in the future. His understanding of what they both were trying to do in the SOHO marketplace (iinet) and the SME marketplaces (TPG) was interesting but I found difficult to comprehend.....I formed the view that if his view of what they were trying to do was correct then they would both fail in their objectives in a big way.

The fact that the residential ADSL marketplaces are at best static and, for at least some providers continually shrinking, seems to be the catalyst for renewed/new interest in "business" market places by several 'residential' ISPs. The problem that the few I have seen seem to have is that they are trying to use a residential ADSL service as a business service with the only difference being that they charge more for it and include spurious 'promises' to make it sound like something it isn't....in other words it is just a 'con'. Perhaps I am not fully informed and am not reading the 'offers' correctly? If that is the case then I obviously need a remedial English comprehension course because I don't understand what 'magic' has been used to convert a non-SLA residential service into a 99.95% up time "business service".

Exetel's business services (based on ADSL2 linked to an auto fail over wireless back up service) are making some steady progress and we will experiment with a new method of promoting some significant growth in these types of sales over the balance of January. As I have said before - finding a way to put 'our case' to the theoretical 2,000,000 soho/sme users around Australia remains the key objective for Exetel over the coming year - that and developing a service that is better than any other supplier's to those market places. If we can do that then we will be able to complete the transition we began almost three years ago. A very difficult, perhaps impossible, set of tasks....but aiming to do the impossible is a useful way of using your time.

Copyright © Exetel Pty Ltd 2012
ABN 350 979 865 46

PS: Mega-millions made by copyright thieves:

http://www.smh.com.au/it-pro/police-find-upload-mogul-in-23m-mansions-safe-room-20120120-1qa8g.html

John Linton

.......a sorry commentary on the state of today's humanity.

After the various silly statements made yesterday in the communications media and the usual chorus from the ethics bereft I thought this put it all into perspective:

http://online.wsj.com/article/SB10001424052970204616504577171060611948408.html?mod=WSJ_Tech_LEFTTopNews

The concept of the US FBI arresting, and retaining in custody, four people in New Zealand who were the employees of a company registered in Hong Kong underlines the financial magnitude of copyright theft and the criminal hunting resources that are now being employed against it. I have no idea what a "two year FBI investigation" that culminates in actions in New Zealand costs (perhaps it was one sporadically part time junior GMan who picked up the phone to the Kiwi cops) but it doesn't sound like it was anything that trivial.

Perhaps actions like this will eventually drive home the message to copyright thieves that stealing is a pernicious activity that is anti-societal and ultimately and totally wrong? But Australian society voted to have the country run by Juliar Faustus and the rest of the dross that now stands at the pinnacle of law making in this country so what does that tell you? It tells you that Australia, like all other countries on the planet, is overwhelmingly populated by chancers and criminals of every type and magnitude and the veneer of civilisation is overstretched to the point where the underlying barbarity is clearly discernible. The 'voices' of the few 'good' people in our version of society are 'drowned out' by the Australian cult of take whatever you can as long as you are pretty certain of getting away with it and do as little as possible that doesn't directly benefit them personally. Too harsh a view? Possibly - but how many people do you know constantly act differently to this type of 'Australian'?

Personally, I know very few, whereas I know a large number who this description fits like a glove. Like the EU's finances, I have no hope that anything will change for the better in the future....it is far too late. Fifty years of irresponsible Socialism, dreadful parenting and worse education here and in the EU has ensured that theft and hand outs are the basis of every country's citizens daily way of life from Rupert Murdoch types on down to the ill bred and worse educated sub teen of the lowest societal strata - all served by the worst of the worst dross in each country's apology for a parliament.

So what? The overwhelming majority of the planet's human population have no interest in the future other than what they can see benefits them individually in the shortest of short terms. There now appears, at least to me, to be no counter balance. If you've downloaded someone else's property lately then you know what I mean. If you haven't then I think your personal honesty won't make any difference to humanity's current 'decline and fall'.....there are far too many negative contributors on the planet for the FBI, or any other law enforcement agency, to remove from their pernicious practices.

Copyright © Exetel Pty Ltd 2012
ABN 350 979 865 46

John Linton

.....in the residential ADSL marketplaces.

I mentioned in the early days of January that orders for Exetel residential ADSL services were running at 2 - 3 times the volumes of the equivalent days of 2011. In those 'dog days' volumes are very low and it doesn't take much to distort those daily figures. However, 18 days in to the month daily residential ADSL orders remain at over 250% of the same period last year and yesterday we had our highest residential order day for over 12 months.

Another noticeable 'feature' of the order volume is that churn order sources are very different from previous months. We can never get precise numbers for 'churns' but the numbers we do collect are showing that the highest number of churns are from the small/very small ISPs who have overtaken both Telstra and TPG as the largest supplier of churn customers to Exetel. This has never happened before and must be indicative of something or other. Another strange statistic is that 'new' versus 'churn' orders have increased quite dramatically as a percentage over last January. January is usually a very strong month for 'new' orders as 'renters' favour this month and next to move premises and university students usually cancel their ADSL service in December and resign in late January through to early March....accounting for a seasonal disparity in 'new' versus 'churn'.

Telstra and TPG remain the largest single sources of churns to Exetel though Internode is becoming almost as large as TPG.....something you wouldn't have seen prior to their latest round of price increases and the takeover by iinet. Having said that, if you sum the churns from iinet, Westnet, Netspace and AAPT residential, that agglomeration is now reaching Telstra size and if current trends continue will exceed it in the near future. All in all the churn figures are showing different trends and different patterns to any previous month and certainly different sources. The new customer orders are also showing different patterns in terms of plan sizes. It is a confusing stream of data and is unprecedented in our experience which is something we need to sort out unless it 'settles down' in February.

We will have to develop some new analytics to try and find a coherent ordering pattern for these services which seem to have dramatically increased at a time when we have been seriously considering 'reducing the emphasis' we place on marketing and supporting residential ADSL services. It may, of course, just be a temporary aberration and order volumes will begin to return to 'normal' as the year begins to resume 'normal service'. Like so much of the past three plus years - it is very different to what it used to be in the 'good old days'. Perhaps this sort of anomaly will become more usual as the current changes in the suppliers to the residential ADSL marketplaces work their way through the 'system'. If the number of providers continues to become less you would expect the permutations to reduce.....at least I would have thought that would be the case.

Copyright © Exetel Pty Ltd 2012
ABN 350 979 865 46

PS: I am confused. How is an attempt to stop theft deemed to be "censorship":

http://online.wsj.com/article/SB10001424052970204555904577167873208040252.html?mod=WSJ_Tech_INTL_LSMODULE

John Linton

....it's a beautiful summer morning without a cloud in the sky and no soaking humidity.

We got back around 9 pm last night to an almost Changi like reception - no-one ahead of us at immigration, bags off very quickly, waved straight out through a queueless customs and on the road home within 25 minutes of landing....maybe Australia has magicaly changed while we were away? Then I read this:

http://www.zdnet.com.au/nbn-and-tech-upgrades-critical-to-oz-report-339329847.htm

which has to rank as the most nonsensical BS yet published on the 'NBN2'. Heather Ridout is an estimable lady, good mother, devoted wife and bright enough to negotiate her way into a career that is both demanding and difficult and the only problem I have ever had with her (apart from her coziness with the current illegitimate federal government dross) is that her chauffeur parks while waiting to drive her to her office in ways that needlessly constrict the very narrow street we both live in.

To equate a giant mining company investing in technology (carbon fibre truck wheels, radio controlled ore movers, driverless trains etc) with a smaller company's need for the 'NBN2' is not just ludicrous it is wildly insane. In case it has escaped Heather's, the "journalist" who slung this piece together or anyone stupid enough to read it and believe any word of it - every word in it is total crap. Business already is the major user of high speed internet (the only thing the 'NBN2' may provide to smaller companies at some future time) and has done for the best part of a decade. In fact there would not be a single business anywhere in Australia within reach of a fibre, an ADSL or high speed wireless service that does not use high speed data services. The thought of a mining company being influenced in their 1,000 mbps data links selection by the questionable, vastly lower, speeds of the 'NBN2' years in to the future is as ludicrous as anything I have ever seen put into print.

Exetel is deeply interested in providing high speed data to smaller businesses around the country (all capital and large regional cities have had high speed data services available since 2002) but the 'NBN2' is not going to be any sort of 'break through' in doing that - assuming it ever gets built in places that don't currently have ADSL or will get access to high speed wireless......and don't bleat that wireless will never be a substitute for fibre - it already is in an increasing number of locations around the world....including visionary giants of technological use like Colombo! However that is not the point. The point is that someone like Heather would initiate this nonsense and then someone in the Australian telecommunications media would expand on her comments and print it.

Does anyone really believe that BHP-Billiton or ConZinc Rio Tinto et alia are just waiting for the 'NBN2' to eventually be delivered so that they can 'gain the benefits of high speed data transfer'? Is the NSW Education Department or the NSW Health Department going to shut down their current Telstra Statewide fibre networks to replace them with the eventual delivery of an 'NBN2' service? (despite the ridiculous lies of Stupid Stephen and co). Exetel is finding it quite difficult to convince our current residential ADSL customers to migrate to NBNCo fibre services and I would think that any business, of whatever small size, would be similarly hesitant....based on experience to date.....

......unlike our airport experience last night nothing has changed in the Australian telecommunications media.

Copyright © Exetel Pty Ltd 2012
ABN 350 979 865 46

PS: The Disproving Of Yet Another Claim By Juliar Faustus:

http://www.theage.com.au/business/economy-shed-jobs-at-years-end-20120119-1q7fc.html

John Linton

We went to the Botanic Gardens this morning - something we have always meant to do on previous trips but never got around to. It was a really great place and the orchids were fantastic including many, many species we have never seen before including one that was breath takingly beautiful. So we wandered around for an hour or so before beginning the walk back to our hotel. On the way we passed the American embassy which was like an armoured pill box with small widows set on a hill with tank trap type road hazards, among other things, to prevent any motor borne assault. It is a sad commentary that America, once the 'saviour of the world' is now perhaps the most hated country on the planet for so many of the world's population. What went so badly wrong?

We had a good day wandering hither and yon and completed it by eating beef sukiyaki at the hotel's Japanese restaurant  - something we haven't done since before we were married. So now we are back in our room having placed a wake up call and packed and are trying to keep ourselves awake by watching War of the Worlds. It has been a very nice, if very brief, break and it has certainly provided the relaxation that such breaks can do. I have made up my mind as to what direction Exetel now needs to take which I wasn't sure about when we landed at Changi 72 hours ago. So it has served its purpose and I feel happy that I can discuss our future plans more sensibly with Exetel's decision makers than would have been possible a few days ago.

The issue is really what does anyone aim to achieve when they set up a business as we did eight years ago? We didn't do it for money and we didn't do it to 'conquer the world' or to attempt any other of the things that seem to be involved in commercial life. We set out to do something better than anyone else  who operated in an environment that we believed we knew quite a bit about and could deliver a limited range of telecommunications services to enough end customers to make a difference to the overall marketplace. It was a pretty ambitious objective but at the time we entered the market every other provider was charging very high prices and delivering not very much for the money they were charging. Everyone were slavishly following the "Telstra less X%" pricing model and doing nothing else 'real'.

Of course a few years later the TexMex bandit arrived and Telstra began to destroy its wholesale customers and ended up charging less than wholesale prices to end users and Exetel's raison d'etre evaporated. Now Telstra charged the lowest prices in the Australian marketplace and was driving every other provider out of business. Fair enough - that's what monopolists do and the end user voted with their feet/wallet/credit card and churned away from Exetel to Telstra. Depressing but that's the way of commercial markets so no tears or recriminations - we needed to move on before we ended up like all the other ISPs who had called it quits or taken iinet's money for their business. A decision had to be made because if you are going to work for money then residential ADSL is not a place to be right now - or for the past few years.

So we need to decide what we now do about residential ADSL. The easiest option is to get out of that market - there is no money in it for Exetel - and there never has been - it doesn't lose money but it does take a lot of effort to provide such services which, if you are not making much better than break even is not a sensible way for adults to spend their time. However it isn't that straight forward now the 'NBN2' is still not going to be delivered for an unknown number of years. Much as it would financially suit Exetel's owners (including me) to sell the whole or part of the business to someone who sees more value in it than I do it can't be done right now....at least it can't be done without a lot of hassle which I am just not prepared to go through.

So - I will oppose any changes to our 'status quo'. Decision made.

Copyright © Exetel Pty Ltd 2012
ABN 350 979 865 46