John Linton We have received a number of requests lately to provide ADSL services to a number of small ISPs including three very small but reasonably well established (5+ years/5,000+ customers) providers. It would never have occurred to me that Exetel would be considered as some sort of wholesale provider (although we do provide services to several small communications companies who want to provide a complete range of services under their own 'band/name' and buy ADSL from us to complement their other services).
Up to now, we have always turned such requests down with an immediate "we are too small to provide such services" one line reply but I haven't done that over this weekend for reasons I can't quite pin down. I'm aware of the various disasters (Veridas, TWG, M2) which in the past tried to build viable businesses by providing ISP services to tiny start ups which, for whatever misguided reasons, thought there was some point in providing ISP services in their particuar location at incredibly small volumes. The completely predictable end results simply reflecting one more triumph of hope over experience. Similarly the Telstra Wholesale 'ISP in a box' concept had a rocky 2 or so year ride before Telstra withdrew that concept and those customers tried to find new 'homes'.
So, it's not exactly a concept where the financial risks are compellingly favourable nor are either the support logistics or the general operational issues. So ....... why the hesitation? I think it's the attraction, if that's the right word, of adding 15 or so thousand ADSL customers that is intriguing but the financial risks remain overwhelmingly daunting and, of course, there is very little profit to offset taking the financial risks....and then there are the real reasons why, 'suddenly', these sort of opportunities have 'surfaced' over the past week or so.
I provided a price per circuit and a cost per mbps of dedicated connectivity and a separate price for dedicated IP which, to my surprise, was received very favourably along the lines of "that's better than they get now". As I had added a small, but not negligible, margin to Exetel's current buy prices that reaction is difficult to understand as I know how much 'profit' we make at our buy prices and we couldn't possibly make a profit at the costs I quoted to the broker. The situation is impossible to understand.While I obviously have no direct knowledge of what any carrier may charge any wholesale customer I am not so stupid as to believe that Exetel buys any better than anyone else and in almost every case, due to our small size, buys a lot worse than everybody else. In terms of ADSL1 from Telstra I would put very real money on the fact that we buy worse than every other ISP ecept the very, very small wholesale customers - assuming there are still TW customers smaller than Exetel.
The 'broker' handling these opportunities is "not able at this EOI stage prepared to say who the companies are" nor who their current suppliers are so it's unlikely that we will respond in any way but negatively later today. What interests me is what sort of company could get to a stage of having what appears to be a viable business but then needs the services of a broker to find a replacement supplier of base services and would have such a restricted opportunity that they needed a broker to approach a company as small as Exetel as a possible supplier? I actually asked that question and was told that the 'ISP brokerage' business was at an all time high based on enquiry levels and he expected that it would be quite an interesting few months in terms of completed transactions. I found that surprising.
Perhaps the more interesting question is under what circumstances are more than one very small ISP being 'forced' in to trying to find alternate 'up stream' providers and why would 'brokers' be considering companies as small as Exetel as being worth approaching? It makes absolutely no sense to me and, having briefly thought about it, I can't begin to think of plausible answers to either question. In fact I think it is so bizarre that I have to think that there had to be some other completely different rationale behind the approach(es). However I have no idea of what, if anything, might be a substitute for the "apparent" reasons for the approaches and I can't be bothered to think about it any longer.
I'm sure its long past time for the owners/operators of small ISPs to pack up and move on to other more logical and profitable uses of their time - and by "small" I probably include companies the size of Exetel and perhaps larger - Easter Monday has never been a day filled with optimism for me....I don't know why. When you think about it ,the days, should there have ever been any, of small companies making sensible contributions to the needs of residential communications users in Australia are truly a thing of the past. I see little in the published offerings of the dozen or so more prominently 'thrust forward' communications offerings that differ from each other in any way at all - even slightly. It reminds me of the 'old days' choice bwhen flying in Australia between Ansett (before it disappeared) and TAA/Qantas - identical price per seat, identical flying time, identical take off and landing time and often identical aircraft. Where was the choice?
Perhaps it's just one more 'landmark' day marking the passing of time that hasn't produced any really positive progress?