Tuesday, April 27. 2010April Is Often A "Quiet Month".......John Linton ......when Easter falls in April meaning that, with Anzac Day, there are three public holidays plus the 'drag along' extra leave days plus it's a thirty day month.....so we have been fortunate to sign our largest, yet, corporate data network and all but our ADSL sales have held up remarkably well. Our largest business sale contained the first 100 mbps link we have ever sold and, as so often happens in businesses like ours, a day later we sold two more to a company that had been a long term 'prospect'. We also recorded the first time we made ten sales in one day - so in many respects April may well turn out to be an 'ordinary' month rather than a sub-ordinary month like December and January. We have been 'waiting' for our new, young sales force to sell the first 100 mbps links before proceeding to a new phase, for Exetel, of addressing much larger businesses than they have done so far. Not that there is anything particularly special about 100 mbps links (Exetel doesn't have any in its own business with the standard base level being 1 gbps with the first 10 gbps now on order) but symbolism in creating a new sales force is more important than many people think it is. We realise that very large corporations and government departments would be reluctant to give a company of Exetel's size a big 'chunk' of its data networks but we see a fairly reasonable chance of bidding for a part of their business that is not 'crucial'. A business acquaintance of mine within one of Australia's largest accounting practices gave me some insight in to how badly ripped off such organisations are when it comes to their total naivete when buying data services. We were discussing other aspects of Exetel's business when I suggested to him that he could well consider Exetel for a standalone IP feed as a back up to his current major carrier supplied network. He said he would find out what opportunities there may be and, true to his word, he called me over the weekend saying there were no opportunities as they had recently re-signed a new three year contract and in any case their current supplier had massively reduced their IP price from almost $A400.00 per mbps to $A220.00 per mbps and they were supplying the back up link at a mere $A135.00 per mbps providing it was only used for emergency back up.....a great deal indeed.....for the provider. I ruined his 'triumph' by saying that Exetel would have charged him around $A90.00 per mbps for the main link and around 50% less for a back up service. I don't know how many, idle, IP back up links' there are in corporate and government organisations around Sydney alone but I would guess at around 400 with another 1,000 or so in the other States and probably at least 100 in Canberra. If all those organisations are being ripped off like my acquaintance is there would be a fairly large market to address....which Pipe has been doing for some time and doubtless TPG will continue to do now it owns Pipe.....though Pipe's pricing as it stands currently, at least from what we have seen, isn't very effective/competitive in terms of what should be able to be offered in today's marketplaces. We have mulled over some IP pricing for the new financial year - both as back up circuits and as primary circuits and think we can construct an effective 'campaign' to Australia's "Top 1,000" companies plus the six State Governments and the Federal Government. I would like to sell at least one 1 gbps IP circuit over the remaining two months to confirm such a plan would be possible - however that would just be the icing on the cake. We already have several very large organisations using Exetel for primary data links and an increasing number of those have added links as they became more 'comfortable' with Exetel as a supplier and some of those customers have been with us for many years and our network has become far bigger and far more redundant since those earlier days. So we will give it some more thought between now and June 30th and make a better assessment of how much of that 'market place' we could sensibly address and acquire in FY2011 but even 2 or 3% of that opportunity is more than we are achieving at the moment - in revenue dollar terms. The other major advantage of such a program is that the more IP we buy for corporate customers the lower the cost becomes for residential customers. Everyone knows that...... Copyright © Exetel Pty Ltd 2010
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it looks like your abandoning your residential customers.
Comment (1)
Far from it. The more IP bought by our business customers the lower the overall price of IP bought by Exetel which can only benefit residential customers.
Comments (8)
How will you be able to sell IP cheaper than the major carriers. Surely Pipe has built its business on providing the lowest cost connections in Australia and have a much lower cost of product than you do. TPG obviously bought Pipe with the aim of doing exactly that.
Comment (1)
You could very well be right.
There are the obvious issues preventing that being the case. I'm sure you would know what they would be. Comments (8)
I cant see how you could do it either. What are you saying would prevent TPG from taking over the whole market for low cost IP services.
Comment (1)
Geoff & Anon,
I think your analysis might be a little simple and based on incorrect assumptions. The communications industry (like others) has many examples where company A resells company B's services for a cheaper price than B's own retail offerings. ADSL1 (every ISP other than Telstra), Mobile (Exetel, Everyday, Virgin, Crazy John's....) so why couldn't IP pipes be the same. It isn't unusual. However in this case I suspect even that might have incorrect assumptions. John has previously hinted at other new suppliers at the IP pipe level. So if you can't see how they can do it when they claim they can, you don't have enough information. Of course that information is probably commercial-in-confidence. Comment (1)
I would expect that TPG will be as 'aggressive' in using their ownership of Pipe as they have been in their other activities.
Whether they have the abilities, management and recruiting and training and retaining, to build the sales force that would allow them to progress any faster (at a realistic cost) than they have to date is unknown to anyone outside their own executive - I certainly don't know. However, based only on the little I have seen to date (over the past 15 years) I would think those issues will be very difficult to solve......and if those issues can't be solved then what you are suggesting will not happen - in my opinion. Comments (8)
Hi John,
Great to see your efforts in training and empowering a business-oriented sales crew is giving you results. As a small residential customer, I am pleased you are succeeding in this..... the stronger Exetel becomes, the better it becomes for me and others like me. It ...is ... a good year - 2010!! Regards, Harry. Comment (1)
Harry,
It was our/your and other Exetel residential customer's 'success' in supplying IP services to "small residential customers" that allowed us to start building a corporate business. If we can build a larger corporate business than we have now then it will be beneficial (by lowering residential prices) to the current residential customers who made a corporate business possible. Comments (8)
I guess it just goes to show the importance of starting out small and gradually growing a business over time mainly by word of mouth and a reliable service than to simply pump the dollars into an aggressive advertising campaign and expect it to just work.
It's good to see that the residential customers won't be forgotten (and in fact rewarded) as they're the ones who've allowed Exetel to grow where it is today. Keep it up Comment (1)
If you think about it by balancing the usage times of residential and business customers each one ensures they equally benefit in terms of obtaining the lowest possible price.
Comments (8)
John,
One thing I feel that could help your push into the Business / Corporate market is to focus on HSPA services for the gadgets that IT guys love to own. Currently there is a big focus on iPhone in the consumer market but that glossy market is all locked into plans with "Big" carriers. I suggest Exetel could promote its HSPA service for Google Android based handsets. There is a big groundswell of interest in these devices - many people are buying handsets outright (like myself) and I feel they are particularly popular with technical people. Having "taken a punt" on Exetel HSPA and been impressed with the service, I am now comfortable to suggest Exetel for my employers IP needs. Adding some Android based handsets to your supported devices list and providing a SIP client that works properly with Exetel VOIP would be some suggestions that would have made the choice easier for me a few months ago. Andrew Comment (1)
Thank you for the idea - we will see what can be done.
Comments (8)
John,
You've written about the prices Exetel can offer for per megabit services a few times on your blog. Making a big deal of excellent pricing for such telco-dominated services is part of what allowed Hurricane Electric and Cogent to build up to the size and presence they have today - at the moment it's not clear such products are offered from reading the website. The fact that Exetel can also offer carrier diversity for customer handoff is something that you might be able to use as an additional go-to-market. Comments (2)
Chris,
Thank you for the suggestion - we will make use of it in the next 'phase'. Comments (8)
You're speaking of your newly linked "Pure" IP Services? Very impressive pricing.
Looking at some of the details there, one would suspect that SW is in the US to plug in the other end of your SX and AJC/PPC-1 connection! Comments (2)
Yes I was - but Steve is at InterOp in Las Vegas not in San Francisco.
Comments (8)
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