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Saturday, November 27. 2010That Was A Very Quick Week......John Linton ....gone in the proverbial 'blink of an eye'. It was a surprising week for residential ADSL sales (up 10% over the previous week when the last week in any month is usually down 10%). Perhaps it another minor indication that Telstra and TPG are both suffering from discount exhaustion? Perhaps not. It was also a good week for business sales with two days to go the Sydney sales team is within a handful of sales of reaching a record month and the 'prospect list' is stronger than it's ever been. The take up of the new Optus 'capped plans' has remained strong both bundled with ADSL and as standalone offerings - at least in terms of our previous experience with Vodafone based services. All other services, with the disappointing exception of VoIP also recorded orders well above what we would normally expect at this week of November.So a very solid 'sales week'. The set up of the outbound sales operation in Colombo made a lot of progress over the past three weeks with Clarissa heading back home today. In a little over 12 working days over 1,000 upgrades were made by the first two newly appointed supervisors and in the last few days by their first two additional team members. As we didn't know what to expect it is not really possible to 'judge' the achievements but I think they are well in excess of what I expected. Of course the real proof of this concept will depend on the progress continuing to be made as we aim for more difficult targets and 'offerings' but I couldn't be happier with the progress that has been made so far. Stupidest statement of the week was made by Internode and dishonest politician of the week (in a very close contest with Whine Swan) was revealed as the ever lying Ms Faustus according to this report: Of course, you should never believe what you read but for cynical lying by Ms Faustus and Stupid Stephen it illustrates a new low standard but the stupidity of the Internode statements beggars belief if they were reported in context - which, on balance, I can't believe they were. The back haul for higher speed connections (and 100 mbps is certainly very high speed in today's contexts) is always the issue (as cable/fibre residentiail services from Telstra and Optus have clearly demonstrated over the past 10+ years). So why would anyone expect the magical 'NBN2' to be any different? However it's revealing that Internode are saying they don't have enough back haul to Melbourne to actually deliver what they are offering - I don't recall that company ever making such an admission before and it will be interesting to see how they attempt to recover from that confession of misleading their customers. However, if the statement by the head master actually referred to video conferencing performance between Tasmanian schools then no Bass Strait bandwidth would be involved so it may be the case that Interode have also significantly under provisioned the NBN back haul bandwidth required for the number of customers they have sold services to as well as under provisioning trans Bass Strait bandwidth. Or, perhaps 'NBN2Co' have under provisioned the back haul between the three small towns and their Hobart hand off point? What a mess whichever the real situation is. The major event of the week was that we signed a series of contracts over the past week to allow us to provide business services in Auckland and to add a third layer of redundancy to our Australian network by triplicating the national Australian back haul and adding routes via Endeavour to the USA and via AJC to SE Asia and particularly Japan and China (to the existing routes via Southern Cross to the USA and Singtel to Singapore). We also made the first moves towards the upgrading of the Australian network from 1 gbps to 10 gbps Late on Friday afternoon our operations and data base development people met with a prospective "joint venturer" to show them what a real set of integrated automated processes can do compared to what they have in place. It isn't until you actually demonstrate what we do to a cynical prospective buyer that you realise what a gigantic gap there is between what we have spent seven years of intellectual effort and insight building and constantly refining and what some other people think is a usable set of internal and external processes. An interesting week.
Copyright © Exetel Pty Ltd 2010 Sunday, October 31. 2010Hard To Know What To Do......John Linton
I was thinking about how Exetel could make the most of the current 'opportunities' late last night as Arsenal were making laborious work of breaking down a packed West Ham defence, and very nearly failing to do so. I have often referenced here over the past 24 months or so that I can see no ways to make any progress in residential ADSL markets while the current endless 'win back' campaigns by Telstra continue to run and elicit the responses from other ISPs. Personally I don't think there will ever be any end to the current ADSL scenario because if Telstra don't win back their deemed residential market share within the planning period they are aiming for then they will intensify their efforts and if the do they will be encouraged to continue them.....on the basis if they let up then they will begin to lose the gains they have made. So, again personally, it would be financially suicidal for Exetel to base any part of its future on increasing its ADSL user base with the best that could be done being to try to change the composition of the current customer base to ensure we are able to meet the needs of a much narrower demographic than than currently exists. I wont see the recurrent billing numbers until early tomorrow morning but I don't expect too many surprises and I am confident that any drop in ADSL revenue will be more than made up by business/corporate revenue and the profit will increase because of the much higher margins from business and ancillary services. My reason for making this 'brave' assumption is that the MRTG reports show no overall usage changes - which is comforting as we add 50 - 60 new business data links each month (sometimes more) and the 6 am to 6 pm business day usage has scarcely moved in the last 9 months. This has been significantly helped by almost all of the 'ridiculously heavy' down loaders moving away from Exetel over that time (by 'ridiculously heavy' I refer to customers who download over 200 gbs per month - month after month). So a combination of those customers moving away and 700 plus business data link customers signing on has balanced the use of our overall bandwidth among customers who are profitable....so there is very definitely a silver lining in so many other ISPs offering huge downloads for not very much money......depending on your views on customer retention of course. So I was watching the frustrating soccer while skimming through the management reports and occasionally looking at the more detailed transaction reports. The trends are evident (because they have to, by weight of money and personnel, reflect the different efforts we put in to the various initiatives over the past almost 24 months). What remains to be done, in terms of planning, between now and 1st January next year is to decide how we move our current resources and acquire new resources to make more progress in the various different business markets and how we improve the offerings to the residential markets without losing more money in those offers than we currently do. As the football got ever more frustrating the rationales became ever so slightly clearer - in fact they probably have never changed in 4,000 years.....you just have to do something better than anyone else that can't be duplicated by other people easily copying what you do by spending more money......this point being emphasised by the money team Arsenal being kept goal less by the much 'poorer' West Ham for so long...money can't buy you everything despite the recent example set by Chelsea and the 20 year example of ManU. So Song eventually got the ball over the line and a thoroughly disappointing game ended shortly after but I had got one 'new' idea so, on balance, it wasn't such a bad night. Copyright © Exetel Pty Ltd 2010 Thursday, October 21. 2010It's Not The Things You See Coming......John Linton .....that are the problem - the problems are how to deal with them. There is never any shortage of 'issues' to deal with in taking part in running a business of Exetel's size and the diversity and novelty of what you get to deal with plus the sheer never ending demands sometimes seem too much for any realistic person to be able to sensibly deal with. It is never the 'big' issues that cause me to think that way - they are the acceptable and familiar part of business life which experience allows you to accept and deal with almost without noticing that they are very difficult and quite 'dangerous' - in a business sense. It's the endless 'small' issues that actually 'wear you down' and make you wonder why you bother. I am not feeling particularly 'down' (I'm not sure that I know what that sort of feeling is - perhaps that means I am down all the time?) but when I listed the key things I had to do today it was a much longer list than usual and contained a very unusual number of issues that I had never had to deal with before and, really, never expected to have to deal with or even be aware of. Perhaps it is the fact that the 'big' issues have become a daily part of communications business life and the sheer amount of consideration they are demanding makes everything else seem too much of an added burden. On balance, I think it is trying to operate in a set of marketplace and supply environments that not only seem to become more difficult each day but show absolutely no indication of abating, let alone ceasing, to be that way. I understand, and have for a very long time, that no matter how clearly and correctly any person 'sees' the future, it only partially prepares you for what that future actually entails. You can see the 'big' changes and you can even, mostly, pretty accurately determine what they will entail and what has to be done to avoid the negatives they will bring. In that respect it's pretty much like sailing - you can detect the slight changes in the wave movement, easily see the dark bar on the horizon and feel the change in wind direction and strength - but knowing that you will be enveloped in the storm within 10 or 15 minutes, and having shortened sail appropriately, never quite prepares you (maybe that's just never prepared me) for the actuality of the power that then envelopes you and the scariness of the experience - no matter how many times it has happened to you. One thing is for certain in uncertain times is that doing nothing, or even delaying doing something, doesn't appear to be an option that it so often is in easy times. That of course poses the major problem of having to make more decisions faster that you have become accustomed to as well as knowing, fore certain, that some percentage of decisions you are making are wrong - to some degree - and hoping that not too many of your wrong decisions aren't seriously wrong and that you are making them fast enough to be able to correct the really bad ones before they do too much damage. So, assuming this scenario is actually what is required at this time it makes for very uncertain days knowing that what ever you are trying to plan for is also being planned for by many other companies all having different views on how they should change what they're doing depending on there own circumstances and how they are 'reading' the same aspects of what is happening as you are.....all with different objectives and all with different budgets to make whatever it is that they decide on happen. One interesting thing that has happened over the past 9 months has been decline in average gbytes downloaded by Exetel's customers. This has several causes (many of which we would have no idea about) but the most obvious cause has been the 'loss' of the very heavy down loaders from around 3% of our total ADSL customers to less than 0.5% of total ADSL customers. This has made an enormous difference, a positive one, to our bandwidth usage in every State and Territory and, presumably, has made the people who left us as happy as the people who have remained with us. It is the most significant change that has occurred in our business since we connected our first customer over six and a half years ago and is going to be one of the major challenges we now have to deal with. Another day another puzzle piece to find a home for. Copyright © Exetel Pty Ltd 2010 Tuesday, October 12. 2010New Situations Generally Need New Perspectives......John Linton ......and despite the punishing nature of spending a week in Sri Lanka (especially the journey to and from Colombo) it usually 'revives' my abilities to think slightly differently or, more simply put, it almost always allows slightly new perspectives on issues that were posing more problems than they should before spending time on completely different issues in a completely different environment.....and it has proven to be the case this time. We will now attempt to put three new initiatives in place by the end of this week or at least make the decisions that will begin to change several aspects of our business. The most 'immediate' change will be to begin promoting the Optus mobile retail plans to our current ADSL customers and shortly after that to new ADSL customers. This is, in some ways, a very big change for us because we seldom 'leave' a supplier and we have used the same mobile service provider since mid 2004 when we first began to offer mobile services. We have also 'stubbornly' maintained since that time our 'need' to create our own plans rather than reselling a carrier's retail plans which is a real major change for us. However the circumstances in the current ADSL residential marketplaces are now so different we could no longer continue with those previous policies. Sad - but necessary. The second thing is to put more emphasis on the smaller business services via a revamp of that section of the web site, new pricing, new services and building a new small business outbound sales force very much along the lines of the corporate sales force we have been building since late February 2009. This will obviously take longer than just changing mobile suppliers (though that is by no means as easy as I have made it sound) but with a bit of concentration that should 'get under way' before too much more time elapses. It will be interesting to enter a brand new marketplace for Exetel for the first time almost since we began business. The third thing that we need to make an almost immediate start on is to expand the business network beyond Australia to New Zealand, the USA and to the UK/EU. We have been turning away an increasing amount of business each month from Australian based companies that want links to these countries and, more lately, overseas companies operating in Australia that want their Australian operations, often in multiple locations, linked back to their head offices. In my ignorance I had always dismissed these opportunities as being too expensive to invest in with little prospect of reaching break even in any realistic time. Now that Steve has looked in to it (following our buying our own bandwidth between Australia and Sri Lanka last year) it turns out to be much more manageable than I ever considered it could be. Then there is the fourth growth path of quadrupling our efforts in providing VoIP services to small and large businesses which we will now put in place by hiring more VoIP personnel specialising in VoIP sales and support with the objective of duplicating the current level of revenue from ADSL services by June 2012. Of all the projects - this looks the easiest to accomplish - but that is possibly because we have spent more than four years refining just what we can offer in VoIP services and have 'pioneered' more VoIP related applications than any other communications provider within our own operations. So, three/four 'projects' to initiate and then manage towards success simultaneously as well as the daily demands of the current businesses brings new perspectives to daily working life. After all the dreariness of the last 18 months of residential gigabyte give aways, business life looks more and more attractive and exciting again. PS: I smiled when I read this - feeling 'smug' that we had the forethought to actually build a company based on web functionality from 'day one' and it has resulted in the best possible customer facilities of any company I have ever looked at: Copyright © Exetel Pty Ltd 2010 Monday, September 20. 2010Time Has Run Out For 'Thinking' About Wireless Broadband PricingJohn Linton I 'played around' with the basic figures that relate to the supply of wireless broadband services by Exetel using the revised 'offer' from our current suppler and an alternative offer from another provider. I didn't make any headway in finding a way of offering anything that would have any appeal to the residential market places that we currently sell to and I, yet again, wonder how anyone achieves break even let alone making any profit from offering wireless broadband services in Australia. In the event that they do they must buy at a far lower cost than we have been able to achieve or they have found some 'magic' formula which completely escapes me after juggling with buy pricing and two years of actual customer usage 'patterns'. I have come to two conclusions: 1) If you make the assumption that it MUST be possible not to lose money at the current price points offered by both the carriers and the wholesale customers of the carriers who resell their product at Layer 2 (in other words don't simply get a handsome commission from reselling the carrier's retail products) then the task is easy. All I have to do is make the pricing the same and assume that the various buyers will use less than half of the monthly allowance and.....you don't make much money but you don't lose any.You also have no basis for being in the market because you aren't offering anything that isn't already available from other providers. 2) If you under provision the actual bandwidth you buy to connect your 'customers' to the supplier network you can make a little bit of money and use the general belief that all mobile broadband carrier's networks are unpredictably congested from time to time to explain away poor performance you can make a lot of money.....(relative to option 1). To do this you have to have the sort of personal standards that are the equivalent of offering a new car with a four cylinder engine while stating that it has the power of a turbo V6. What this means is that 1)'s a gamble and 2)'s a sure thing. Doing both 1) and 2) would be be much less of a gamble and pretty much a sure thing. But I have a great deal of trouble with 2). Even if you did both 1) and 2) and sold at the same price as the multiplicity of other sellers in the market places - what have you achieved? A 'me too' scenario - and what's the point of adding no value to a market place? None whatsoever. You also have to lie to every single customer who buys the service. We currently make a derisory amount of profit from wireless broadband which falls each month over the past few months and will make an actual loss either next month or the month after so we have to do something quite significantly different to what we do now....and we've run out of time to 'think' about what we should do. The issues that to me are irresoluble are the fact that the cost of providing the service is around $A4.00 for a monthly 'port' charge and around $A16.50 per gb downloaded. With a marketplace that seems to think that any port charge is unthinkable and anything over $A10.00 is "daylight robbery" it makes it very difficult to offer an "attractive" residential service....without ripping the residential customer off in the ways that have been suggested to me. I am no "saint" - but I can't deliver a service based on lies. I have always seen absolutely no point in 'copying' but I think the time has passed for people like me to make decisions in the Australian communications business - if in fact there ever was a time. Maybe its only the current turmoil that is making everything so difficult but even if that is the case that turmoil will continue for the foreseeable future. So we will have one final meeting this morning and make the decisions required to be able to continue to provide viable wireless broadband offerings without losing money. Business life....not really much of a life at all at the moment....then, as Steve sometimes reminds me.....it never was. Copyright © Exetel Pty Ltd 2010 Monday, September 6. 2010...Just Ongoing Changes...No Fancy Words NeededJohn Linton "New Paradigm" and "Paradigm Shift" are over-used phrases (and almost always used incorrectly) ever since some American (I assume) marketing course introduced the word to its ill educated attendees who subsequently found it useful to fudge every future presentation to senior management that they couldn't articulate any real commonsense in. Perhaps an overstatement but you get my view on the usage of such phrases. So I was disappointed over the weekend to see that no less than three of my correspondents had used one or other of those phrases in our correspondence on wireless provisioning and the mooted TPG business fibre costs. There is no "paradigm" involved in under provisioning bandwidth on wireless networks - simply at best 'sharp practice' but in reality just simple dishonesty. The fact that "everyone does it" is about as ethical for business 'marketing' personnel to use as the people who steal other people's property via illegal downloads who use the identical phrase. Similarly there is no 'paradigm' shift/new/or otherwise involved in a company taking a view that they can use assets built by a company they have acquired differently to the way the original company used them - I thought that was the whole point of companies taking over other companies.... to use the assets more productively. It really doesn't matter what words you wish to use in either of these cases the actuality will remain the same and the reality of services based on technology......selling prices fall over time in ways and levels that are inconvenient to long term market leaders who have become used to their profit margins increasing constantly by not passing on the advantages of technology delivered cost savings and, over time, creating a completely falsely premised price structure....which then gets exposed by some new/more daring/more desperate 'player' in any technological marketplace. I have had less that 72 hours to 'digest' what I have apparently learned about some, apparently wide spread, provisioning policies by various wireless broadband sellers and even less than that to assimilate what TPG's 'new' business offers may mean to Exetel. In the past this would have been more than enough time to reach a conclusion on what this might mean to Exetel and to then formulate any required changes to current and medium term 'strategies'. These days I will take a little longer to offer my views on what we might do as a few more days will not make any difference and it will allow other people within the company to understand the scenarios and come up with their own ideas. I have started to put in place the simple changes to our web site that will deal with the TPG offerings and those should be completed today. We will hold a meeting this morning to make whatever changes we decide are appropriate to the wireless broadband plans and we will get whatever changes are necessary to be made to our current supply contract as quickly as our supplier can make them happen with a view to putting the changes to our wireless broadband offerings in place before the end of this week. In the mean time we have to deal with the ever tougher issues that routinely confront every part of our business in these ever more difficult market conditions. I think the only positive that comes out of the constant changes with which we are being confronted is that they affect our competitors more seriously than they ever affect us and we are small enough to deal with them, as best we ever can, far more quickly than our larger competitors. Meanwhile the 'cargo cult' NBN2 remains a huge dark shadow over any form of rational decision making and continues to drive the Australian communications industry into a new 'dark age': http://www.itnews.com.au/News/230989,consensus-evaporates-on-nbn-model.aspx "Always look on the bright side of life"....but sometimes it's really hard to do. Copyright © Exetel Pty Ltd 2010 Monday, August 9. 2010One Thing At A Time.......John Linton .....doesn't get enough done in any given day and that method of 'conducting' a business day is a distant memory. Today their are multiple demands for 'management review and action' that make true multi-tasking an essential aspect of running a company of Exetel's size essential. I had worked the same way for many years up to a year or so ago - basing my working day on a constantly modified (added to and subtracted from as tasks are completed) 'to do list'. Since email became a major part of business working life I have added responding to emails 'immediately' they arrive between 6.30 am and 10.30 pm to that regime. The other thing that 'demanded' changing from a self created list has been the development of a second by second reporting system of all aspects of Exetel's processes and activities. One thing I have stopped doing is to answer the telephone very often and days may go by without me answering either my mobile or my office extension. I can't remember when I 'adopted' the regime of a 'to do list' but it must have been in my early days at IBM in the 1970s because I fairly clearly remember that early to do lists were written on the reverse side of an unused 'punched card' which was exactly the right size to fit in the inside left hand pocket of a business suit jacket. Today, I wouldn't know where, or if, a 'punched card' (almost certainly very few people who might read this musing would know what a 'punched card' was) could be found and the number of times I would wear a suit in a year could be counted on the fingers of one hand. So these days I simply rely on my memory and the constant flow of 'reminders' that email from various sources constantly provides together with the 'tyranny' of Exetel's internal reporting systems that provide a second by second status of everything I, or anyone else, has asked to be reported on together with the 'alarms' for out of line situations from bandwidth usage on the most obscure link in our network, through the performance against set objectives of every person who works in our company to the second by second reporting of the receipt of new orders for every one of our services. So rather than referring to the hand writing on a piece of thin cardboard every so often during the 'week days' to determine what I needed to do my day is now 'run' by the stream of information on a computer screen any time I care to look at it. This information appears in various structured and ad hoc enquiry reports that we have been developing since before we actually commenced operating Exetel as a supplier of data services and has been constantly developed in scope and 'sophistication' ever since and shows no sign of requiring any less effort today than when we started doing it. Included in these feedback mechanisms are suggestions by customers and the multiple times a day I check the Exetel forum.So, apart from the few 'permanent' daily, weekly, monthly, quarterly and yearly reviews my day, of whatever length I 'choose' to work, is totally run by screen based reports, emails and other information provided via a screen connected to the Exetel data base....a very different scenario to the decades long use of a self created and updated to do list. So it was surprising to me when I created the first 'to do' list I can remember earlier this morning on an A4 sheet of paper folded in three to vaguely resemble the dimensions of a punched card and not having a suit jacket pocket to put it in I folded it in half and out it in the pocket of my chinos. I don't know what lead me to do this - approaching senility or some misplaced nostalgia for the days when your week's work consisted of less than a dozen or so items you could describe in a few words each and you could gain great satisfaction as you crossed them out as the week progressed. Those were the days. Copyright © Exetel Pty Ltd 2010 Monday, July 5. 2010Back To Stay In Central London For A Couple Of Days.......John Linton .....a totally different,and nothing like as pleasant, experience from the beauty and peace of the English rural districts. We returned our hire car and got a cab into our hotel which is situated just behind the Ritz in St James. Very pleasant hotel with impeccable service and we had a light lunch before I escorted Annette to her preferred shopping destination and then walked back to the hotel with the first of her 'parcels'. The weather, incredibly for England, still remains sunny and very warm - but the hotel room has modern air conditioning which is difficult to find here and impossible in the areas we have been visiting. When logging in to the hotel internet I noticed as well as the main wifi connection they had an option for a prioritised VoIP connection - never seen that before. We will go to our favorite London restaurant tonight and then Annette will do a shop till you drop day in Oxford Street tomorrow finishing up with theatre (All My Sons - David Suchet and a similar English cast) and dinner tomorrow night. An interesting aspect of central London is that (having bought a new much faster modem out of curiosity) wireless broadband runs at almost 20 mbps on occasions and I'm told the networks will be delivering consistently above 20 mbps before Christmas. As I have no longer got any close contacts in the industry here I can't get the details of the infrastructures and versions now in use in the various areas/districts of the UK. Perhaps its just testing LTE on a wider scale than is planned for Australia by Telstra and Optus. Whatever it is - it's impressive. While I have never been inconvenienced by the wireless broadband speeds I have used in Australia or in the UK I understand that some percentage of a broadband user base finds fast download speeds important and simply buy a service on that criterion. I wonder what those user types will do if wireless becomes this fast in Australia? Complain about the latency? Our hotel has a fibre connection (I suppose being in central London is like being in the CBD in Sydney or the CBD in Tokyo - you can get 100 mbps fibre links for very little cost) and I timed the hotel's link against the wireless broadband link - wireless was faster by about 5 mbps. While that doesn't mean anything , it's an example of what happens when multiple users log in to any service that has a fixed bandwidth - each user takes their share of a finite resource whether it's a direct fibre link to a building or a mobile carrier's tower servicing a geographic area. Either infrastructure will more than adequately serve whatever purposes are required by the overwhelming majority of end users. Food for thought. As my mind clears as the last of the gentle holiday days go past I have begun to think about how to deal with the change from ADSL to either fibre or wireless for the majority of residential users over the next 18 months. I have no idea of time frames or directions as the only real information is from our own data analysis (ie. what we can see in the adds/moves/deletes of our own customers) and what is publicly available in the US and EU media - the Australian media is not helpful in this respect as it seems to confine itself to today's 'sensation' rather than doing any sensible investigation of true future directions - which may well be because Australian companies are strangely reticent to talk honestly about their operations. Having said that, I think that it will be difficult to predict the 'end of ADSL' for a while but you'd have to think that there is a great deal of work that has to be done to between now and xx/xx/xx to satisfy the economic imperatives of delivering/migrating residential data services via a new main medium/media? My view is that we will have to put that in place quite soon now.One of the things we have already started is supplying (for those who want it) a no monthly charge wireless connection with any new or re-contracted ADSL plan. While this is in its very early days I think it is something that's going to be quite important once/if Australian wireless broadband exceeds the speed of wire line broadband. We will need to keep improving that offer (both to new customers and to current customers) over the coming months with the ultimate aim of providing both services at the same per gb pricing - when/if ever that becomes possible. It seems from what I have seen in the UK that that convergence is much closer now than it was a year ago - at least for the majority of current broadband users (sub 20 gb per month) and it is likely that the Australian carriers will follow the EU and US carriers in the not that distant future. Copyright © Exetel Pty Ltd 2010 Friday, July 2. 2010All Good Things Must Come To An End........John Linton .....or so pessimists seem to say. Our final day in the Dales/Peaks was spent on a scenic drive following a route (with detailed instructions) prepared by a local with a We stopped for lunch in yet another charming village and ate yet more home made pastry and meat combinations washed down with a modest amount of the local 'best. We Today was billing day for Exetel which recorded our first ever slight fall in month on month recurrent billings in our 78 month 'history'. This was because of our decision to stop providing services to out of contract money losing ADSL customers which we have been implementing over the past three months. However the monthly recurrent plus once off billing meant that the amount was in single figure thousands which is, in some ways, quite remarkable and is certainly better than I expected. The major difference was in the 'profitability' for the month which jumped markedly and that is hopefully the start of a trend....well we all should be able to dream every so often. In many ways, I am sorry to lose any customer as is any commercial entity but I have to say that the two immediate benefits (less bandwidth usage and more monthly 'profit') take away much of the regret and make it much easier to provide better services to the overwhelming majority of residential ADSL customers - so hopefully the customers who leave Exetel and the customers who stay will both be happy - as will Exetel. 10 days away from the day to day 'challenges' of daily business life continues to change my perspective (as I'm sure that holidays tend to do for every person who is able to take them). I would like to think that the thoughts that cross the remainder of my mind over the last week or so will remain with me when we head back to Australia in 10 days or so time. It is really nice to look benignly on the world in general and to notice that the hair trigger irritability you have become used to exhibiting is completely absent when confronting the myriad of minor difficulties that tend to invade every day irrespective of how relaxed you are (dangerous drivers, motor way tail backs, pushy people, loud voiced fellow diners etc). Perhaps there is some chance it will remain a normal state of mind? Unlikely but it would be nice. Copyright © Exetel Pty Ltd 2010 Friday, June 18. 2010FY2011 Planning Complete........John Linton ........let's hope the coming twelve months all works out pretty much as we currently think it will. I made the very last change to the FY2011 business plan a few minutes ago and do not intend to look at it again. We held an 'informal' board meeting last night to approve the plan and the slight change I made this morning will not make any significant difference to the end result and only recognises the additional effort we will have to make to attempt to retain our ADSL customer numbers above the contracted number we have agreed with Telstra in exchange for a slightly better set of buy prices - only notable for being the first price change we have had from Telstra in getting on for five years.....far too late and far too small to be of any real use to our end customers.....but much better than the nothing it has been in developing plans over the last four plans. The numbers displayed in the neat symmetry of Excel always look impressive and the bottom right hand cell always gives me the optimistic feeling that we will achieve a sensible return for the efforts of a hundred people continuing to build a company of Exetel's size to a little bigger size by providing very low costs to several customer types in several different market places and therefore making a very small contribution to lowering the cost of internet services across Australia and therefore making Australia a slightly more efficient place to live and work. If only everything displayed in those thousands of cells would now 'just happen' it would be really great. Of course - that's not going to be the case; at least it has never been from January 2004 up until now. As is always the case when you finish some fairly complicated, arduous and demanding set of tasks there is always, however briefly, a sense of accomplishment. In the case of developing a business plan that involves a significant number of services and marketplaces and a great many future 'unknowns' it also provides a degree of 'comfort' that you have carefully studied the current happenings and seriously examined the likely future happenings and have been able to produce a comprehensive view as to how Exetel may well perform in hundreds of different activities over a reasonably long period. Exetel is, obviously, a small company (therefore our planning tasks are far simpler than those faced by much larger organisations) and we have developed the basic structure of the plan over the past almost seven years so much of the detailed structure of the plan already exists and has been validated against each past month's actual results so there is a solid base of data on month by month performance over the past 78 months on which to base the succeeding twelve month's projections - but of course any future twelve month period in data communications is always different to any previous twelve months and the changes in all sorts of areas are unknown and can only be very roughly predicted. So all planning represents a best efforts set of guesses and, as in every other year, has to be managed one day at a time and sometimes one hour at a time with changes to future months automatically generated as each month's actuals are entered in to the current month they project different results than those original 'shiny' and optimistic numbers change a long way from what you start each year with. Passing time is a cruel mistress to any optimism you may have allowed to have crept in to your original assumptions. However our financial plan has been a very good set of check points to guide us through the many problems and 'surprises' with which we have been confronted since 1/1/2004 and hopefully this version will be better than any previous version both because we have had a lot of previous experience and because more people have been involved in its development than in any previous year. As could be expected, after operating a start up company into its 7th full year, there are more reasons for optimism than at any previous time. We really have, after so many years, managed to develop a better telephone support and problem resolution set of services for residential customers and will continue to improve the problem solving abilities of those services in each successive month. We have also completed the re-design of the residential network to provide almost complete redundancy in every 'node'....as well as completing the upgrades to the bandwidth to a level we have never achieved before.....and with the processes in place to continue to re-dimension the bandwidth at prices that are far lower than we have ever been able to achieve in the past. There are many, many other reasons for Exetel to feel more confident today than at any other time in our short 'life' and there are so many new challenges about which we need to feel confident. So - the new year will begin while I am a long way away in some remote rural region of another country - I hope I feel as confident when I return as I do now when the temporary euphoria of completing the annual planning is not even a distant memory. Copyright © Exetel Pty Ltd 2010
Tuesday, June 8. 2010How Many People Will Choose Fibre?John Linton Despite the latest poll saying that Labor and Rudd continue to lose 'market share' in polling and if it continued that way there would be a change of government - we signed the NBNCo contract yesterday on the basis of whatever happens in the upcoming election the Tasmanian fibre roll out will continue and that it will provide an alternative to ADSL1 which is all that Exetel can provide for Tasmanian users at the moment (neither Optus nor AAPT have wholesale ADSL2 in Tasmania). Before we signed the contract we had a smile at this: http://www.theaustralian.com.au/news/just-16pc-tipped-to-take-up-nbn/story-e6frg6n6-1225876225571 with the usual sub editor's 'head line' and the usual mis-representation of the 'facts' by the journalist. It's a good question as to how many people will select fibre over ADSL2, wireless or even ADSL1 and I certainly don't know the answer. What I do know is that in 4 weeks we have received more applications for fibre services based on Telstra's fibre roll out in Point Cook than we have ADSL customers acquired over 4 plus years. Now, not being the complete fool some people assume I am, I understand that a one off pilot against slow moving opposition is not indicative of anything other than a general trend. This general trend is pretty hard to misread though - whether it's novelty, early to market advantage or the peculiarities of the particular area there is a lot more than 'idle interest' in a fibre service by Point Cook residents.....even at prices based on Telstra costs to wholesale customers. We will 'go live' with the Opticomm fibre services in their NSW and Victorian 'estates' later this week and we are well behind other ISPs offering fibre services in those locations. So we will have no advantage of 'early to market' in those areas and obviously the 'novelty interest' will have been well and truly gone by now so we will get a much better idea of the sort of take up that may be possible in a more competitive market place. However, like Point Cook, I am assuming that the wholesale buy price for Exetel is similar to the wholesale buy price offered to other customers and therefore, for the first time, Exetel is not at an immediate cogs disadvantage. That may well be naive of me but we were assured that was the case and, naturally, I always believe what suppliers tell me. Anyway - time will tell and it will be an interesting exercise. After wasting so many years trying to make peak/off peak a benefit to our customers and, no matter what we did, failing to make 100% of our customers 'happy' all of the fibre plans are based on the pay for what you use basis.....in theory....no customer can ever be unhappy....though we will now 'waste' the opportunity of giving sensible users the benefit of the lightly used hours of the day and therefore waste the money that pays for having 'idle' bandwidth. However, if we couldn't get it right after six and a half years of trying there is no reason to expect it can be got right (by us) with the far less well (less overall bandwidth for the links to and from the customer) provisioned fibre circuits. Irrespective of what happens over the coming months there is one thing that is absolutely certain and directly contradicts the head line in the Australian article - the take up of fibre will far exceed 16% of the market available to it....if the early results of the Point cook trial are in any way indicative the MINIMUM take up of fibre will be 50% within a few months of fibre becoming an option and it will move to something greater than that over time. What any 'final' percentage will be is dependent on how wireless broadband develops and how the 'real' price of installation changes once the various trials are completed...and, of course, what Telstra decides to do in terms of selling whatever to the NBNCo and therefore what its own future fibre offerings will be. As always, there are more unknowns than knowns. Copyright © Exetel Pty Ltd 2010 Saturday, May 8. 2010Well, Apart From The Share Price Fall.....John Linton .......we had one of our better weeks - which is always a nice event. I held great fears for our move from Level 9 to Level 25 in the East Tower of the world trade centre in Colombo but the General Manager assisted by volunteer personnel completed that very complex task (and together with engineers in North Sydney) accomplished the very complex tasks associated with moving 50 people and the communications systems they require to do their jobs without incident and on time. It was a great relief to receive the periodic updates during the day saying it was running smoothly and then the final advice that it was fully accomplished. On a much smaller scale, but just as important, was the completion by AAPT of a second GiGE back haul that provides connectivity between Exetel customers connected to AAPT's ADSL2 ports and Exetel's PoPs to be increased to the required levels as we have run out of capacity on the current single 1 gbps connection (950 mbps out of 1 gbps - but only 950 mbps is usable) and the second circuit has been a problem to get operational in the originally required time frame. This was mainly our fault as we asked for it to be terminated at our North Sydney offices as part of the relocation of one of our rented co-los in the Sydney CBD to the data centre we built when we purchased the 'new' premises in May last year. We began the process of reducing the racks we rented in one of our co-los some months ago and will gradually move those services to our own premises. The third key 'success' of the week was to finalise the Telstra and NBN fibre wholesale contracts and complete the internal preparation to offer those services (from Monday May 10th in terms of the Telstra Point Cook fibre trial) as well as finalising the 'marketing to promote those services in the various locations. We completed the pricing for the three different supplier's services and built the pricing on our preferred model of PAYG per gb with the base services provided at the carrier cost plus a small margin plus whatever installation cost the carrier charges from time to time....which in some cases is currently zero as they try to develop early interest in user take up. While I, personally, do not think we will sell many fibre services over the coming months I do think it's an essential preparation for the not too distant future when fibre services are much more widely available. We also completed the upgrade of the Australian network (all bar one circuit) which was a major project in its way adding 1.8 gbps of IP bandwidth in total to each Australian PoP and also adding back haul to each of the PoPs. We have now doubled the network hardware and link capacity of the network in a twelve month period which was a huge expense to us as well as being a significant topological change for which our small engineering team is to be congratulated for completing without very much inconvenience to our customers. I suppose the icing on the cake, seeing I started with the Wall Street blood bath, was to watch EFTel's share price sink some 30% to an all time low and, at 1.12 cents, get close to the delisting level. The company is effectively worthless with a growing negative asset backing and huge, for its tiny size, short and longer term debt. I understand it's a petty view, and I seldom if ever take pleasure in the misfortunes of others (having had more than my 'share' myself) but I particularly dislike that company for its past actions and I can't forget them. Obviously the people bailing out of their share holding yesterday know something that caused them to take the actions they did which may become more generally known at some future time. So a very good week for Exetel and a great relief to me personally. It is a good feeling to start the weekend with. Copyright © Exetel Pty Ltd 2010
Friday, May 7. 2010There Was Movement At the Station....John Linton ....for the word had passed around...(apologies to ABJ) ...that the price of IP was going through the ground and had joined the wild decline of markets every where. If you follow the stock markets you will have seen the blood bath on Wall Street overnight which was tracked by the futures index in Australia showing the likelihood of an imminent bloodbath on the ASX this morning. Though, as people are now beginning to report, it might have been a "computer error"! The A$ has tanked and bad debt is rapidly rising in Australia. Definitely a 'bad news on the doorstep' start to the last day of the working week. I read about the rapid increase of households defaulting on non-bank related bills in the SMH yesterday which I suppose shouldn't surprise anyone with so many people buying in to real estate courtesy of the 'first home buyer's grant schemes' fueled by the ultra low interest rates of early last year and similar insanities. Not very difficult to predict that people mortgaged up to the hilt would begin to suffer after 7 interest rate increases over the past nine months (or whatever the actual number is). We noticed a slight increase in our '1st of the new month' payment defaults but nothing that, of itself, would cause major concern. However I'm pretty sure (no disrespect intended to our ever growing in competence young corporate sales force) that the 'flood' of new business and corporate orders for higher end circuits (20 mbps to 100 mbps) over the past two months at least partially reflects some belt tightening across the board in the commercial sectors of the economy. I am an innately cautious person and, as I begin to reach 'maturity' I tend to have become more rather than less cautious than I once was so maybe I am reading too much in to the various indicators but it seems to me there is every sign of, at least a mild, double dip recession that the 'pundits' have been talking about since they came back from their Christmas 2009 break. It will become obvious sooner rather than later and I have zero credentials in such matters but I would think the 1,000 point plunge in less than an hour in the DOW (before it recovered a little) doesn't suggest that the 'insiders' have very much confidence of economic and financial issues getting better over the coming months. One 'bell wether' indicator of how times are changing is the new pricing for IP that we were offered yesterday - sub $A40.00. Nice price - though we cannot take advantage of it at the moment having just added another 1.8 gbps over the past two weeks at a much higher price than that (Damn! - should have been more patient). What it does indicate is that there is a 'surplus' of IP bandwidth in Australia at the moment and I find that a bit odd. If you look at the MRTG reports in the user facilities you will find that the bandwidth used by Exetel customers has doubled from around 3 gbps 12 months ago to over 6 gbps at the moment. Exetel's growth over the past 12 months has, compared to previous years, been slower than average for all sorts of reasons including the saturation of the ADSL marketplaces so this growth is more than in any other year of our existence. I have no knowledge at all of other companies growth in IP deployed but I assume it would be along similar lines but in any event it wouldn't be declining. So why is there this obvious 'pressure' on carriers to reduce prices by so much? It was only a little over 12 months ago that Exetel was paying $A175.00 per mbps so, in the event that the pricing we were offered yesterday is a reality, it means the price of commercial IP has fallen by around 80% in a little over 12 months. An unprecedented fall. Along the lines of "I sense a great disturbance in the Force" magnitude. http://news.smh.com.au/breaking-news-business/telecom-q3-net-profit-down-39-20100507-uhe7.html If you look at the comment in the above article about how its revenue from SX cable dividends is falling it might explain, at least partially, the offer we were made yesterday. Like so many other things lately - I really don't know what to make of the financial news overnight - nor yesterday's IP offer - one more thing to worry about I suppose. Copyright © Exetel Pty Ltd 2010
Friday, April 9. 2010There Appear To Be Deeper Issues.......John Linton .....than I thought affecting today's Australian communications market places. We had expected to have signed off on our 'negotiations' for new services well before now but the revised approach we have taken to obtaining bids for our, not very large requirements in the context of the current 'buyers' in Australia, seems to be of a disproportionate interest to some of the suppliers we approached. I am, through experience, a very conservative buyer of base services as I have seldom seen 'new' base service providers deliver on new infrastructures without very significant 'negatives' that seem to last far longer than even the most pessimistic estimates. However I am having a great deal of trouble reconciling the current price disparities between the pricing offered by our 'traditional/long term' providers and the newer possible entrants to the Australian marketplaces. Perhaps our previous approaches to 'negotiation' have been naive and, maybe, even just plain stupid and our long term suppliers have got used to treating us carelessly? Maybe I will have to accept that we have, through my personal stupidity, allowed that view to have grown over the years. I think that is probably a distinct possibility. However I can't help thinking that something else has changed this time around that is making more difference than modifying our previously naive buying processes. Possibly its the fact that the number of potential purchasers of IP services in Australia is decreasing (Westnet, Soul, People Telecom, and now NetSpace all 'exiting' the buying process over the past 18 months or so). Those companies 'exits' don't leave many buyers of any 'size' left for the newer entrants to sell reasonable amounts of IP services and inter-State transits to. I think that may have had a greater influence than I thought when we started this years 'negotiations'. With the times being as tough as they currently are and, at least in my opinion, likely to get significantly tougher it is very difficult for us not to move away from the providers we have dealt with over the last six years and to 'try something entirely different'. My back of the envelope calculations of what the latest 'revised' offer we received last night would reduce our costs by over the offer we are (were?) about to sign a contract for shows cost reductions over that offer that are hard for us to not consider very, very carefully before making any 'final' decision. We will do the proper analysis of the new offer today and then carefully consider the various ramifications over the week end before making a final decision next Tuesday when Steve is back in Sydney. We need to also consider the wider issues of what such offers mean to the Australian data communications 'industry' more generally. A year ago I simply couldn't conceive that IP costs (available to a company of Exetel's size) could fall by over 70% in 9 months. Although IP is no longer the largest component of providing internet services (the port and carrier connection costs are five times larger) it is still significant and the lowest costs currently offered would cut our current IP monthly bill by 66% - which would transform our profitability forecasts to numbers we never dreamed possible....not a bad 'day dream' to allow yourself to have - even if only briefly - because such things don't really happen in business. Or do they? Perhaps Exetel, like so many residential buyers of communications services, has become used to being 'ripped off' by the prices charged by Telstra and co over the past 20 years that we actually don't believe that anything else is possible? Perhaps I should go back to the base maxim of my technology past where the expectation always was that prices fell by 50% and delivered twice as much every 18 months and use that as a base point for asking for new pricing? That level of pricing, at least at the moment, is easily achievable. I guess it puts clearly in perspective the danger of living in a country that has a monopoly infrastructure provider - gouging pricing is the inevitable result without competition. As the ADSL market becomes even more fiercely competitive it occurs to me that it might be worth considering re-selling IP bandwidth to some smaller ISPs but mainly to larger corporate and government users. Currently, as has always been the case for Exetel, we put in a lot of effort and cost to make almost nothing out of ADSL services and that will only get worse over the coming 12 months or so. It might make much more sense to deliver IP services to the corporate market without the hassle of dealing with Telstra? What is the only thing worse than a commercial monopoly? A government monopoly?
Friday, April 2. 2010Tougher Times Getting TougherJohn Linton We have been 'negotiating' for a final IP price with the two companies that have put in realistic prices (realistic in our views) and have reached a price which, while not wonderful is sufficient for our current purposes. We will, we are assured, receive the last 'final' bid from the last of our preferred longer term providers early next week but even if that bid doesn't better meet our needs we could choose either of the current 'firm' bids and put in place the plan changes that will be required over the coming months. I'm not sure whether I am getting too old to do this job as effectively as I once did or whether I am expecting too much but the end results this year are not what I had hoped for. Perhaps it's just that Exetel hasn't 'kept up the pace' and in these difficult times our residential business is less important than it has been in the past? Irrespective of whether we should have done better or not in these negotiations the worst price we received has allowed us to almost double the current bandwidth at no additional cost to we are paying now and allows us to release the three ADSL2 unlimited plans to our current customers by early next week. The slight delay was caused while we waited to see if TPG were really brave enough to try and offer telephone voice services over the old Comindico network. From my reading of their plan announcement they weren't that brave, at least right now, so their offer is scarcely, if at all any better than the AAPT plan it was addressing.....as far as I can see. So, TPG's 'timidity' will allow us to offer unlimited ADSL2 plans that are lower cost than either AAPT's or TPG's (in three different formats - line inc, byo line and 'naked' which neither TPG nor AAPT can do) and give our own users no reason to move away from us and allow us to assess the impact of unlimited downloads with the cushion of an additional 4 gbps of 'real' bandwidth as well as some unknown amount of peered/cached bandwidth. In the meantime it 'protects' us from an influx of 'download the internet because its free type users' new customers which will continue to move from other ISPs to TPG and AAPT. At this pricing we still have some 'room to move' if, as expected, competition drives such plan prices lower but our objective at the moment is simply retaining our valuable customers - we have no desire to use unlimited plans to attract new customers. At least that's the theory....and using this approach it allows us to test the validity of those assumptions.The other thing that the current negotiations allow us to do is to I have little doubt that all other ISPs, at least the ones that are left, will continue to re-assess the plans they offer to the market and will continue to attempt to make their offerings more attractive. At our proposed pricing, and dependent on what now happens, Exetel is able to look at the coming months with a little more certainty than we did over February and March....of course, the next few changes will put that in better perspective....particularly whatever it is that Telstra is cooking up. It will be interesting to see what happens over the coming quarter and I feel a little more confident than I have done for a while....though with the Netspace demise it is getting a bit lonely to be an ISP of Exetel's size.
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