Vocus CEO, James Spenceley, talks to Tim Lohman about winning the Deloitte Fast 50, the local ISP landscape, IPv6, the NBN, customer service, and data centre trends in 2011.
Computerworld: Vocus won the last Deloitte Fast 50? How did you do it? James Spenceley: Deloitte is usually a really good indication of which companies and sectors are doing well. The internet industry, in general, is growing significantly. The dependence and amount of money people spend on their internet — whether it be their ISP, iTunes or shopping online — there is just a huge swell of money to internet-based services. People are just using the internet more. We have also approached the business of providing technical telecommunications services with a fresh approach. We have systemised and automated a lot of our processes. It was tempting to say, “Well, Optus can do it in 30 days, so why don’t we do it in 20 days?” But instead we asked, “What is the minimum amount of time it takes to deliver this service if everything lines up right?” and built systems and processes and culture which delivers that.
What do you make of the recent GST on online sales debate? I’ve been standing on the sidelines smiling; it’s hilarious. These companies are trying to cling to a business model which is almost out of date. You can go to a lot of these retailers’ sites and you cannot find what products they sell. They are some of the least Web-friendly businesses in the country. It is like the music or motion picture industry: you can keep trying to fight the ISPs and end-users but at the end of the day, when everyone is doing it as it is cheaper and better, you just have to change your business model. If I can buy something on the internet and have it delivered the next day instead of getting in the car and fighting traffic, I think I’d even pay more for that.
What are the strengths and shortcomings of the Australian ISP landscape? The shortcoming is dealing with an incumbent communications carrier which disadvantages the non-incumbents with pricing. It’s always been the case and is still today. I think there is a lot of uncertainty around the NBN and that has been a disadvantage for the industry for the past three years. It has almost halted any level of development in access technologies. The new regulation mandating that any high-speed services delivered or upgraded need to made open access will halt any further development — which is, I think, the point of the legislation. If the NBN gets up and runs well, it will be a positive thing but it is a big question mark. One hundred megabits to the home will lead to a lot of opportunities created.
How different is the public and industry discussion and debate on the NBN? The political arena has pretty much nailed it and is probably at the pointy end of the debate. Malcolm Turnbull has probably explained it best: this is about an outcome not about how we get there. It isn’t about wireless or fibre or 20 megabit or 100 megabit or a gigabit. It is about the outcome of having a reasonable level of internet speed to the Australian population. 10 years ago people didn’t even know what DSL was or hadn’t heard about an IP address, but now you have ministers in government talking about fibre and wireless technologies – it is phenomenal. How did we get to this point where the technology and the delivery was the focal point and the result wasn’t? I went through a life-changing experience and that was COMindico — a company which started with inexperienced senior management telling us what we would build rather than building the business model. I have lived through a $350 million train wreck and I don’t want to live through a $35 or $43 billion train wreck.
You’ve been a big advocate of getting ready for the IPv4 to IPv6 transition. Should the government be doing more in that area? I think it’s something the government should absolutely be leading on. If you can have a minister deciding what technology runs to my house, then they should be involved in getting Australia ready for the transition of the very protocol at the heart of every service they want to deliver in the future. This is the year we run out of IPv4 addresses and as an industry we are unready, as is the global industry. It’s not like the internet will stop working, but the experience and the speed and usability of the internet will change if we are not ready.
Why do you think customer service is such an issue for telcos and ISPs at the moment? The reason we have an issue with customer service is the price point of the internet has been driven down significantly — probably by a couple of ISPs who target based on price, and the rest of the market has had to follow. But the expensive part of providing a service is customer service. It is something some people will pay for but the majority won’t.
Do ISPs and telcos need to explain to customers what sort of service they get for their money now — like with the budget airlines? Yeah, because what you are getting now is just an internet service. If you want more than that, then you pay a bit more. If you want a meal on a plane, you pay for it. Maybe it’s the TIO [Telecommunications Industry Ombudsman] who has it wrong at the moment.
There’s been a real boom in new data centres. Can you see any potential traps for those moving to one of these new providers? One is being in a data centre which is run by a managed data centre provider — someone who wants to do the work for you. That’s a very positive thing for companies that want that but it can be a real negative for companies that want flexibility on who they buy services from and who they get to maintain their equipment. So, the first trap is that we have seen is companies who are into running their own equipment and sourcing their own telco services going with a service provider whose model is to do all that for them. The second trap is not understanding your power loading. Power is getting more and more expensive and what you can fit into a rack is growing, so your power usage and cost is going to go up. Some data centres do have a limit on how much power you can use, so if you want more you may have to buy another rack rather than buy more power into a current rack. Power is the key thing, not necessarily space anymore.
What will be the major data centre trends in 2011? The trend will be more power into racks. Very few people are deploying loads onto 1RU servers anymore; it's blade-based virtual servers. 2011 is definitely the year of the virtual server provider. It has been massive in the US and is now starting to develop here. You will just buy a server through a virtual provider and pay 100 bucks a month for it. People who have their own infrastructure won't just turn it off, but their own growth and peak demands will be the first area of use. I think when then next hardware refresh cycle comes around you will see very little hardware refreshed because it has been outsourced.