The National Broadband Network (NBN) presents an interesting situation for players in the $40 billion telecommunications industry and to some degree it will level the playing field between network operators and resellers.
Telcoinabox is a wholesale, value added aggregator, supplying more than 110 retail resellers in the industry and as such relies on its relationships with the major networks. Telcoinabox accesses networks from the carriers and then adds value and on sells to its resellers’ who in turn on sell to the end user (predominantly SME/SMB).
Regardless of the network (Telstra, Optus and AAPT) we use, we find we end up competing against their retail divisions which in many situations is at pricing less than we can buy from their wholesale channels. You have to wonder how this is the case. Our total spend with the carrier is infinitely more than the individual end user buying from their retail divisions, so how do they justify this? They can't; A classic example is Telstra, 2 years ago increasing the wholesale cost of residential line access higher than its retail price. We save Telstra money by managing the line, wearing the bad debt and having to bill the line, yet we pay more for it, go figure!
Given that the premise of wholesale business for the carriers is that it is cheaper than retail to supply and is one of the main reasons that it represents nearly all the EBITDA of AAPT despite how poorly Paul Broad runs the business. AAPT is notorious for selling at retail, less than we can buy at wholesale. Given their profits come from wholesale it is hard to rationalise.
So where am I going with this?
The NBN opportunity (in theory) levels the playing field, and depending on how wholesale access pricing is determined, everyone has the same opportunity for access and revenue.
This effectively means that say Telstra wins the right to build the network, Optus, AAPT and other major networks will access the network on the same terms as resellers in the industry.
Then it comes down to what each provider chooses to put down the network, e.g. converged voice and data which theoretically should be cheaper than supplying a fixed-wire service (copper) and a “2nd lined”/fixed DSL service that are separate. In other words it comes down to innovation and good management.
What an opportunity!
The added opportunities are the value-adds such as ‘hosted voice’ which removes the need for in-office CPE/PABX hardware and expenditure.
It does not get any better than that.
Damian Kay
