John Linton Exetel spends over $A4 million a month with three major wholesale telecommunications companies each month (Optus, Telstra and AAPT) on a variety of services including ADSL ports and back hauls (the largest spend), wireless broadband, wireline minutes and mobile services plus IP. We are not any of those companies largest customer, by any means, but we have been good customers for more than seven years in that we pay our bills and our business volumes steadily increase. It will be interesting to see the impact of the 'NBN2' on these, and other companies, wholesale business when/if the 'NBN2' services become deliverable in a realistic number of locations. The comments reported here:
http://www.zdnet.com.au/optus-to-offer-nbn-wholesale-services-339312211.htm
are some indication of what Optus intentions are but it's going to be a difficult 'sell' I would have thought if, in fact, the 'NBN2' is going to be forced to sell access at the same price to every buyer irrespective of volume - in theory the only way that it could make any difference to the current monopoly situations. Where does that leave a 're-wholesaler'? The value add is reduced to a better priced connection to the 'NBN2' hand off points than the smaller ISP could procure for themselves and, depending on what transpires, additional 'content' that an Optus can provide that the smaller ISP couldn't. Not an easy solution for Optus/Telstra to put in place - at least as far as I can see.
Vicki Brady mentions that Optus was glad that the 'NBN2' (presumably via lobbying from Telstra/Optus et al) had expanded the number of POIs from the twelve favoured by the 'NBN2' to 121 favoured by the large carriers. Without this there would be absolutely no 're-wholesaling' as, doubtless, smaller ISPs (like Exetel) would have simply installed their own POI interconnects in the major capital cities and would have had access to 100% of the 'NBN2' coverage without paying premiums to a third party. Having said that - it may still be the case as smaller companies have no need, nor ambition, to provide fibre services to 100% of the 'NBN2' foot print by paying premiums to a third party and the 80% of the market within the five mainland capital cities is more than enough for any company to 'aim at'.
In general terms the wholesale customers for the three large carriers would appear to be continuing to shrink in terms of wire line based services though that decline, presumably, is being offset by the ever more rapidly growing mobile usage in every marketplace. One thing I have noticed over the last two years is the increase in the number of approaches Exetel has received from companies wishing to buy internet and other services from Exetel on a 're-wholesale' basis. Mostly very small companies but lately companies of surprising size. We have been developing the capabilities of providing quite sophisticated facilities to visps almost since we commenced the Exetel Agent Program in mid 2004 and now offer much better back end services to visps than our main carrier suppliers offer to us. In fact, right now, our current visp customers probably get better value add from Exetel than they can get from anyone else - if that continues to be the case it will be interesting to see what happens when the PSTN starts getting de-commissioned.
I think wholesale business within the carriers we buy from is a pretty tough ask at the moment and, despite Vicki Brady's brave words it seems to me that it will only get harder and will continue to be more rapidly dependent on growth in mobile services. I think we have to deal with some pretty demanding problems but I think the 'NBN2' is claiming its first major 'victims' before its delivered a single byte of data.
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