A NBN blindside for our telcos

The NBN creates ample opportunity for the creation of industry based carriers and it's a threat that Telstra and Optus need to take seriously.

A few years ago, well before NBN, I was privy to a lengthy discussion between several IT executives from Australia’s powerhouse industries, mining and banking.

The main thrust of their discussion was that these industries were frustrated by the 'high pricing' of Australia’s telco services. The executives also lamented the standardisation of network product sets and the reactionary, almost pedestrian, efforts of the carriers to provide tailored managed services.

It was roundly recognised and accepted that while these gaps in pricing and services provided opportunities for niche players, the scale of operations (and importance to Australia’s economy) in these industries required a prudent supplier approach (eg the big four banks will mainly purchase from the big two telcos).

In assessing the risk mitigation possibilities of engaging smaller carriers, the industries explored whether they themselves could set up their own industry based telcos. In fact, this was more than just a surface exploration; it was a deep dive into the murky waters of wholesale pricing and procurement strategies. The stumbling blocks centred on privacy of intermingled end-user (as opposed to customer) data and, more importantly, the lack of software that would facilitate billing, recharge and cost transparency.

Many years have now passed and an Australia with an NBN, and the proliferation of network aggregation providers, is opening up these possibilities all over again. In fact, with the economic woes in several sectors, these discussions are possible in all sectors of the Australian economy. For example, it would be eminently possible for the retail industry to set up its own carrier, by retail association members, to provide services to its members. A wholesale agreement could be agreed by the industry body, who could then also manage its implementation. There would certainly need to be some investment required to ensure the carrier was well managed and met the service needs of all the members, but at least the questions of network quality would be removed with NBN at the centre.

The massive advances in software, smartphones and converged telecommunications technology has shifted the predominate reliance of business from PSTN based services to data and mobility. This is power to the elbow of industry based carriers. For the Australian retail sector for example, wireless POS and mobile payment options could be developed and deployed specifically to benefit Australian retailers and for best-benefit of the Australian landscape.

Now, more than ever before, it makes sense to use a provider that caters to the industry specify technology, service and product requirements that each industry segment requires. And, when coupled with price reductions that could exceed 30 per cent plus on the cost of telecommunications, the business case looks very compelling. The software challenges of the past have also been removed by web-based software, which can be easily adapted for any billing and procurement purpose.

For Australia’s main carriers, a move to this type of industry carrier model does not render their services obsolete, but emphasises the strength of their network carriage and detracts from the catch all 'value-add' services which are currently ubiquitous to all industry segments.

Australian carriers have their hands in many pies and this cost structure will quickly become unsustainable should some large industry sectors move their purchases to NBN, wholesale access agreements and provide their own value-added layer of service.

Tony Simmons is the managing director and founder of The Full Circle Group, an independent telecommunications consultancy firm focused on telco expense costs and management.

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