The reality of the NBN

Customers are singing the NBN's praises and savvy entrepreneurs are taking advantage of low start-up costs in a bid to compete against the telco giants. It’ll be a tough act for Malcolm Turnbull’s fibre and copper compromise to follow.

I’ve spent a lot of time writing about the politics of the NBN over the past few years; today I want to write about the reality of it, for the customers and the resellers.

One of the 375 postcodes in Australia that now has the NBN connected is Brunswick, an inner Melbourne suburb.

I rang Melissa Rogerson, an Optus NBN customer in Brunswick. She and her family have an unlimited 50/20 bundle, which means 50 megabits per second (Mbs) download and 20 Mbs upload, including unlimited data plus all phone calls, for $115 a month. They absolutely love it.

The family’s communication costs have fallen because that price includes everything -- limitless phone calls, including international, and limitless data.

But most of all, she says, it’s the fantastic speed. “It’s increased the value of our house, no doubt about it. We’ll never again live where they haven’t got the NBN.”

The Rogersons used to be connected to Optus cable, and got pretty good speeds -- usually around 20 Mbs. Now they get up to 60 with their 50Mbs plan: movies come down in a few minutes and the internet works instantly and reliably, all the time. The only downside is that power is needed to work the phone, but everybody’s got a mobile so if there’s a blackout you can still dial emergency.

Melissa and her husband stuck with Optus, but I looked up the list of resellers for Brunswick on the NBN Co website. There are 53 of them. 53!!

Telstra, Optus, iiNet, TPG are all there, but most of those listed are outfits you’ve never heard of -- obviously start-ups that are using the opportunity of the NBN to create a telecommunications business. So I rang two of them.

Boom Broadband was started two years ago by three guys in their early 30s -- Jason Baker, Phillip Pratt and Luke Merritt. These three still comprise the entire staff of the company.

They pay $3500 a month to one of the 12 NBN wholesalers -- AAPT, which is now a TPG subsidiary -- for a piece of the NBN, and $200 a month for a cloud billing system called WHMCS. They needed almost no capital to start the business, and from a Melbourne office they cover all of Australia.

The three lads have a pretty slick website, listing four simple data plans (50 gigabytes, 100GB, 500GB and one terabyte), with four different speeds (12, 25, 50 and 100 megabits per second). 

The 50/20 plan with 1TB of data is $90 -- $25 less than Melissa Rogerson’s deal with Optus, although it doesn’t include phone calls. 100Mbs and 1TB costs $100. 

They say they are making a profit margin of about 20 per cent and have less than a thousand customers at this stage, but are growing steadily. Their marketing involves leaflet drops to apartment buildings, but mostly Google and a comparison website called Whistleout, which is owned by Fairfax Media.

Another reseller is called DeVoteD NBN, and is owned 100 per cent by 34-year-old Glenn Samson. It’s based in Mill Park, an outer Melbourne suburb, where Glenn lives. He says he has 1200 NBN customers all over Australia.

He also started two years ago, building off a DVD rental store he also owns in Mill Park (DeVoteD DVDs), which he started 14 years ago, at the age of 20.

Mill Park was an early suburb to get the NBN, so with the DVD rental business winding down because of internet downloads, Glenn saw an opportunity to get on board the future. He raised the $1200 needed for a deposit, did a wholesale deal with AAPT and NextGen, built a website, hired five staff, and started selling the NBN. He says the business is already profitable.

Glenn's marketing method was a tried-and-trusted one: door to door sales, as well as hand delivered letter drops.

Unlike Boom Broadband, he offers both internet only and phone/internet bundles, and his customers split about half and half on each. Most of his customers are in Mill Park, but he also delivers the NBN to some homes in NSW, WA and Queensland, who found him via Google.

His 50/20 unlimited data plan costs $99.95, with no phone. The phone internet bundle only goes up to 400GB of data, which is more or less the same price -- $99.90. The top of the range -- unlimited data, 100Mbs download -- is $109.90.

So here’s what I got out of this brief exercise: the all-fibre NBN is very good and I really hope to get it in my suburb, before Malcolm turns it into a fibre and copper compromise.

More importantly, Australian entrepreneurs are off the races with it, competing against the four giants, Telstra, Optus, iiNet and TPG.

And with 50 of them like Glenn Samson and the boys at Boom Broadband, employing few staff and using cloud-based billing systems that cost $200 a month, they are going to murder the big guys -- it will be the death of a thousand cuts.

It’s also very exciting. Please don’t stuff this up Malcolm Turnbull.

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