Broadband: The second wave

Ten years after the great suburban cable rollouts and five years after Digital Subscriber Line (DSL) made broadband available over copper phone lines, Australia’s high-speed internet access has reached critical mass and exploded.

Three-quarters of the country’s 830,000 small to medium businesses have moved to broadband, opening up a gateway for the channel to provide a raft of value-added products and services.

Having embraced ‘first wave’ dial-up technologies such as email and internet access, the market is now hungry for the ‘second wave’ services that broadband enables.

Voice over Internet Protocol (VoIP), Video on Demand (VoD), videoconferencing, security, managed services, software as a service and off-site back up are just some of the strings that tech-savvy resellers and system integrators can add to their bow when looking to add value to a broadband offering.

The take-up of broadband amongst small to medium businesses has helped revive the Application Service Provider (ASP) model, which involves businesses accessing applications such as Customer Relationship Management (CRM) over their broadband connection rather than having it installed on their desktop computer.

Such services allow the channel to offer economically a suite of applications that were previously only available to the top end of town, according to Landry Fevre, telecommunications and consumer markets research director with research fi rm IDC Australia.

"The second wave addresses enterprise applications where companies are trying to do more than just email with their internet connection. We’ve seen a huge surge around ASP, such as web-based accounting packages or even CRM like salesforce.com," Landry says.

"They seem to be quite attractive to small businesses because, from their perspective, there’s no headache of maintaining it because it’s hosted elsewhere. It also allows a distributed work force, because people can access the application from home."

Australian internet service provider Pacifi c Internet has monitored the country’s broadband take-up over the past three years with its Broadband Barometer report, commissioned from IDC.

As well as finding 73 percent of SMBs are on broadband, the research predicts there will be a 210 percent increase in SMBs adopting ASP tools over the next 12 months. In addition, industry-specific applications that often rely on broadband, such as health systems, will see a 75 percent growth in SMB use.

The channel will play an integral part in the take-up of second wave services, says Pacific Internet managing director Dennis Muscat.

"Riding the second wave requires asking what applications are going to be attractive to small businesses as they move into the future. Second wave services are things like ASP applications, intrusion detection systems, industry-specific software applications, remote access and monitoring," Muscat says.

"If you’ve got a relationship on the ground with an SMB and are able to articulate this, you’re going to be in a really strong position to cash in because you will understand what the customer wants."

Internet service providers are reliant on the channel to provide such services, which allows channel players to value-add for greater margins, Muscat says.

"We as an ISP don’t have the coverage to be with the customers, so when an end user is looking for services, consulting and functionality for this broadband pipe, they’ll be looking to their computer consultant or systems integrator to provide that service for them," he says.

"It is very difficult for even the largest companies to have direct relationships with hundreds or thousands of businesses, so we’re tied in closely to the reseller channel. If you don’t work closely with resellers and system integrators you’re not able to have a strong penetration and a strong impact in that market, [so] you’ll end up being boutique or very narrow focused."

The complexity of options available to SMBs today means they are looking for someone to stitch together a managed services and connectivity solution as a ‘one-stop shop’, says Warren Hardy — Optus wholesale and satellite managing director.

"As a systems integrator, anything you can do that makes the delivery, the use and the pricing of such services as simple as possible will give you some cut through in the current market. Technology is moving at such a pace that businesses are just starting to get overwhelmed by it all."