Broadband: The second wave

The power of the industry giants means the broadband reseller channel must focus on adding value rather than simply selling a vanilla service, says Matt Lovegrove, sales and marketing general manager of IT and telco service specialist SecureTelecom.

"Simply selling broadband connections is a fool’s strategy as it is based on volume. Resellers who focus on the volume market will find it very difficult to make money as you are competing directly with the larger telcos who have the brand and deep pockets to spend on marketing," Lovegrove says.

"You must add value to the underlying broadband service and there are a lot of opportunities out there for resellers. More than ever clients are wanting a one-stop shop for their IT and telecoms services, so bundling is key to win in this space."

Advances in long-range wireless technologies now offer the channel a viable alternative to relying on Telstra-controlled copper. It also allows high upload and download speeds, something that symmetric flavours of DSL struggles to offer over long distances.

Access Providers began rolling out metropolitan wireless networks four years ago after initially looking at DSL, says chief executive Keith Ondarchie.

"We chose a wireless platform to provide connectivity to businesses who have a need above ADSL. From a resellers’ point of view, there are so many questions over what Telstra will do that within its SME customer base everybody must be concerned.

"If resellers really educate themselves and think about where they’re going in the future they can grab great market share because of the nervousness of everybody," Ondarchie says.

Sydney-based wireless broadband provider BigAir offers symmetric links of 2Mb/s and beyond, specialising in VoIP and Virtual Private Networks, says managing director and co-founder Jason Ashton.

"I think wireless represents a more significant opportunity for the channel because you’re actually able to offer a product that is completely independent from Telstra and as a result we can differentiate ourselves from Telstra and offer better margins to the channel," Ashton says.
"One of the services that we’re seeing some demand for is off-site backup and disaster recovery. With our very fast broadband services, such as 10Mb/s and faster, we can offer them a way to build an off-site data recovery site and to back up the organisation’s files, on a daily or even hourly basis."

Despite concerns over Telstra’s plans, industry figures such as IProvide’s Sykes and Internode’s Hackett still see broadband as a golden opportunity for the channel.

"Some of our partners make a good return out of just monitoring uninterruptible power supplies that are used within businesses and they can do this over the VPN," Sykes says.

"I think there will be more and more instruments, devices and sensors that are IP-aware and will be connected to the companies’ VPN. Service providers will be able to write applications for those that either monitor, or are part of, the business process. I think we really are in the horse and buggy days at the moment of the true power of IP-connected SMEs."

Such managed services offer an "enormous opportunity in the SOHO and small business markets", Sykes says.

"If you’re dealing with a company with 20 staff they may find it’s a lot cheaper if they don’t have an IT person," Hackett says.

"Instead they can have their mail servers managed on a virtual basis by someone else, not necessarily by an ISP but in effect as an ASP model. The benefit is all of the security and intrusion concerns have been outsourced to somebody that does that for a living," he says. "As those businesses get bigger there’s a secondary opportunity for integrators and resellers to work on the process of in-sourcing it again."

Demand for hosting of email and Microsoft’s SharePoint collaboration application is growing with increasing broadband penetration, says Andrew Spicer, chief executive of application service provider WebCentral.

Customer relationship management, human resources, accounting, content management, tax, storage and backup applications are all well suited to the ASP model, he says.

"SharePoint in particular is really starting to take off, Microsoft is putting an enormous amount of weight behind it," Spicer says.

"This is creating a big role for partners, because it needs to be configured and set up properly. A lot of small businesses aren’t particularly technically savvy and the channel plays a critical role in getting them set up.

"Part of the reason Microsoft has announced they’re going to launch a hosted CRM version is because they’re seeing how well salesforce.com is going. Siebel and PeopleSoft have also had to launch hosted versions of their products. Whereas those products tended to be very much in the corporate space, they can now move down because a hosted version which is more standardised, the cost of sale and delivery is a lot lower. The SAP-lite type concept is coming down to the small business."