Catching a broadband customer’s eye

Analyst firm Ovum has released a report on the need for internet service providers and their resellers to offer more value-added services to customers.

Michael Philpott, consumer practice leader at Ovum believed service providers hadn't been able to take advantage of opportunities such as IPTV and video-on-demand, online music, gaming, technical support and content back up.

Most had stuck to just selling an internet service, he said.

Those that had looked to innovate on their internet service had typically set up an internet portal as a way of "entertaining, helping, communicatiing with and "up-selling services" to existing clients, Philpott said.

"Others, who do not have a very successful portal, are starting to experiment with free services, to gain the initial traction, and then looking for ways to further up sell services on top of the initial offering," he said.

Philpott believed that most ISPs came into contact with customers only when they signed up for the broadband service and then if "something goes wrong" - with "only the odd e-mail flyer in-between".

Internode chief Patrick Tapper told CRN his ISP recognised that customer dynamics had changed as the broadband market matured.

"For the past decade, the primary concern for most customers has been to have reliable and affordable broadband services for web browsing and email access," he said.

"This is changing with the advent of Web 2.0 technologies so that customers are now seeking value-added services on top of their basic broadband plan."

Damian Kay, managing director at wholesale reseller, Telcoinabox, said getting customers exposed to a product was often the biggest challenge.

He said margins for straight broadband were "traditionally very low in the reseller market" - pointing to the need to innovate.

"It is well known that the broadband market is highly competitive," he said.

"Those installing their own DSLAMS stand to make greater margins but with the risk and the challenges of whether they will get healthy returns on their investment."

Kay said it was difficult for the average reseller in the market to be "highly competitive whilst making healthy margins".

"Players such as TPG are an exception however this has been done through huge investments in marketing and promotion," he said.