New internet service provider (ISP), Australian Broadband Services (AusBBS), has flagged it’s entry to the market with plans to offer National Broadband Network (NBN)-only services via an outsourced virtual business model.
The startup, which has been in the making for around 12 months, has secured its first round of funding which will enable the initial platform build and a basic three-month trial launch in August.
AusBBS chief executive, Rob Appel, told Computerworld Australia that many hours had been spent on research and analysis of the market, putting together a team and planning for the build.
Appel, who previously established and worked at Chaos Group, which developed graphics rendering engine V-Ray, could not disclose the source of the funding, but said it was “in the hundreds of thousands”.
“We see the NBN as a defining moment for the market, a deregulation moment, and that there’ll be a lot of customers shifting around and opportunities for small players who are operating well to come in and take a reasonable stake in the market,” Appel said.
“We’ll be the first purely NBN virtual ISP,” he said. “A lot of the virtual ISPs out there are kind of small franchises which are built around the bigger aggregators, like Telco in a Box, whereas we’re aiming a bit bigger and we’re licensing our own platform which is in the Cloud."
He said everything apart from the business undertakings will be outsourced, including customer service and sales, but would all be kept within Australia.
According to Appel, the Cloud service provider has been selected as well as one of Australia’s “larger” wholesale aggregators, although he could not disclose the identity of either.
“What’s taken the time up until now is finding the right suppliers, the right platform to operate over the new technology as there’s a lot of different approaches people take to building an ISP platform,” he said. “Traditionally ISPs will end up building their own platform but over the past 15 years things have changed a lot and there’s a lot of specialists in particular areas, like billing, provisioning and CRM as your key components for platform.
“There’s specialists out there who are highly advanced in the area who can deliver something to us which is 24/7 supported, secure, fully redundant and operate through us on a variable cost basis so we can avoid some of those upfront investment costs that traditional ISPs have been faced with.”
The company will launch in August with a headcount of around 10, which will be kept to a minimum in line with the company’s outsourced model.
“The trial will be to gauge the customer response to the product and the brand and we’ll obviously be doing that in NBN areas so it’s a limited market but it’s a long term project.”
“It will test out a simple product range and how it is received by the market… It’s likely we’ll be testing mostly in NSW and Victoria but potentially, wherever the NBN is we’ll be testing.”
Appel said the services will be targeted at residential customers as there has been only a limited number of ISPs entering the space over the last five to 10 years.
“We are in discussions for mobile products as well but certainly our core product is fixed line and then we’re looking at all the potential bundles.
“All the big players are in the process of investing heavily in different Cloud applications, home security, and IPTV, and these products are all going to be bundled,” he said. “For us, we see those as opportunities as well but we’ll be looking to outsource everything and use third parties for all our bundling products.”
With significant consolidation in the market recently with the likes of iiNet’s acquisition of Internode, TransACT and AAPT, M2’s acquisition of Primus, and Optus’ vividwirelss buy, Appel said entering the market will be a challenge. However, he notes the NBN has changed the playing field for ISPs with its “non-discriminatory” wholesale pricing across the country.
“There’s the opportunity to go in there with a really efficient cost model and target those millions of customers shifting around between ISPs or signing up for the first time over the next 10 years and particularly in the next five years,” he said.
“Our overall goal is to reach a top 10 position. Obviously we’re not looking to be an iiNet but we are aiming quite high to have that position within five years.”
He said the set of cost structures AusBBS will operate by will be on a different level to those looking to consolidate their business and will be focused on the customer relationship as opposed to owning infrastructure.
“We’re looking to develop some smart plans and approaches to sales and some real costs benefits for customers as a result of this variable cost structure.
“As far as the customer is concerned the experience should be similar. We’re looking for some improvement on usability and simplicity but as far as the speed of services, the setup, the customer service, it all should be equivalent; it’ll just be at a lower cost base.”
He said the company will aim to win customers using points of differentiation such as the simplicity of plans and making the process to sign up easier and also making it more transparent so customers know what they’re paying for, as well as aggressive price points.
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