Considering the costs of hardware, network management software and the skills and expertise required to build secure and scalable enterprise networks, especially today’s hybrid wired, wireless, virtualised and ‘in the cloud’ configurations, the costs of internet connectivity are relatively modest. And, on top of that, there are at least a thousand different plans offered by more than a hundred locally-based internet service providers (ISPs).
By and large, basic internet connectivity is a commodity - end users can shop around for the best price and the right plan (typically speed and data caps), most ISPs offer acceptable levels of service and the vast majority of users don’t really have that much interaction with their ISP. They get the connectivity and pay the invoice. Indeed, the only time anyone has to even think about internet connectivity is when it stops and that is a relatively rare occurrence.
So where does that leave resellers? Only a handful of ISPs have reseller programmes that offer margin on brokering internet connections. The largest ISPs sell direct to both residential and commercial clients and spend massive amounts of marketing budget on extolling the virtues of their particular brands and services. But, given the relatively modest costs for internet connectivity, the margins wouldn’t be all that much anyway. Resellers should be looking at internet connectivity as an enabler that provides a platform upon which almost every other aspect of their client’s ICT operations rely. Reseller revenue streams will be derived from the hardware, software and professional services.
Faster speeds, more choice
That being said, there are two major developments going on right now that will change the playing field: ultrafast broadband for wired and 4G networks for wireless. These two technologies offer far greater speeds than are currently available. Ultrafast broadband (UFB), which is based on fibre optics, is providing downlink speeds of at least 100Mbps and uplink speeds of at least 50Mbps. This compares quite favourably to a typical (this writer’s) ADSL 2+ connection which tested at 5Mbps download and 0.85Mbps upload.
Right now only a handful of ISPs, including Vodafone, Telecom, Orcon, CallPlus, WorldNet and a few others, offer UFB plans. Similarly, coverage is limited. But both the number of ISPs offering UFB and the areas covered are growing quickly. Initial pricing for UFB is not that much more than for ADSL2+. For instance, Telecom’s Business Broadband Ultra Fibre 100 charges are: $167.29+GST per month for 200GB of data, with 100Mbps download and 50Mbps upload speeds. Given the huge jump in speed and the relatively small increase in cost, UFB, as it becomes available to a wider audience, will be a game changer for online activity.
4G wireless is also being rolled out in NZ. Based on LTE (long-term evolution) technology, 4G is capable of delivering speeds of between 100Mbps and 200Mbps, or around ten times faster than 3G. Nokia, however, has tested LTE speeds up to 1.6Gbps, but those speeds are a long way from reaching the general market. Vodafone’s 4G network runs on the 1800MHz spectrum and LTE is in turn based on advanced network technologies which increases the spectrum’s capacity and speed using a different radio interface together with core network improvements.
One of the issues facing providers is the fact that 4G requires a signalling protocol to support millions of simultaneous subscribers accessing data on the internet all the time. The particular signalling protocol is known as Diameter and needs to be managed by a controller. These controllers are not inexpensive - F5’s Traffix Signalling Delivery Controller (SDC) appliance and base licence starts at US$135,000 - but this would be a modest investment for major players looking to enhance their customer’s wireless user experiences. Carriers that implement LTE 4G SDCs will be able to support the bandwidth-intensive applications that will in turn enable more cloud-based services.
4G is live now for Vodafone customers in parts of Auckland and the network will expand to more suburbs every week. 4G will be live in parts of Christchurch in May, and parts of Wellington in August/September 2013. At the entry level customers can get onto 4G with a SIM only plan for $40 per month which includes 500MB of 4G data. For those looking for even more data, a 4G SIM-only Smart plan for $65 per month has 1.25GB of 4G data.
Telecom is also trialling 4G but at this time has yet to announce plans.
But no matter the carrier, timeframe, coverage, technologies or performance, these two technologies are poised to become the de facto standards for internet connectivity in New Zealand for the foreseeable future. And even if many ISPs are not all that keen to include resellers into the revenue stream in the form of margin, resellers shouldn’t let that stop them from brokering the best deal for their customers. It makes good economic sense for your customers to have faster speeds, if for no other reason than you can sell them more storage capacity.
Advantages of faster speeds
“The biggest advantage we anticipate in the roll out of ultrafast broadband, 4G and gigabit Ethernet is that our clients will receive a more consistent internet experience,” says David Crown, manager, strategic partnerships at Gen-i. This turn provide a platform increased productivity. These new technologies will result in faster transactions and combine to help grow the export sector, especially in the intellectual property fields.”
“4G is for people who want to be able to access information and content from their smartphone or tablet at the fastest available speeds,” says Hamish Sansom, head of mobile data at Vodafone NZ. “It can give you the same or greater data speeds than you can access on your home broadband connection. It’s also often faster than public wi-fi networks. For commercial users, 4G delivers a near seamless connection to the cloud, allowing businesses to upload and download attachments in seconds and load web pages instantly. And 4G promises much more than simply speed – it means improved productivity for the workforce and the opportunity to get work done wherever business takes them.”
Kiwis wanting to experience the speed of 4G will need a 4G-capable device with the latest software, a qualifying plan and be in a 4G coverage area. “The device will seamlessly switch to Vodafone’s next fastest 3G speeds when customers leave the 4G coverage area,” continues Sansom. “We have the largest range of 4G-capable devices in New Zealand: six at launch - three Apple models, two Galaxys and an HTC - and by the middle of the year we will have over twelve 4G devices available.”
Where to add value
With the faster speeds supported by 4G and UFB networks, organisations can tap into many of the bandwidth intensive applications that were problematic before. Cloud-based services will be more attractive as the latency between the keyboard and the datacentre diminishes. And other applications, such as video-conferencing will become much more popular. You can almost expect people to video-conference with colleagues instead of walking to the next cubicle or even texting. Much of the current markeking hype is based on home users - downloading films, video and e-books. But the opportunities for business will be much greater.
So where can resellers add value?
“Smarter devices and faster speeds mean that users will require more advanced management platforms,” says Gen-i’s David Crown. “Resellers need to be able to make managing these devices and the applications simple. Resellers have to be able to understand exactly what the clients want to achieve and then develop policies - and create solutions - to help them reach their goals.”
It helps if resellers are active users of the technology themselves. “We use these technologies ourselves and have built up considerable expertise and intellectual property that we can apply for our customers,” continues Crown. “For instance, internet security is always an issue and offering your clients solutions based on VPN (virtual private network) technology can add value to a sale. But it all boils down to user requirements. You need to be able to look at their business processes and infrastructure and then help them move forward while taking advantage of the newer technologies.”
Resellers are in a unique position. You understand the clients, their requirements and their corporate environments. While many of the major ISPs might work directly with major clients, they cannot afford to work as closely with SMBs as there is simply not the return on the sales investment. And many of the mid-sized ISPs don’t offer many ancillary services. So you can leverage your reseller/ end user relationships to broker ISP agreements and then use the enhanced speeds and more consistent services as a basis to streamline their entire ICT infrastructure. Areas such as cloud-based services, managed services, infrastructure as a service, video-conferencing and more will become more accessible to your clients. And they’ll need smarter management tools to keep the technology transparent to users. And that’s where the real opportunities will be.