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Vertel booming as it pulls in more government contracts

Vertel booming as it pulls in more government contracts

Indie telco cleaning up where the big boys don’t bother to play

Vertel CEO Andrew Findlay

Vertel CEO Andrew Findlay

Australian independent telco, Vertel, is seeing a nice spike in sales, and has pulled in two Victorian health contracts, a NSW health contract and is plotting out another six month build in Gippsland.

The company’s big push has been through its microwave layer two and layer three fixed internet services, which enable the company to push high speed internet services to areas that wouldn’t receive decent service otherwise, says Vertel managing director, Andrew Findlay.

“We’ve really focused on areas that lack fibre infrastructure, or there is fibre, and its extremely expensive from Telstra. We go and target the education, health and community/emergency services businesses out there,” he said.

“For the same monthly price as a 4mbps service from the majors, we can give them a 40-50mbps service for the same monthly spend.”

Vertel focuses on areas outside the metro, usually rural areas that don’t have reliable service on hardlines – or market sectors that the majors don’t show much interest in, such as community level and local government level services.

Findlay describes them as the ‘tier two’ guys; “as a challenger ourselves, we like to deal with other challengers.”

The Vic health contracts are still being in the process of being finalised, but Findlay saidthe company will be servicing 250 of their 930 sites, at an average service fee of around $3000 a month. This makes the contract in the region of $750,000.

“We’ve been working on them with our design guys for the last three months, doing 12 hour days,” he said.

The Gippsland project, which incorporates several communities, including health, councils and independent schools is due to start in the next six months.

Vertel is growing by 45 per cent year on year, for the last three years, which Findlay admits has caused some scaling problems, but “we’d rather have the problem of too much business, rather than the opposite problem.”

The company follows a very capital intensive model, which while straining internal finances at times has meant that the company has had to pull from an eager pool of blue chip investors, who he says have been investing due to the strengths of the contracts earned.

Part of the success of the company’s model has come out of the current Cloud trend, that is, local government bodies moving their infrastructure to the Cloud. Vertel has done a good job of selling itself as a redundancy supply – that is, a failsafe when anything goes wrong with the main broadband connection.

“In NSW they’re collapsing 130 datacentres into two – which is obviously a great opportunity for the Government to save some dough. But because there are only two DCs, they are now required to have diversity of supply out of their main sites as a contingency,” he said.

Read more: Telstra claims world first 450Mbps network speeds over LTE

“We are completely diverse from Telstra’s infrastructure, which is why we don’t do a lot of business with them. Generally they’re the incumbent, either through a direct relationship or through a wholesale relationship.”

Even if there are two fibre operators servicing the same building, he says, often the majors will share pits or exchanges – and thus can’t be used as true back ups for emergencies - a key problem for the emergency services in rural Australia.

Another area the company plans to target in the next 6-12 months is SmartFi Carrier. This is where mobile phone carriers offload their subscribers’ data component onto wi-fi networks to ease the strain on their 3G and 4G infrastructure.

While obviously not a big concern in Australia yet due to our relatively strong (and empty) mobile infrastructure, choke points, such as sports stadiums (especially during major events), are already showing interest.

Read more: Optus yearly net profit up $835m

The technology has taken off in the UK, where mobile competition is fierce and most of the networks are heavily overloaded. Ruckus Wireless provided the same services for Orange/Everything Everywhere and O2 during the London Olympics.

Australian networks see similar levels of strain during our sports’ Grand Finals, for example. Vertel has been in discussions with several stadiums, as well as councils doing municipal wi-fi and non-stadium sporting events where phone call drops are common.

“It’s still 6-12 months before it really gets taken on by the carriers over here. For our carrier, it’s really important for them to control the user experience end to end, over a third party infrastructure, so it hasn’t sat well historically. But the attitude will change,” he said.

Findlay also isn’t terribly concerned about the NBN as a threat to the company’s business model, stating that, while the project could be useful it hasn’t worked out due to politics.

Read more: Telcos are losing out due to increased mobile tethering: Telsyte

“There are some fundamental assumptions that were made, and that just don’t stack up to a business case,” he said.

“It’s actually been good for us because it has elevated the conversation to the masses about the need for broadband. And companies like us can deliver that now, not in five years time.”

Allan Swann is the Editor of ARN, a publication of IDG Communications Australia. Follow Allan on Twitter @allanswann, and at Google+.


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Tags smart-fivertelorangeRuckus WirelessTelstraNBNRedundancyNSW health4g3gAFLNRLAndrew FindlayoptusTelecommunicationsbroadbandMicrowaveWi-FiVIC Healtho2Everything Everywhere

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