Australia vs. NZ… Where would you rather be an ISP?
- 24 February, 2016 06:56
Renowned for All Blacks vs. Wallabies, Kiwis vs. Kangaroos and BlackCaps vs. Baggy Greens - the Australia and New Zealand rivalry continues to capture the imagination of two nations.
Sport aside however, the trans-Tasman sibling rivalry transcends history, politics, business and perhaps even Russell Crowe.
But in the tech world, a new rivalry is bubbling in the Internet Service Provider space, as key players in both markets assess the current state of play.
For the ISP outsiders, and those removed from the markets Down Under, a common misconception remains...
That Australia provides better internet options for businesses compared to New Zealand.
“This assumption is completely wrong,” claims Brendan Ritchie, CEO, DTS. “Australia will be hard pressed to catch up to New Zealand within the next decade.”
Chewing the fat amidst the APRICOT conference in Auckland this week - a regional internet conference on operational technologies - Ritchie accepts that in reality, Australia is a “great place” compared to New Zealand, within which to run an ISP.
But perhaps crucially, “it does not provide end users with anything like the speeds, pricing or contract options that New Zealand-based end users have access to.”
For Ritchie, Australian is a different beast within which to provide internet to businesses. Why?
“Wholesale circuit charges are higher,” he explains, “and that goes for one-off installation charges and recurring charges.
“Wholesale pricing is also subject to volume discounts in Australia so smaller operators may (if they not able to secure a good deal) find themselves at a disadvantage.
“This excludes NBN.co which has regulated price points, but NBN services are not focused on business and are not widely available.”
As Ritchie explains, contract terms of 36 months are common in Australia, as wholesale providers offer free install under this selection, allowing retail ISP’s to pass this on.
“Lesser terms attract high install costs, so 36 month terms are widely accepted,” he adds.
In addition, Ritchie observes that competition with the retail arms of companies that provide wholesale services remains common place in Australia, citing TPG, Vocus and Telstra as examples.
“This isn’t always a problem and operational separation does exist in most cases,” he qualifies, “but there are instances where access to information on wholesale service availability is withheld due to “commercial sensitivity” which can only mean that releasing it may affect that businesses more profitable retail operations.
“I’m looking at you TPG.”
Furthermore, Ritchie believes access to cost effective high speed services is not always a given.
“If you are lucky enough to be at an address with reasonably priced 100Mbps+ access, you can almost guarantee that you are at a CBD location in a major city,” he claims.
Offering a direct comparison to the Australian market, in New Zealand, Ritchie believes wholesale Ultra-Fast Broadband prices are instead “regulated and reasonable”.
“We pay $480 for 100Mbps fibre services that have guaranteed speeds and are multi-VLAN capable, or we pay $65 for 200Mbps/200Mbps best effort fibre,” he adds.
“Installation charges are set in stone and are usually twice the monthly charge with either no term commitment or a 12 month maximum.
“Regardless of size or number of services purchased, wholesale pricing is regulated and universally consistent.”
On Kiwi shores, Ritchie says wholesale providers of UFB services are unable to sell directly to end users, meaning no retail conflict exists between them and their clients - “that’s us”.
“In an ever increasing number, businesses addresses are now capable of getting low cost best effort or guaranteed speeds well in excess of 100Mbps via UFB,” he adds.
Ritchie believes that compared to Australia, the New Zealand market also makes it easier for ISP’s to connect at a Tier 1 basis for access to wholesale services.
At present, Australia has almost 100 more NBN zones than New Zealand has UFB zones, which Ritchie believes makes Australia “a far more expensive place” to gain universal access to regulated wholesale products.
“The reality is that NBN simply beds in the existing wholesale providers as 3rd party aggregators well into the future,” he claims.
So, which is better?
For Ritchie, in covering both Australia and New Zealand from his Queensland office, the answer is simple; “New Zealand is a far better place for business customers to purchase internet services within.”
Citing faster services, lower monthly charges and shorter terms, Ritchie believes that considering how great an emphasis the modern-day business places on internet reliance to operate efficiently, “this plays heavily into the narrative that New Zealand is a better place to run a business.”
As an ISP however, Ritchie believes the prevailing wholesale market norms make Australia a more beneficial place for an ISP to operate in compared to New Zealand.
“We get income locked in for longer periods and the services we sell are more profitable,” he adds.
“There are certainly some down sides to operating in Australia, but with business services yet to be as commoditised as they are in New Zealand, returns are higher.”
Brendan Ritchie is CEO of DTS - follow him on Twitter at @bcarmody