CyberShack ISP Solutions? I Think Not…

Analyst firm Telsyte sent through a release this morning outlining their belief that with the roll out of the NBN new companies will be able to gain benefit from expanding their customer offering to include internet services. The idea is simple, pick a business with a large customer base (think Facebook, Yahoo and Ninemsn – Telsyte even mentioned banks) and expand your current offering to them by adding an internet connection. All of a sudden you are providing not just online content, but the means to get online in the first place.

Great idea, and there is nothing to say that it would not work. The NBN offers reselling companies a complete solution for providing an internet connection. The work from a technical level is done, and with all homes being connected at roll out (or pay a large fee in the future) you just need to provide marketing, billing and customer service to round out the package.

The value offering to customers then changes from speeds and up time ratios, to what else are you able to provide your customers for buying internet through you. A media company could add free access to TV shows and movies, a music club could offer discount concert tickets and cheaper music files – the bundling of value could be endless.

The thing is this idea has been tried before. Around 10 years ago, many companies threw their hat into the ring of ‘I am going to provide internet services’ only to have most fall over or change their value offering to remain in business.

The best example is AOL and Time Warner merging; it was going to be great. Then it was not and the whole idea of content and internet becoming one and making loads of money, fizzled. A smaller example, I remember was none other than David Bowie, who sold an internet service to North American customers, and bundled in David Bowie music, news and access to concerts. I loved the idea then, I love it now, but making it work is the challenge.

In my opinion the reasons we use the internet is as wide and varied as the many functions that the internet allows. Our use of the internet changes, and does so faster than many other areas of consumer behaviour. Many companies have tried to sell a service differentiated by extra value only to see their customer based dive as wants and needs change. Maybe, with the uniform nature of the internet offered through the NBN, with speed guaranteed and pricing being uniform, to gain a competitive advantage ISPs will once again be doing deals with content companies, and content companies may once again look to become an ISP. 

I don’t see it though. ISPs sell their product to customers and earn large customer bases by being very good at selling internet packages. Other companies who are good at banking, media or whatever they are good at are not going to be able to easily step in and do this job just because the NBN is doing the technical bit by providing the internet pipe.

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