NBN News The Danger of a cheap service.
Here Peter Hanley discusses NBN News The Danger of a cheap service and how you can be left without a service over just a few dollars a month.
How the NBN pricing works.
NBN Co has a regulated fixed pricing schedule across all carriers on the supply of services. There are certain tiers and obligations but the price is known to all and every carrier works on that.
Second tier carriers buy from the first tier carriers and on-market the product to the consumer at a naturally reduced margin.
The NBN margin problem begins here.
To establish a market position you either need a big marketing budget or a price advantage over the other suppliers.
If you have neither of those sales are going to be very low and the business model may be stretched beyond profit potential.
An example of an NBN pricing collapse.
I am sure you have heard of the ultra low price carrier Amaysim who resells Optus mobile capacity and recently launched into the supply of NBN services.
It is reported they signed many customers to the cheap service but then pulled the plug.
To not disadvantage the user they evidently sold or handed the customers to Southern Telco, who only informing the customers late in the change.
Come the day of change and some/ many customers were left without any service. Not for hours or days but for weeks.
Now there is nothing wrong with what they did and I am sure both carriers went out of the way to appease the customers and provide a great service but it was not all a bed of roses.
Does this show the way to similar events
If you are a home user the event is annoying even extremely irritating and has you shouting to all and sundry how unlucky you are.
If, however, you are a small to medium business the experience can cost you many thousands of dollars in lost revenue and customers.
The answer is simple, your price is a function of service and the cheaper the price the worse the service.
This is not Einstein stuff. The buying price is fixed so something has to give somewhere.
I understand one well-known carrier with a good size NBN base is working on a margin close to $1.50 a customer. That my friend is a recipe for a disaster.
Overcoming cheap NBN pricing
One way to overcome this problem for the carriers is to sell value-added services like Telephone hosting where the profit can be enhanced with the addon services.
Again my cautionary warning on NBN
We the consumers have no contact with NBN, not for faults, nor service or in fact anything.
You contact your carrier who contacts NBN and negotiates the problem.
Imagine further when your supplier buys service off a carrier who buys from NBN.
There are many companies like this in the market and many people dealing with them.
The problem is when you have a fault.
You dial your provider and explain the problem in full and how you are being affected.
They then contact their provider and explain the problem as they understand it.
Then they contact the NBN to find a valued solution.
Nothing could ever go wrong here.
This also extends to solution providers and hosting companies. Are you dealing with the Hosting Co or a dealer?
The same Chinese whispers campaign goes up and down the chain trying to attend your fault.
I had one circumstance where the supplier stopped communication because it was time to finish work, knock off time was 6 PM. I can understand that but I was in Perth and it was only 3 PM.
NBN Channel loading
We all know that the internet slows down under peak loading, NBN is no different and it also suffers from Channel stuffing.
The more customers on a given channel the greater the opportunity for the carrier to make money.
If you are on a cheap service you are going to suffer service degradation of some kind either now or in the near future. If you are a business client this may not be suitable.
Pay for what you get on the NBN
You do have the opportunity to pick a product that maintains a quality of service with some carriers.
The difference in choice is only about $10 a month to guarantee sufficient speed to run your business for all hours of the day.
This is not available with all carriers so ask the question upfront.
The NBN Is not overly complicated
It really is a simple supply line of a product regulated by the government and then handed to a mass market who want your business at any cost.
Peter Hanley
I have been involved in the Telco business over several decades and am
a dealer for VONEX a wholesaler of NBN services, hosting products, broadband services and Mobile phones. VONEX is a listed Australian company