Wholesale internet requires stability across commercial sustainability, scalability, its services and a healthy relationship between the retail services provider (RSP) and the wholesale services provider.
There are two types of customer for wholesale internet providers: the RSP and the end-user. Both are imperative to developing viable wholesale services, with end-users being the ultimate and most important part of wholesale service delivery.
Wholesale internet in Australia is important for ensuring Australian internet users get the best prices and service – let’s take a look at in more depth below.
For RSPs and end-users, the most important thing is choosing the right internet services. For end-users, the RSP is the company that offers the service (Telstra, Optus, Dodo etc.). For the RSP, it’s which wholesale network services partner that they have to choose in order to provide their customers with the best service.
Both choices are defined by their services, and these choices are vital, as they will influence customer dynamics as usage continues.
An RSP may commence operations by offering low retail prices for a lower-tier service. However, this can be problematic for the business further down the track, as customers’ expectations grow bigger and there is a demand for a better service.
To make matters worse, the wholesale internet partner and the RSP might not have the ability within existing points of interconnections (POIs). This is when getting more out of a fixed network and existing margin can cause serious problems for all parties involved.
Getting more out of a provider
The demand for faster internet speeds grows as new technology is implemented. With an increased focus on network capacity, wholesalers can increase said capacity and traffic by contending their network. The wholesale internet provider can define service level agreements with its retail partners in a manner that is much easier to predict. The RSPs can then go on to create their business models around these more predictable guidelines and at a much more competitive price. They can provide more internet connections to customers from the POIs they already manage.
But as demand for better services increases, so too can problems arise with network contending. If the internet’s capacity is capped because of a problem with the physical network, there are not many other options except for building new infrastructure to support the demand for increased capacity.
If there is increased capacity, the RSP may choose margin erosion as more service capacity is offered for a provided price point and done so across a larger number of channels. Furthermore, an increase in retail prices to handle this can become the catalyst for user churn or a complete failure of the RSP to provide their offering. This is because the balance between customer expectation, SLAs and service price fails.
A dynamic market for a range of services
Competition is intense in the Australian internet market. The NBN is nearing completion, and other companies are building their own infrastructure to increase capacity and flexibility to customers in order to create a better market for high-speed internet services. Furthermore, other options such as 5G networks are making for a much more even playing field.
Customers have the right to understand ISPs, do their research and find the best service for them. Wholesalers have a responsibility to their customers to offer highly dynamic access to infrastructure and internet capacity, working alongside RSPs to ensure they are commercially sustainable while providing the best service for customers.
The RSP and wholesale partner have to plan carefully whilst focusing on their customer in order to provide the best service at the best rates.