Broadband competition starts to dry up. Bad thing?

  • Primus bought out, more might be on the way
  • Telcos might be missing the point
  • What do customers actually care about?

In the wake of yesterday’s acquisition of iPrimus by M2 Communications, many industry watchers are bemoaning the death of broadband competition in Australia. Internode managing director Simon Hackett is claiming that the NBN has killed any incentive for anyone to build fibre rings, DSLAMS and other bits and pieces of infrastructure that help broaden competition and guarantee lower prices. Renai LeMay at Delimiter has offered a neat infographic that passes judgement on each major player as either dead, surviving or acquired by iiNet.

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               nbn broadband competition

But here’s a good question for the 99.9% of people who aren’t industry watchers – who cares? The most frequent question we get from visitors to our site is “I want to get some internet’ - not "I want a wide range of providers to choose from with tiny differentiations that I'll barely notice".

That’s not a judgment – people don’t want to know about the intricacies of this market , and they shouldn’t have to. When I buy cereal, I give very little thought to the intense Agri-Wars going on in the background, the villainous machinations of Consolidated Bran or the plucky young players like iiCorn. That’s because a) none of that exists and b) It doesn’t matter if it does. I just wants some flakes.

The telecommunications industry is particularly adept at creating unnecessary drama. To that end, it’s a bit like the advertising world from Mad Men- lots of people running around promoting a product that is essentially invisible. Of course, behind the scenes the product has a very real physical presence – thousands of tons of copper and optical fibre, hardware located in every suburb, street and home in Australia, more real estate than the Catholic Church, 50 metre towers dotting the landscape - it’s definitely there. But the industry as a whole has done a bad job of making it non-invasive. Thanks to all sorts of complicated deals between the providers, customers have to know the difference between ADSL and Cable; what line rental is; what an off-net service is, what an exchange is…the list goes on and on. And simply put, most people don’t care, and would just as soon not know.

Of course, the blame can’t be apportioned to any one group or company. Some strict legislation is responsible – but even then, it could be argued that the legislation is strict because of past misbehavior from the telecoms companies. It’s also worth pointing out that many companies- particularly TPG, Dodo and Internode – have demonstrated a clear desire to simplify their offerings, to provide a singularity of service to customers who want their internet service to be as no-fuss and consistent as any other utility. But things have to change, and a clean slate has become necessary.

The idea behind the NBN, which I’m not really trying to defend, is that it will get rid of all the noise. Right now, people see an ad, and there’s as good a chance as not that when they call, they’ll be told “sorry, we can’t give you that plan. We can possibly give you a much more expensive plan. But you’re too far from the exchange. Or on a RIM. Or connected to a pair gained line. Give us two weeks to find out”. That scenario is so common that we all may have forgotten how utterly unacceptable it is.

It’s true that competition will die a bit as providers lose the option to compete for better underlying technologies. But the whole industry has forgotten the customer, it seems – customers don’t want to have to care. They want access to the same service everyone else has, at the same price. Allowing everyone to build their own networks breeds more confusion and isolation in customers who see ads and then get told they can’t have it! Competition will still exist. There’s still going to be a way for a company to make money competing on things like customer service, price and digital services.

To wrap this up (I want to avoid saying “in conclusion”, because I’m not an earnest Year 7 student) those who wring their hands over the drying up of viable competition might be missing the point. The competition that exists is predicated on the overly complex regime that has frustrated consumers for the past 15 years. After a period of contraction, competition will bloom again, hopefully over variables that consumers actually care about.