iiNet, Internode gear up for apps in 2011

Content delivery an increasing interest to ISPs, but not all think it's sustainable

iiNet and Internode have changing business strategies for 2011, with applications and improved customer service becoming they focal points in the coming year.

In a Christmas video message to iiNet subscribers, managing director, Michael Malone, said the provider was moving away from growing its customer base - now at approximately 650,000 subscribers - and instead looking to deploy applications over coming years.

“The last few years have mainly been about getting everyone connected to high-speed broadband,” he said. “The next few years are really about how you use it  - what the applications are that you can take advantage of now that you're connected at very high speeds to the internet.”

In the video, Malone and iiNet managers hinted at possible new applications in 2011, including remote desktop support for contact centre staff and successors to its popular BoB modem router with touch screen panels. The new applications and technologies are likely to be derived from the provider’s new research and development facility, iiNet Labs, as a means of tailoring applications to suit existing services.

The launch of BoB and IPTV service fetchTV in recent years have indicated iiNet’s move away from being a pure service provider but, until now, growing its customer base has been a high priority. In an interview with <i>Computerworld Australia</i> toward the end of last year, Malone identified 2010 as a “switcher’s market” that forced iiNet to develop retention strategies, something it has done through an aggressive advertising campaign as well as becoming the ”acquirer of choice” for smaller ISPs. Internode chief executive, Patrick Tapper, indicated similar changes to the Adelaide-based service provider's goals for next year, with IPTV and anticipated NBN applications forming a base for further changes. “We saw the end of the rapid growth that occurred since 2005,” he said in a statement. “While the market is in a commodity cycle at the moment, where every service provider is fighting for market share, Internode believes that increased product diversification and a continued focus on excellent customer service will maintain our growth in the coming year."

However, not all believe that content and application delivery is a viable business model for established ISPs. AAPT chief executive, Paul Broad, said on the launch of the ISP’s unlimited plans that connectivity remained a key priority for smaller providers. The retail division was bought by iiNet in July, establishing the Perth-based company as Australia’s second largest DSL provider.

Telco analyst Paul Budde agreed with Broad’s sentiments, arguing that the ICT sector as a whole needed to become “facilitators” of end-user applications and content, rather than developers and deployers.

“We are not content producers in the ICT industry,” he said. “Applications will come from the Harvey Normans or the medical software people of this world, the teachers, because these are the people that make content.

“Trying to build up a proprietary FetchTV or T-Box system; these things are going out the window because we’re unlocking and hacking devices. There is no way that you can build sustainable, long-term businesses based on proprietary systems anymore.”

Service provider’s increasing interest in Cloud computing and data hosting has bolstered investment in the data centre space, putting the telco sector on the same battleground as more traditional IT stalwarts IBM, EDS and HP. However, Budde said that while telcos could successfully compete in the infrastructure and middleware or connectivity layers, the applications themselves would require a third party.

“What Michael Malone and others I think are alluding to is that what they want to to do is build up a customer base big enough to be of interest to retailers who want to reach the customers,” he said. “If you want to harness the combined ICT elements - Cloud computing and the NBN (National Broadband Network) - then you obviously have to be attractive to companies like Harvey Norman, the banks, healthcare organisations who want to deliver services to the end-users.

“These companies are interested in what sort of customer databases they have that these people can access.”

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Tags iiNetinternodeaaptMichael MalonePatrick Topper

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