Having long-touted itself as more than a modem company, Netcomm this week consolidated its move into broadband services, announcing the acquisition of telecommunications company Van Gogh Investments (VGI).
Netcomm will spend the next few months transforming itself into a digital subscriber line (DSL) carrier after shareholders approved the issue of 2 million ordinary shares, 5 million options exercisable between July 2001 and 2003, and 7 million options exercisable between July 2002 and 2004 for the acquisition of VGI.
Netcomm managing director David Stewart told ARN the company had signed a memorandum of understanding to acquire the company some time ago. Now, with the go-ahead from shareholders, Netcomm will roll out DSL services across the metropolitan centres of Sydney and Melbourne. The first exchange is due to be installed by Christmas.
"VGI was started by a group from the telecommunications industry with the intention to roll out an asymmetrical digital subscriber line (ADSL) and become a carrier, so we have had those people on board for a couple of months," Stewart said.
"The roll out means installing our digital subscriber line access multiplexer (DSLAM) equipment in telephone exchanges, but our intent is to sell services via our traditional sales channels."
Mass production of the Netcomm DSL modem range is due to begin shortly. The company also has a further three modems in the development stage. Netcomm plans to sell the modems through retail channels such as Harvey Norman and Officeworks, with particular focus on the SME market rather than the corporate sector.
Stewart likened the DSL sales channel to the existing mobile network, where dealers sell the customer a modem and access to the network.
"We believe the first to adopt [the DSL modems] will be SMEs and the power users - anyone who has the need to have broadband Internet access," he said. "Because of the charges Telstra has put on the unbundled local loop, pricing will mean the initial take-up will probably not be by the average consumer."
He added candidly, that the initial pricing structure could prove a saving grace for providers.
"It is not bad that DSL starts off like this because there is no way we could supply demand otherwise."
Netcomm is in discussions with Harvey Norman about developing marketing strategies to educate the consumer market. These include providing DSL services to mass merchants for use in practical displays.
"It is a traffic generator for the retailer and it means the consumer can get exposure to DSL. We are looking at putting our first lines into retailers as part of our marketing," Stewart said. The announcement comes hot on the heels of the appointment of Terry Winters as Netcomm chairman.