Wholesale internet services: Never forget the customer


Wholesale internet services: Never forget the customer

Wholesale internet services can be a bit like standing on a balance board and not falling off.

They require a very careful balance across continuity of services, scalability, commercial viability, and a partnership between the retail services provider (RSP) and the wholesale services provider.

Image by joseadolfo from Pixabay ‌‌

Customer dynamics are also slightly different because, in reality, there are two levels of customer: the RSP and the end-users. Both have input into what defines successful wholesale services, and although the end-users are usually not visible to the wholesaler, it's the end-users that are ultimately the most important part of this services delivery equation.

And those needs and expectations should be what defines the services on offer, and the business models of the RSPs.

Making choices

For end-users and RSPs, the first decision in getting this 360-degree balancing act right is the choice of internet services. For the end-user, it's the choice of RSP. For RSPs, it's the choice of wholesale network services partner.

What defines both choices are the services on offer, and those early choices need careful thought because they influence customer dynamics down the track.

For example, RSPs may enter the market offering lower-tier services at a low retail price point initially attractive to end users. Yet, that can create problems later on: users' expectations usually tend to grow, at which point the margin at which the RSP provided those original services become too tight to support increased networking headroom.

Worse, the RSP and its wholesale partners might not have the capacity within existing points of interconnections (POIs).

At that point, getting more capacity from a fixed network and an existing margin can become difficult.

Squeezing more from the source

It's no secret that user demand for high-speed internet services continues to grow. Not surprisingly, demand for services increased by 25% as a result of the COVID-19 pandemic. As early as April 2020, business internet traffic at 10am increased 71% when compared to pre-COVID traffic.

The number of people working at home at least once per week has also increased by 71% over the past 12 months. The expectation that many more of us will continue to work from home has likewise sharpened the focus on network capacity.

One option for wholesalers to increase traffic and capacity is to contend their networks. For a new suite of services from a new RSP, this might make sense. The wholesaler can define service level agreements with its retail partners in a more predictable way, and the RSPs can build their business models around predictable services at a competitive price. They squeeze more connections to users from the POIs they have.

But network contending can become problematic as demand for more services grows.

If the capacity is capped because of physical network constraints, little can be done short of building new infrastructure.

If capacity is available, the RSP may see margin erosion as more service capacity is provided for a given price point, across more channels. And any increase in retail prices to mitigate this can trigger user churn, or worse, the failure of the RSP's business model.

The equilibrium between service price, SLAs, and customer expectation falters.

One way out of this conundrum is to manage networks dynamically. Superloop, for example, does not congest the network, and provides a platform called Superloop Connect that makes it easier for our RSP customers to order, deliver, and manage their network capacity and NBN connections dynamically.  

A dynamic market for internet services

The Australian market for internet services grows fiercer by the day. As the NBN infrastructure nears completion, aggregators such as Superloop are building our own infrastructure to extend capacity and flexibility closer to end users so we can create a dynamic market for high-speed internet connectivity.

RSPs are, in turn, creating a subsidiary market for the value-added services that sit on top of the wholesale networks. End-users have every right to play those markets to find the best combinations of service, flexibility, and price.

The responsibility to customers is for wholesalers to provide increasingly dynamic access to capacity and infrastructure, working with RSPs to ensure they are commercially viable, working together for the ultimate benefit of the end-users.

End-users deserve continuity of service. With careful planning, and a focus on the customer, that 360-degree balancing act can be maintained.

Find out more about Superloop's wholesale services.