When the concept of network ownership was born in the mid noughties it was seen as yet a further step in developing and de-regulating the telecoms market for emergent Service Providers.
Telecoms providers were handed an opportunity to own their own network asset, contribute to forming a competitive landscape and offer the benefits of networks with the service level of a small business. The intentions were well meaning, however skip forward 15 years and owning a broadband network, or any network for that matter, is no longer seen as an asset.
Cumbersome, complex, costly, capex heavy, operationally challenging and all so we can declare we own an asset when, actually, the fastest growing businesses are asset light.
Think Daisy. Its business models is nimble, adaptable, simple, replicable and customer focused. Owning a small network is not congruent with this which is why decommissioning networks and converting from ISP to virtual ISP is seen as a way to develop operational efficiencies, better manage margins and put the focus firmly back on the customer.
Here we explore the core reasons to make the switch.
1. Unless you have consumer traffic you are always going to have a network that is dormant in the evening.
The capacity of your network is determined by your peak times which means that 16 hours out of the 24 you are running a high bandwidth network with high availability that fails to maximise on your investment.
There are certain solutions…
You could choose to rent out your network, bring on a partner who focuses on consumer business but they are few and far between and realistically B2B businesses are not set up for out of hours support and not to the level required by home users.
You could branch into the retail market yourself, but the margins are tight, and the bundles are now Quad Play offering, broadband, phone, TV and mobile, which means dramatic changes to your business model.
You could resign yourself to a quiet network in the evening, but this will eventually force up your costs making your business prices uncompetitive and your margins so tight that it’s hard to invest in better service mechanisms.
2. Calculating your cost price requires a degree in further mathematics and skills akin to those in Good Will Hunting
Now this is no reflection on your business, even the big boys struggle with this one, in fact they struggle more than most because the truth of the matter is that the more complex the network the harder it gets to understand exactly what it is made of. Planned future investment is also tricky, anticipating market trends and demand is challenging and there is fine balancing act between your business objectives, network development and the sale and marketing achievement. Calculating the future and ongoing investment is a challenge and any errors can be fatal for cash flow and overall profitability.
A virtual ISP has none of this headache, the guesswork is completely removed and replaced with a simple price point from which you can build out your tariffs and costs easily ensuring your businesses profitability.
3. One price point
The management of the network is not only complex and constantly changing in line with technological development, it is also incredibly difficult to pinpoint the base line cost. It isn’t always a sum of all the parts, there is also the challenge of predicting usage of customers and then pipeline and getting this wrong can mean you have a group of very unhappy customers.
Typical customer interactions can escalate quickly;
“I have a broadband fault” – pretty generic
“My broadband has slowed down” – beginning to sound suspicious
“I want to cancel my broadband”
A virtual ISP avoids this with one simple price point across network for their realm, upgrade when required and never squeeze customers usage when calculations go a bit awry.
4. Every time you need to upgrade your network you cancel out recent growth through the necessary capex
Unless there is a retail route to market margins are tight and as the complexity of the network grows it becomes harder to identify how much money you are making per tail sold and in no time, you need to upgrade. Someone once described upgrading their network as being like buying a taxi, you have to get the car before you even take your first fare. It is like this with a broadband network. Upgrading involves capital expenditure and the profitability from this product suffers a blow until trading level increase to the value of the investment and only then will it become worthwhile in terms of margin.
Investing in a Virtual ISP engagement means you don’t have to worry about cancelling out your growth every time you want to build in more network capacity. Your realm can flex as required, this means there is no investment form you until you have the business to warrant it.
5. Consolidate your network
Smaller ISPs tend to have limited interconnects for network coverage which often means running a network alongside at least one managed services arrangement. These providers then have two revenue streams for one product with very different commercial models further complicating the proposition. A Virtual reseller has the opportunity to leverage the network relationships of the larger ISP allowing for the consolidation of their network offerings under one brand which they own.
6. One portal, one set of analytics
In business, we all know, the simpler the better. Successful businesses are built from a highly replicable and repeatable sales model but the same can be said for most business functions. An efficient operations team offers a far improved service to customers however this can be jeopardised if the interface between product and customer is complex. Often this can include multiple product, billing and network portals with varying aesthetics and user journeys adding further complexity to onboarding staff and managing customers.
Information is power, and our Partners tell us that they need the tools, the analytics and the general visibility of their network. They do not want to lose control of this level of management and first-hand insight which is why the Wavenet portal provides an equivalent level of detail but on one interface, with a user friendly and intuitive user experience. This has resulted in more efficient onboarding and training of new staff and easier customer query resolution.
7. Place your efforts on your customer solution rather than the solution delivery
The common theme throughout is the transition of something from being limited and complex to being more flexible yet simple. Providers who make this transition are then able to focus more thoroughly on the solution delivery, building in demand services for their customers and placing the focus back on the sales and marketing effort. Streamlining in this way aids growth through realigning the business focus with that of its customers.