Enterprise Ethernet – a missed opportunity?

We very much welcome the announcement by NBN that they are reducing the monthly costs and mostly removing the up front fees associated with Enterprise Ethernet (EE). We expect that we will be able to offer this service in many more places and to smaller businesses than we do currently. More than likely this is NBN reacting to price reductions by other big fibre providers who they are in direct competition with and also making life harder for the fibre overbuilders. NBN are a business (though government owned) and they have a responsibility to maximise their revenue opportunity.

However we are very disappointed that this has not been accompanied by an equivalent investment in the regular NBN infrastructure (aka “NEBS”). The most obvious one being starting the upgrade to FTTP. NBN originally had a scheme called “NBN Select” where they were offering a fixed price (and relatively cheap – around $3600) upgrade to FTTP in various business areas. They were upgrading the in-street infrastructure and then inviting people to upgrade their individual premises. Once upgraded they are free to use whichever provider they like. This scheme seems to have mostly fallen away as the NBN Business team appears to now regard NEBS with a certain amount of disdain, claiming it is a low grade, residential, product.

While there is no question that Enterprise Ethernet is a good product, it is still expensive and comes with long contracts. It’s value is really only apparent when compared to non FTTP (HFC, FTTN, FTTC etc) technologies. While there are some use cases for EE where FTTP is already available, they are extremely rare in our experience. Most businesses only buy EE because the technology they have been given is not up to scratch to running a business. This is around performance, but much more importantly around reliability and certainty – the reliability and certainty that only fibre can provide.  

In some ways the fact the EE even exists is a testament to how poor the decision was to move away from the original FTTP rollout back in 2014. The original “business grade” product was Traffic Class 2, that ran over FTTP. Sales of this product were fairly poor because people realised that the standard, and much cheaper, Traffic Class 4 FTTP product was good enough for all but the large businesses. Most business applications (including conferencing systems: Teams, Webex, Zoom etc) do not need high quality, low jitter connections that EE or Traffic Class 2 provide – if they did no-one would use them. 

We have built our business on no contracts – because we prefer to keep our clients through good service rather than locking them in. EE goes against this idea due to the need to take on a long term contract from NBN. This reduces competition overall as customers are locked in to their provider for up to 3 years. There is no opportunity to change provider during that time. 

In many way NBN’s EE is a product of the classical old style telco thinking. We believe we are part of the new style, flexible telco model. A model that allows people to change speeds when they need to, change provider when they need to with a minimum of fuss (within 20 minutes). This is the same model being made available by cloud companies where you can buy computing power by the hour – think Amazon Web Services (AWS). 

If there is one thing Covid-19 has taught us is that it is not enough to have reliable internet in the office, we also need it at home as part of our desire to do more working from home than ever before.

We look forward to NBN making equivalent announcements in the much more flexible NEBS space. These are the investments that are needed to start us down the road of the inevitable FTTP upgrade for Australia.

Damian Ivereigh
Launtel
22nd Sept 2020