You may have heard that the team at Launtel are preparing to turn on gigabit speed NBN Internet in Launceston at the end of May.
It’s important to pause for moment and answer a few pertinent questions about why we’re doing this, what it will mean for businesses in Tasmania and why we think, frankly, this is a massive deal for Tasmania and Australia, one that is hard to overstate.
First a little background: the world economy is changing and changing fast. New businesses and new business models are appearing at an accelerating rate. Think back 10 years, the first iPhone had just been announced but didn’t go on sale until June 2007. Facebook had been opened to the public a year earlier, but was hardly known outside of tech circles. Twitter had also only just started. Google had only just bought YouTube. Only in the last 5 years have Uber, Airbnb & Xero appeared. For businesses back then the internet was the place where emails were exchanged and flights were booked. The internet, at most was an enhancement to business life not the critical requirement it is today.
You’d be a brave person indeed to predict that this pace of growth is going to slow, that all the significant new business models have been explored or that businesses would soon become less dependent on their connection to the Internet. However as our hunger for more connectivity grows, our infrastructure in Australia and the telcos who run it have not kept up.
Indeed “Telco innovation” is an oxymoron.
A step change
It is time for a big change in thinking. A change where the Internet is the fastest part of your network, the part that is open and ready to take as much traffic as we can throw at it. So fast that we stop thinking about how fast it is and just get on with what we really want to do. When was the last time you plugged in a kettle and paused to wonder if the electrical infrastructure could handle it, or turned on a tap and wondered if there was enough water available in the pipes?
The Australian nbn™ has had a checkered history and unfortunately is the butt of much derision and source of many complaints about poor performance. However at its core (specifically the original fibre core connecting clients with FTTP or “Fibre to the Premises”), it’s actually a very capable network and easily capable of the gigabit speeds that our Blue Ocean Gigabit connections will provide. In Tasmania, due to the way NBN was rolled out, we have more Fibre to the Premises or “pure fibre” in a small area than any other part of Australia. So it makes commercial sense to use its maximum potential here in our backyard.
So why it this important for business?
Unlike 10 or even 5 years ago most businesses today depend almost entirely on the Internet to do business. If the internet slows or stops, the business slows or stops. If your internet fails, after an hour, nowadays most companies will simply send their staff home. However what businesses often don’t appreciate is how much their internet now controls the speed that they do business. One of the most expensive resources a business has is its staff. How productive they are controls how successful a business it is. Anything that gets in their way causes the staff frustration and costs the company money. How much money? A surprising amount.
Let’s say you take a 20 person company that has a wages bill of $1M a year (around $50,000 average per person). That equates to about $8 per minute of the working day. So let’s say you were to make a change that saved every person 1 minute of productive time each hour. That adds up to an extra $16,600 per year in extra productivity across the company.
So if the 1Gb Internet service just gives businesses back a bit of time each day and a lot of happier, more productive staff it’s a win-win for everyone involved. Of course if this is the value right now, what do you think it’s going to be 5 years time?
Tasmania and the new internet economy – the NOW economy
The term “internet economy” has become a bit cliché these days, but it doesn’t mean the phenomenon has stopped happening! In the beginning it seemed a bit of a far-fetched marketing term, but now it looks like it will have all the disruptive force of the Industrial revolution of 150 years ago, however with a lot less smoke (which is just as well).
Tasmania is often criticised as being on the end of the line, on the way to nowhere. However I think this is old style, “geographical” thinking, where physical distance was a barrier and it was important to be on a trade route. However if you look at the UK, it isn’t really on a trade route, it’s just a little island, only twice the size of Tasmania. Yet because of the industrial revolution it became arguably the economic power house of the world. To this day it’s still is a significant financial trading centre of the world. In the internet economy, distance is unimportant, connectivity is the important thing.
Just as having a deep water container port wasn’t of much use unless other destinations also had them, now as more and more cities and countries join the Gigabit Internet “club”, we have the opportunity to lead Australia in this revolution. This isn’t just good for Tasmania, it’s good for Australia as a whole. This isn’t about Tasmania beating mainland Australia, but rather us using the opportunity that we’ve been given, to join in the world internet economy, using our pure fibre network.
The internet economy is the NOW economy. Business is required as never before to be responsive: if your web site fails to load your customers are not going to wait, they’ll just go to the next line on Google search. We do business on our smart phones and we want things to happen NOW. The Gigabit connectivity, while new to Australia, is part and parcel of the new world – just talk to the many tourists who arrive and listen to their amazement about how slow the internet is in Australia.
We’re expecting to turn on the first stages of the Gigabit Internet in Launceston and the North of Tasmania at the end of May 2017. Then depending on the takeup in Launceston, we expect a month or two later to be turning it on in Hobart and the South of Tasmania.
We will upgrade most of our connections to both the NBN and across Bass Straight to support the extra traffic as more businesses come on-line. Because the connections through the nbn are relatively expensive and they have to be paid for regardless of the number of clients – it’s a bit like running an airline really – we will have to stagger the growth to match the takeup.
The one thing we’re determined to do is provide an internet service that dramatically exceeds business’ expectations. However we are pioneering this, and while we’ve been assured by nbn™ that the network can handle it, there’s always the unexpected technical issues that we’ll need to deal with. Until everyone is 110% confident of service reliability, we’ll be providing a secondary 100/40 connection via a completely separate network in case of any failures.
So why is it so damned expensive?
Yes for an internet connection it will cost more than some businesses are used to paying. However the question is, is it good value?
In Tasmania we haven’t been exposed to the cost of fast internet, because it hasn’t been available here. In Melbourne or Sydney to get an internet of that speed (typically only available in some CBD locations on various private company’s fibre) will easily cost $2000/month. We’re bundling in 10 unlimited calling SIP channels (VoIP phone lines) which will be attractive to any business that is currently using more expensive ISDN phone lines.
We put a lot of consideration into the price and we decided that it was important to price it at a level such that we could definitely buy enough connectivity to the NBN and back to the main internet where we knew it would perform really well.
We believe it’s still good value, based on the productivity increases that medium to large businesses will see from the increased performance of their internet.
We’re also hoping that Tasmanian businesses will see this not only as good for their own purposes, but will support the project and the future effects it will have on our economy.