Cost Pressure Puts the Squeeze on ISP Market

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Providing broadband and making it profitable is becoming a much harder challenge because it has become ‘just a commodity’, based on high volumes and low profit margins.

Nimans says the market is beginning to shrink as smaller ISP’s struggle to survive in a highly competitive, price driven industry. Ironically greater levels of consolidation are helping aggregators such as Nimans continue to grow as they provide a wide choice of services and solutions – playing a more prominent role and helping re-shape the ISP landscape.

“Aggregators are ideally placed because we can provide a broad knowledge of what’s out there in the market place which is not necessarily ISP specific,” says Nimans’ Head of Networks, Mark Curtis Wood. “There’s more choice, based on a bigger picture as we can provide access to multiple ISP’s so that we can tailor specific solutions.”
He continued: “ISP’s increasingly face the challenge of differentiating themselves. A good ISP provider is one that ultimately supports its customers. It’s never just about the price but that tends to be the overriding factor. For us it’s also about having open access to the channel through multiple different routes.”

Mark says another advantage of using an aggregator is that resellers do not have the pressure of any minimum commitments to an ISP, based on volumes of business.
But it’s not just resellers that benefit from aggregators, as Mark continued: “We are being approached by suppliers who understand the reach we have got in the channel. We are often better placed in the market to give support to resellers. We are nimble and flexible and can in some cases provide more focus from a dedicated operations team. We are ideally placed to help ISP’s expand their customer bases because we have the ability to look after clients on a more individual basis. Not everyone can offer Fibre To The Cabinet; we can mix various products together to ensure resellers always get the best deal.

The ISP market continues to consolidate as revenue streams and profits remain tight. “There are a lot of smaller players thinking about getting out of the market because of the commoditisation of broadband. There are similarities to the traditional calls and lines sector where revenues are decreasing. It can be hard to provide the right levels of service because the price point is so restricted. Eventually we could be looking at just a handful of major players.”

One way of moving away from ‘commodity products’ is to focus on next generation access to open up new revenue potential. “The next step is to identify how you access some of the next generation products such as Annexe M and Fibre To The Cabinet. Ultimately it’s about educating your customer about why they need these. Nimans is ideally placed to assist in this area.”