Launtel questions NBN Co's Enterprise Ethernet sales

An nbn retail service provider has suggested that NBN Co is pushing Enterprise Ethernet sales on companies that don’t need it.

In a blog post, Damien Ivereigh, CEO of Launceston-based Launtel, argued that NBN Co is heavily overselling Enterprise Ethernet to customers without the need for the technology.

He said he believes Enterprise Ethernet would not be a product were it not for the decision to switch from an all-fibre rollout to the current multi-technology mix (MTM).

“Unfortunately Enterprise Ethernet’s main purpose is to make up for the deficiencies in the network that occurred due to nbn’s switch to the MTM (aka using all the existing copper, HFC etc that was already in the ground),” Ivereigh wrote.

Ivereigh recalls that when NBN Co first announced its business availability zones across the country, where Enterprise Ethernet was being offered with no upfront install costs, state and local political figures wanted to know why a particular area north of Launceston was not on the list.

“It had probably been left off the list because it was one of the first areas rolled out with FTTP. They already had fibre! Yet the assumption was that they needed to have Enterprise Ethernet to attract the “world class” companies to the area. It was this point that I realised people had been drinking way too much of the nbn Kool Aid,” he said.

He said business customers not served with FTTP are left with two choices for a business-grade connection — sign up for a multi-year Enterprise Ethernet contract or pay for an upgrade to FTTP, which can be difficult to arrange.

“The advantage of the tech upgrade process is that it is a single upfront price and then that’s it. Enterprise Ethernet on the other hand is significantly higher prices not only for the entire contract, but also once the contract is renewed. You are also stuck with that retailer for the duration of the contract, regardless of the level of service they provide,” Ivereigh wrote.

“Given that one off cost upfront can be a significant drain on a businesses cash flow we are currently investigating whether we can finance the technology upgrades. What surprises me is that nbn don’t do this — most likely because it would compete with their much more profitable Enterprise Ethernet.”

Ivereigh argued that Enterprise Ethernet is only the superior choice for customers needing the very low jitter, very low contention properties of the technology.

“If you are an accounting firm, a legal firm, a manufacturing business or even a designer or a school, you almost certainly don’t need it. All the modern applications we use today, including video conferencing is designed to run over pretty average connections. The reason is obvious, if they needed an expensive connection to work they would rarely be used.”

Ivereigh added that it is “frustrating” that NBN Co chose to create a completely new product rather than creating the product from the existing NEBS FTTP product. “Yet again, nbn have created yet more complexity for the RSPs to deal with,” he complained.

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