Energy providers enter nbn game

Optus Wholesale’s recent agreements with retail energy service providers Origin Energy and Sumo Power is the latest sign of convergence of telecoms and energy sectors, and an indication that telecoms services are on their way to becoming a utility, according to GlobalData.

Last month, Optus Wholesale signed a three-year agreement with Sumo that will allow the gas and electricity retailer to offer nbn broadband services as part of a bundled internet, telephone, gas and electricity offering for residences and small businesses.

The agreement covers the wholesale supply of residential broadband services over the nbn, mobile broadband and fixed wireless broadband services.

This agreement was signed shortly after Origin Energy entered the broadband market through a similar wholesale agreement with Optus. Origin is offering nbn services on all speed tiers from 12 Mbps to 100 Mbps, as well as ADSL offerings for residences outside the current nbn footprint.

According to GlobalData, both electricity companies are hoping to add postpaid mobile services to their bundled offerings under a mobile virtual network operator (MVNO) arrangement with Optus.

The research firm also noted that this is not the first time the energy and telecoms sectors have converged in Australia. MVNO Amaysim launched retail energy services in 2017 after the purchase of online-only retailer ClickEnergy, while Vocus-owned Dodo began offering broadband and energy bundles last year.

“The shift for telecoms companies into the energy market comes as competition is driving down communications services prices and margins. Several telecoms providers have seen margins on core businesses like fixed-line voice and basic broadband decline as consumers increasingly see communications services as a basic utility like electricity or water,” GlobalData Telecom Technology and Software Analyst Malcolm Rogers said.

Telecoms companies worldwide have been resisting being relegated to a “dumb pipe” providing only commodity services for years, but some experts believe this is inevitable.

“Utilities by their nature fetch lower margins as customers see them as easily interchangeable substitutes, fuelling the process of commoditisation. Commoditisation of telecoms services has been a topic of concern in the industry for a while, with many telecoms companies investing in other industries like software or entertainment to try and diversify their revenue,” Rogers said.

But the deals could also help Optus better compete with Telstra and TPG for share of the nbn market, and stimulate competition among service providers.

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