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unbundling = money

01 Oct 2006

As most people are aware, the government announced in May that it would legislate to enforce LLU (Local Loop Unbundling),  enabling other ISPs and telcos access to Telecom’s phone exchanges and the local line that runs into homes and businesses around New Zealand. This will break the monopoly Telecom currently has on broadband.

All this is great news but discussion around the benefits of LLU has yet to move beyond ‘how cheap and fast will broadband become’. LLU means so much more for the end user than just fast broadband for under thirty bucks a month. It’s the beginning of a tidal wave of new opportunities.

Identifying the revenue opportunities requires some thought and this will be the challenge for channels and resellers wishing to take advantage of the new playing field to create income.

Slow and expensive broadband internet connections have thus far held back the development of services and hardware which could make an economic impact in New Zealand. Now that this bottleneck will ease, as a country we need to ‘walk the talk’, and begin identifying these blossoming opportunities.

Once LLU becomes reality, I foresee that the income opportunities will broadly fall into the following three areas:

Value Added Services

With the internet connection bottleneck improved, a whole new wave of services delivered over broadband will be developed. Just as we’ve already seen value added services such as ringtones for mobile phones and TV episodes downloadable to the iPod, we’ll now see the development of many new services for broadband. This could be anything from high-speed backup services, realtime entertainment, video-on-demand, music on demand, VoIP (Voice Over Internet Protocol or Voice over Broadband), IPTV and games previously unfeasible over slow broadband.

The trend is moving away from consumers being told what to do, what to watch and when to watch it to personalised services and entertainment - in realtime and on demand

Resellers currently in software development or content production will do well to begin future forecasting the trends in the areas of value added services delivered over broadband.

Hardware and CPE

Until now the hardware and CPE revenue opportunities have been quite limited, to modems and routers, and more recently the ‘personal entertainment’ devices such as iPods and MP3 devices. With LLU, and the resulting boom in value added services delivered over broadband, the consumer will drive demand for a new wave of devices to support these services, including faster and better modems, VoIP phone handsets and gateways, and IPTV set-top boxes. We’re even seeing the first of the combined ADSL router with Wifi and VoIP now built-in.

The real oil will be in picking future trends. For example the reality of a personalised TV channel is closer than we think. The boom in illegal downloads of movies and music is being fed by the industry’s refusal to deliver entertainment how and when consumers demand it. The technology is fast allowing consumers to create their own entertainment experience and they need new hardware to constantly keep up with changing trends.


As businesses and consumers become more and more dependant on new technologies the paradox is that they become less and less able to understand and manage these technologies without professional help. To some extent, this began with the boom in VCRs in the eighties, and from there the technology only becomes more confusing to the average consumer or business owner.

Home users will soon be happily purchasing IPTV set-top boxes, MP3 players, PC multimedia boxes, VoIP phones, and Wifi gateways, and businesses are rapidly becoming dependant on email, browsing, VoIP and offsite data storage.

But all this new hardware needs to be installed, configured, maintained and repaired. The average person will be less and less able to make heads or tails of how to do all this. The opportunity for the reseller channel is to provide “one stop shop” solutions, to make it easy for the consumer or business to take advantage of the new value add services and hardware available in the post-LLU world.

The IT integrator that can manage these relationships and provide a quality service to remove the hassles of the technology will be successful in making the most of the revenue opportunity.

In conclusion, we must move beyond thinking about LLU in terms of ‘cheap and fast broadband’, and forecast the services, hardware and solutions that will meet the needs and desires of end users and how ultimately we can build profitable businesses around these.