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Smart Telecom gets into the broadband game

Smart Telecom, a relatively small company is getting into the residential telephone infrastructure game in Ireland in a big way. They’re doing a deal where you get line rental plus 2-megabit broadband for EUR 35 including VAT. The same package with the incumbent (Eircom) would cost you well over EUR 100. This is the first serious challenge to Eircom’s dominance of the residential last-mile marketplace in Ireland.

Reading between the lines of program manager Garfield Connolly, the plan is to:

– use their own fiber network to connect to any exchanges that are convenient

– unbundle those exchanges and do whatever it takes to get 100,000 customers paying EUR 35/month for their line connection, resulting in a gross profit of EUR 15 per line, for a total gross profit of around EUR 18m/year.

– sell out to another telco before you run out of cash. Companies like Esat/BT can use their fiber network to reach more exchanges and replicate the model.

It seems like a pretty good model all-in-all. It sounds like the technology is coming together for them. They seem to be taking great care not to let things get too complex, which is a good idea.

Of course, it all depends on getting their 100,000 customers and the accompanying 18 megayoyos of recurring revenue on-board as quickly as possible. From the discussion, it looks like Smart are a little surprised to find that a large proportion of their potential customers have broadband already, and are looking for a better service for a lower cost, rather than wanting to install broadband for the first time.

Makes sense when you think about it. Anyway, I wish them the best of luck.

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  1. Hmm,

    Maybe their model is a good one. I mean back in dialup days Esat gave the great service of unlimited time connections for whatever it was, ?25-?30.
    It didn’t take them long to change their mind to firstly:
    only after 6PM
    only if you didn’t leech from the internet (and lets say it, most people still do something similar to this).

    While it might be adventourous to try it, again, its definately needed to shake up the broadban market.

    The point worth noting, like you said, are:

    -they need the customers. period. if they don’t get them, then they are screwed.
    – if they decide to change the package, for whatever reason (customers using too much bandwidth, etc) they will get flamed. I remember the rabid discussions on IOO about Esat.
    – sell out to another telco before you run out of cash. Companies like Esat/BT can use their fiber network to reach more exchanges and replicate the model.
    – they have to do business with Eircom. They would try the patience of a saint.

    When I have to pay for bandwidth provided by a PSTN line, and if they are still around, then I would look at them.

    Lets hope wireless becomes more popular.

  2. Wireless broadband will never come close to satisfying demand in an urban area. I feel strongly about this. There are a number of reasons:

    1. Not enough bandwidth. There is only so much radio spectrum and therefor bandwidth available (there is no such physical constraint with fiber or copper).

    2. Wasteful of bandwidth. Becuase of a technical phenomenon known as the hidden node problem, a lot of the bandwidth ends up being wasted with collisions and handshaking when you go above 30 or 40 users within a cell. You can get away with this with mobile phones because the bandwidth demand is quite low and most users only use their device very occasionally. You can’t get away with it so easily with high-bandwidth applications.

    3. Unreliable. Some days wireless will work great. The next day it may not. This could well be because the salesman has been at work in your building or area, and your cell has become suddenly congested. Even a small increase in the number of users could cause this sudden outage. I certainly know of one user in Dublin who had wireless broadband for a few weeks, and then suddenly found out that it didn’t work anymore.

    You don’t get this problem with a wired solution, particularly with DSL. (It may happen with cable, but the situation isn’t so volatile, and you’ll see a gradual reduction in service rather than a sudden and complete loss.)

    Of course, it works well on a small scale, which makes it great for trials and for rural applications.

  3. Hmm, I don’t agree on the point the wireless will never satisfy urban requirement.

    Look at mobile phones. The main reason for the success of mobile phones (network wise maybe at least) is there is a fixed distance for a urban, built up area, 1.5KM. Also the layout of the network that gurantees the distance between them.

    I think if wireless was setup in the same way, there would be a more guaranteed reliability with it.

    As the cost of these things becomes cheaper, there is no reason why they can’t be spread more on the ground.

    True 802.11b does not have enough bandwidth available for a densly populated network.

    The better configuration would be high bandwidth point-to-point links and then local coverage through 802.11b nodes.

    Hmm, you get lots of other problems with DSL.

    For remote coverage, yes of course, WiFi is an excellent model to use.

    anyway, I have been interested in wireless since year 0, so I will always favour wireless over wired.

    but thats just me.