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.