news Maverick analyst Paul Budde this week claimed cut-rate broadband provider Dodo was the only ISP positioned to take advantage of the deployment of the predominantly fibre-based National Broadband Network as it is rolled out across the nation over the next decade.
In a blog post following a briefing with Dodo, Budde highlighted the fact that many telcos and ISPs in Australia had historically followed a “network-driven, telecoms approach” to their business, while the telecommunication landscape in an NBN world would see the network become “pure commodity”, with control over infrastructure “beyond their reach”.
With the NBN, Budde argued, the focus would change from networks and “regulatory gaming or Telstra gaming” and to pure retail outcomes. “There is only one large-scale telco retailer who has any experience in this market, and that is Dodo.”
Budde said that Dodo did have a poor customer service record in the past, but that since that time it had built new customer service infrastructure that would be particularly appropriate to the wave of new customers incoming onto the NBN. “The nature of Dodo’s business means that it attracts large numbers of first users, who are difficult and expensive to handle unless first-class systems are in place to manage the process, while still maintaining a good enough margin to operate a healthy and sustainable business,” wrote Budde.
“And this is the area in which BuddeComm suggests that Dodo has an advantage over the other telcos in the market. For Dodo, moving to the NBN does not necessitate any major operational changes, or any major changes to its business models, margins and so on. It will just be a case of moving from one wholesale network to another – and the new one will probably be less complicated, much easier to deal with, and much less negotiation will be required. So, in principle, less cost.”
Speaking with Delimiter recently, Dodo chief executive Larry Kestelman said the company currently saw itself as a one-stop shop that would provide utilities to Australian premises — from Internet services, to telephony and even gas and electricity. To meet this goal, the company had for the past five years employed 25 full-time software developers and invested hugely in its internal systems. Like Budde, he noted that the company did attract a very high proportion of novice customers — which put a substantial pressure on the company’s customer service skills.
Kestelman said it was the front-end of telecommunications companies which was important — comparing the telco sector to other industries such as banking. “I don’t think anybody sits there and goes: I wonder where NAB gets its funds,” he said. “Nobody cares. It’s the same with this — nobody cares where the Internet comes from, or even whose network [it is]. We’re one of the few companies which does not actually own its own infrastructure,” he said. “We have actually had to learn our own business by buying from other providers.”
opinion/analysis
I want to post some more detailed thoughts on Dodo at another time, but I will note that I don’t quite agree with Budde here. Frankly, although Dodo is increasing its social capital and reputation with Australian telecommunications consumers, its somewhat crude approach to marketing and mass market style still tends to turn many people off.
There’s a reason why companies like Internode have grown so strongly organically over a long period and have customer bases resistant to churn; because they have demonstrated a commitment to helping their customers get good service at a reasonable price during a troubled transitional period in the telecommunications sector.
Cut-rate companies like Dodo and TPG have also grown strongly, with their price advantages, but I would also bet that they experience strong degrees of churn, and as the NBN begins to act as a price leveller, I would bet such companies will struggle to convince customers to sign up for value added services with them.
Image credit: Dodo
I’m with Dodo (unfortunately), and I will say first hand that they are the most incompetent bunch I’ve ever had to deal with.
“Pure commodity”? Control over infrastructure “beyond their reach”? Really, Paul? Come on mate, you know full well that Internet connectivity on the NBN will require more than just the fibre local loop. With zero infrastructure, you’re little more than a reseller of someone else’s Internet services. Granted, that’s all that Dodo does right now, but to tar all ISPs and telcos with the same brush is a downright lie. Someone, somewhere has to roll out some sort of infrastructure to support connectivity from any of the 121 POIs of the NBN to the rest of the Internet.
Why is it that people insist on spreading this sort of FUD? Is the pay-off from the Coalition really that good?
Without a doubt, Dodo’s Customer Service has improved, in fact, I think if you compare the Ombudsmen reports over the last three years, you will see that Dodo’s position has improved more than any other provider. It is very apparent that Larry Kestelman is committed to improvement and to providing the Australian public with an affordable quality service. At the same time, Larry’s stance on this commitment can not be questioned given his willingness to stand up and be vocal. It seems that it is always left up to Dodo to keep the rest of the providers in tow with regards to pricing. I’d say ‘watch this space’ as this Dodo is far from extinct.
Fairly positive comment there Mark … got anything to disclose?
Other than I’m an ex-Dodo customer (had to disconnect whilst building a new house on site of new house. Will return to Dodo in the future), not particularly. I might just say that I was very satisfied with their service in the past and look forward to re-connecting in the future when the house is complete. Looking forward to comparing their NBN offer once the other providers have finished publishing their offers. As I mentioned, leave it to Larry to always come up with something, he always has in the past.
When your TIO complaints number as many as dodo has, its quite easy to reduce that number by a figure more than anyone else. Wouldnt have to do with the amount of customers they no longer have as well would it? (i’ll be honest, dont know their customers numbers for sure, but this article is the only place iv ever seen anyone say they were a happy dodo customer)
Not that I’m a particular fan of Dodo but Paul Budde nails this!
The entire ADSL ISP industry is based on problem resolution of a horrendous number of customer and vender problem scenario combinations, and capacity management.
One single downtime instance and customer service experience can make a massive difference in brand perception.
The NBN reduces the number of problem scenarios massively by removing the adsl modem from the equation, and replacing it with a standard box which either works or it doesn’t and can be monitored and managed remotely.
It removes the competitive advantage of a good customer support team.
A small number of wholesalers removes the advantage of efficient capacity management, and makes it a business decision
Wiping the slate clear, a LOT of people will be happy with comparatively avg internet speeds if they don’t have the drama of connection and continuity of connection.
The NBN reduces the number of problem scenarios massively by removing the <insert brand=”” name=””> adsl modem from the equation, and replacing it with a standard box which either works or it doesn’t and can be monitored and managed remotely.
Not quite Brett, the NBN NTU does not act as a router, and a third party, possibly even branded, router will need to sit in between the NTU and the customer in most cases.
In regards to TPG’s churn rate, their share holder report claims 1.5%
I’m not sure how this compares to other ISP’s.
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