How to make money as an ISP

Published on the 17/03/2015 | Written by Brendan Ritchie

Sector expert Brendan Ritchie looks at the reality of shrinking margins for ISPs and telcos today…

Whether it is in Australia or New Zealand, recent changes to the telecommunications landscape have reduced margins on almost every product and service that the average ISP and telco sells. Voice is all about call volumes, data is cheap, and the market is savvy. This fairly quick drop in margin, which has essentially taken place over a 24-month period, has dictated that the cost per sale has also had to decrease, but in both countries there remain serious impediments to that happening.

Here are some issues we have at the moment that are keeping operating costs higher than they need to be:

  • B2B integration is poor. Many major carriers still do not make useful APIs available to their wholesale clients, and worse, many still require xml and excel documents to be submitted to get an order progressing. Manual entry equals wasted money. Ideally we could SKU a service in the sales process, have that automatically saved within the relevant internal ticket/case, and then simply click “proceed to sale” from that ticket when the client has electronically signed.
  • UFB service qualification results have to be accurate. Most of the UFB carriers are good at this most of the time, but recently we had three Enable (Christchurch UFB carrier) orders rejected in a three week period due to no service being available, even though the order was placed on the basis that their RSP portal showed UFB was 100 percent available (to their credit they fixed one of these orders with a nimble workaround). Margin on UFB services is razor thin and we can’t afford to have clients disaffected and at risk of leaving based on third party errors.
  • Streamlining of internal provisioning processes. This one is on me to fix. We need to ensure that as few people as possible need to manually enter information into key systems, and if any manual entry is required, it is only once. We are getting there, but buying another company has set this project back.
  • Streamlining of pre- and post-sales processes. Contracts need to be templated but malleable when required, sales staff have to be able to pump them out in quick succession. Channel partner commissions should be automatically calculated, as should internal commissions, and reporting on net impact on the bottom line for each signed contract or cancellation.
  • When we sell a service, there are all sorts of factors to take into account, but each of them needs to be automated and flow on from the initial authoritative entry.

The difficulty is that while telcos and ISPs find themselves in a race to gain scale or die, the margins have dropped, meaning that the money required to help them gain back some profitability is simply not there. It’s a catch 22; they need to become leaner and more efficient, but that costs money, which needs to come from more clients, but more clients are expensive to process when you have antiquated systems…so update and automate, get some developers on board…but that costs money…you see what I mean.

Scale is such an overused word, in my case at least, but it really is the driver at the heart of everything we do, and seek to do. We have just employed two more people in new positions (PHP development and systems admin) but from here the primary focus needs to be on smarter systems, not more people powering old-school processes.


Brendan Ritchie is the CEO of DTS, a business-focused ISP that has been supplying clients across Australia and New Zealand with internet, voice and tailored WAN solutions since 2002. You can find him on Twitter @bcarmody.

*This article was originally published on LinkedIn Pulse.

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