Remember all the talk two or three years ago about how everyone would love broadband? At the time, the industry churned out marketing material gushing about a new technology capable of delivering a whole raft of new and exciting applications that would radically change the way small companies operated.

In many respects broadband has lived up to its promise, but things didn’t quite work out service providers planned.

On the one hand, they actually underestimated small businesses’ appetite for fast Internet. On the other hand, while broadband had changed the way companies operate, they’ve not been as quick to adopt new applications.

Pacific Internet managing director Dennis Muscat says that by July of this year 52 percent or slightly more than half of all Internet-connected companies in Australia had broadband access. Two years ago the number was around 20 percent.

These numbers come from research conducted for Pacific Internet by ACNielsen Consult and published in the company’s Broadband Barometer.

Muscat, who heads the local operation of a regional telecommunications service provider, says many small businesses have purchased residential broadband packages aimed primarily at consumers. This makes sense because many smaller companies operate directly from people’s homes.

Jason Juma-Ross, principal analyst with AMR Interactive says that for small businesses the practical reality of broadband Internet is not that it enables new applications such as video conferencing or voice over IP, but that it allows users to do more of the things they did with dial-up. He says that for many users the always-on nature of broadband is possibly more important than its speed.

Muscat echoes this. He says, “They’re doing much the same as before, but with more intensity.” That means sending and receiving more email, increasing the amount of web browsing for information and doing more with their own web sites. At the same time, companies with broadband links are far more likely to use Internet banking and pay their bills online.

For example, Muscat says people are now sending large complex documents via email that they might have previously couriered or sent via fax. “Broadband increases efficiency and reduces costs. At the end of the day these are what small businesses want from any technology.”

One area that has changed dramatically is remote working. Companies that operate at multiple locations or who employ out-of-town teleworking staff can now give their remote users full, real-time access to internal computer systems.

Muscat says this has had a huge impact on some industries. “In the past if, say, a travel company employee got an out of hours call from a customer who needed to change his itinerary, that employee would have to physically go to the office in order to change the booking. Now they can take the call at home and log on to the travel systems.”

For now, more glamorous broadband applications such as videoconferencing remain well outside the business mainstream. This is despite the increased reluctance for long-distance travel now that airports have additional security procedures.

Likewise, there’s been no rush to voice over IP technology, which allows businesses to cut telephone toll budgets by enabling calls over the Internet. And software companies that have repackaged their applications as pay per use online services are still not getting much traction in the small business sector.

One reason for the slow move to new applications is that companies don’t necessarily see them as relevant. For example, videoconferencing adds little value for many companies, who could just as well get by with ordinary telephone calls.

But there another factor that can be sheeted back to Muscat’s observation about Australian small business using broadband products and services designed for residential customers. These consumer offerings tend to be significantly cheaper, but they are also generally much slower than business services – in most overseas markets anything less than 1.5 Mbps isn’t regarded as true broadband and certainly not adequate for advanced applications involving video or voice.

Moreover, residential broadband doesn’t offer the same service guarantees as commercial products. In other words, it’s not generally as reliable as business-class broadband and that extra consistency is essential for more sophisticate applications.

So what broadband applications are small businesses using? Muscat says that for the moment tools that increase data integrity dominate the market. He says there’s a huge demand for managed firewalls, spam filters, content filtering and other security products and services. “They’re concerned about viruses and hackers and being flooded with spam”.

Muscat says that as they gain experience and confidence with the technology, companies will move beyond what he describes as online hygiene factors and seek a higher grade of data network. “Small businesses know they have to deal with these issues before they can move on to the highfaluting applications.”

First published in The Australian Financial Review 2004

When they want to create something that looks like a grass-roots campaign, but isn’t, big companies use astroturfing.

The Drop the Rate campaign that began yesterday with support from Consumer, Tuanz and 2degrees is a classic example.

At first sight it’s aims are laudable. Lord knows we pay way over the odds for mobile phone services. The campaign aims to put pressure on Vodafone and Telecom to cut the mobile termination rate or MTR. This is the amount one phone company has to pay another when customers call between networks.

There’s no question New Zealand’s MTRs are high by international standards. That’s only part of the reason mobile phones are far more expensive to run here than in Australia – or just about anywhere else. It is also a major brake on the economy – calls that could be made, possibly should be made, are going unmade because of the high costs involved.

Yet despite it being worthy in principle, there’s something phony (or should that be phoney?) about the Drop the Rate campaign.

For a start, there’s an expensive PR company behind it.

Who is paying Matthew Hooton’s fee? Good on him for getting the job, but you can be sure Exceltium isn’t collecting money from cake stands and sausage sizzles for this work.

Second, 2degrees doesn’t want to talk about the MTRs it pays to Vodafone and Telecom and has gone to extraordinary lengths to make sure grass roots, that’s real grass, not astroturf, New Zealanders don’t get to know the rate.

Of course no-one can blame 2degrees for taking part in this kind of stunt. Telecom and Vodafone play hardball. And both are less than snow-white in their marketing and political lobbying.

Campaign gets wide media coverage

Hooton certainly proved his PR skills. The Kiwi specialist press was full of the story. At The National Business Review Chris Keall expressed some weariness about the campaign in 2degrees again a little sneaky on MTRs at the National Business Review. The story got a good run in the New Zealand Herald and the Dominion Post.

At Computerworld Rob O’Neill seems more willing to take the campaign at face value. His Drop the rate mate' campaign targets MTRs offers no comment. Paul Clearwater at The Line reports that Vodafone disputes the information on the campaign’s web site in 'Drop the rate mate' campaign begins.

Update: Computerworld reports on Hooton’s attack on Telecom and Vodafone in Mobile termination row goes nuclear. The story finishes;

Hooton has words for Telecom, too, as the MTR debate goes white hot.
"Telecom now seems to be saying that it needs to rip off mobile consumers in order to fund more investment in the industry," he said. "Good luck to Telecom arguing that a cosy duopoly leads to more investment in services and coverage than a more competitive environment."

My opinion: Hooton proves he is a worthy campaigner against the arrogance of Telecom and Vodafone – clearly he was the right man for the campaign. Despite this, I’m still not comfortable with the astroturfing.