To VOIP or Not To VOIP
A pretty regular query I receive is when will Westnet release a Voice Over IP (VOIP) product. Westnet has been looking at VOIP for quite a long time now and actually conducted a two month staff trial way back in late 2005. We have no question that the technology works but the hurdle we struggle to overcome every time we re-evaluate launching a VOIP product is why put our energy and development resources into a product that the prospects of breaking even on look pretty grim. Our core business is providing excellent products with excellent customer service and any product line we offer that risks making a loss puts that core business at jeopardy. We intend to be here for many more decades providing quality products and excellent customer service and this must remain in the forefront of our minds at all times.
Engin is a publicly listed company which claims a 44% share of the VOIP market. Engin announced recently to the ASX that they enjoyed a very impressive 173% revenue growth and 255% margin growth in the 6 months to December 2006. Unfortunately though this resulted in a net loss after tax of $4.5 million from revenue of $8.3 million. This loss was actually up from a net loss after tax of $3.7 million for the corresponding period in 2005. Engin is only an example but does demonstrate that VOIP is not an easy game to make a dollar in.
To cut a long story short, we would like to offer a VOIP service but will not offer one unless we can make it at least a break even proposition. I know I don’t want to see our broadband prices increase again and I suspect nearly 200,000 other members are with me on that. VOIP is scheduled to be reviewed again in the middle of 2007. Hopefully the numbers do look different but until they do you won’t see Westnet risking its core business on VOIP.
Posted by Ryan Bunter
May 4th, 2007 at 6:28 pm
Quite right to avoid VOIP at the moment when there is Skype and MSN going for it. For the moment, stick to what you excel at, viz internet and phones
May 4th, 2007 at 10:28 pm
VOIP is a consumer win as opposed to traditional phone plans. To take a purely economic viewpoint on an isolated position of VOIP alone is a mistake. VOIP is a value added product which would enhance the business as a whole, therefore before dismissing the technology, as a loss making proposition on face value alone, it would be prudent to look at it as a natural fit to the overall business of an ISP. I do not know the financial position of Nodephone by itself but I do know that it adds to Internode’s overall product, enabling the ISP a more attractive proposition than it would have ordinarily been without it.
May 5th, 2007 at 11:39 am
Hi Martin,
We certainly haven’t dismissed the technology. We actually quite like the technology but offering it as a loss making product would put upward pressure on our ADSL pricing due to the existing tight margins of that product. Personally, I don’t think introducing products which risk price increases on our core product would be something our members would like to see happen.
May 10th, 2007 at 11:36 am
I enrolled for VOIP with Engin about a year ago - and cancelled after 10 days of hell. Constant phone interference, a messup with the internal workings of my Mac, and long waits (like 20 mins) for the online help. The help was actually good once I got past the front line kids, who didn’t seem to have much idea of what I was talking about, but……
I decided I didn’t have the time or patience to continue being mucked about just to save a few dollars. So I switched to Westnet, and couldn’t be happier. Great customer service all round.
October 11th, 2007 at 7:30 am
As a consumer I love VOIP and will keep using it. I am using Engin and have a very low regard for their quality of service … I’ll move on at contract end. After being a customer of Westnet you will NEVER go back to Bigpond, but Internode is a serious contender with great service and great offering. IMHO only Telstra, Optus and Internode can ever deliver industrial grade VOIP because all three have or allegedly have direct access to wholesale broadband, ie. they own it. Westnet should partner up with Agile and become a friendly but viable competitor to Internode. We would all benefit from a stronger service oriented competitive consortium versus Telstra & Optus in this space.
I love Westnet, but will probably move to Internode next year when I move to Adelaide and that will be driven by my desire to escape Engin.