Dodo prepares for life in a post-ISP era

The Australian Internet service provider (ISP) market has continued to go through a process of consolidation. Figures released by the Australian Bureau of Statistics in October 2012 revealed that the number of 'medium'-sized ISPs — those with 1000-10,000 customers — dropped 25 per cent in the space of a year. ISPs with more than 100,000 customers dropped from 10 to eight in the same period.

From the point of view Larry Kestelman, that ISP market consolidation is not something to be fearful of — at least for the company he sits at the helm of, Dodo. Dodo's CEO says his company has been "very much the winner of the consolidation in the market".

"We're an organic growth business, and the less brands that there are out there on the frontline, I think Dodo benefits out of the lessened competition without a doubt," Kestelman says.

"We're a frontline brand, and the less brands and brand noise out there, it's a plus for us."

Dodo has experienced "significant growth" over the last two years, Kestelman says — just don't describe the company as an ISP.

"I don't like the term anymore," he says. He doesn't like to describe Dodo as a telco, either: "We're a customer service business."

"We've diversified," he explains "We're not a one-product shop, which a lot of the people that have either disappeared or have been acquired [were]."

This diversification began with Dodo offering household electricity, then, in, 2012, household gas supply, and more recently the company has begun selling car and home and contents insurance. Power and gas are "absolutely" part of Dodo's core business Kestelman says.

"The way we look at ourselves, we don't actually look at ourselves as an ISP or a telco, we're almost an enormous big buying group," he says.

"We have a large number of customers, and we can on their behalf go and get a good deals on other products that we feel are relevant. Then it's our job to support the customer."

"Without a doubt" the company will look to expand its household service offerings, the CEO adds.

"My team is pretty well stretched with dealing with the ones I've got," he says, but he sees potential in expanding to financial services, including perhaps mortgages.

"We're a service business, so people will call us for convenience, for trust. We have a brand, we have these systems and processes, and from a differentiation point of view, if you want to deal with one brand for all of your household needs, well we're the people."

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The CEO believes this diversification of the company's business will stand Dodo in good stead as the rollout of the National Broadband Network continues, with the federal government's new network beginning to level the playing field for ISPs and eroding at least somewhat the competitive advantage of the larger players in the market.

Kestelman says Dodo is "busily integrating in the background" in preparation for launching an NBN offering. "When we do, as with everything Dodo does, it will be in a blaze of glory. We will definitely not hold back and we will want to get our fair share of the pie."

"For us, it's a real opportunity because of the equalisation of costs. We've worked on the idea of a wholesale market from day one for 11 years of our existence; we've been a buyer at wholesale level. Now everyone becomes a wholesale buyer... We see it as a huge plus for us without a doubt."

The company has held off on launching NBN plans while it waits for the network to achieve a scale that makes it worthwhile, Kestelman says. "That's why we have not launched prematurely, just for the sake of saying we're doing it. As the volume is now ramping out, we'll certainly be there in the very near future."

"I would safely say to you that you will see something from Dodo in this financial year," Kestelman says.

"We're in a position where we're very supportive and actually very excited about NBN being a big part of our business. We just need to always juggle between future potential and today's reallity. So today's reality is still 99% of the market is copper but we recognise the enormous potential that will evolve very quickly now.

"We've seen the rollout start, which is terrific, and I think that's ramping up. And we'll ramp up with it... we'll certainly be a large player in that space and I think you'll see us be as aggressive as ever, both on the offerings and price, and what it is that we're putting to the market."

Rohan Pearce is the editor of Techworld Australia and Computerworld Australia. Contact him at rohan_pearce at idg.com.au.

Follow Rohan on Twitter: @rohan_p