Andrew Colley | August 26, 2008
FIXED-LINE incomes for carriers could come under more pressure as sales increase of equipment that allows consumers and businesses to share 3G mobile internet connections.
NetComm, which has a $10.5 million contract to supply devices for Telstra's Next G network says it is negotiating to open new supplier agreements with other mobile internet carriers.Sales of the equipment on Telstra's Next G network have been strong. NetComm chief executive David Stewart says the units are being deployed across Telstra's network at a rate of between 10,000 and 20,000 a month.
Currently, Telstra doesn't offer voice capability on the devices.
Stewart says there is no reason why the company couldn't supply similar equipment to alternative providers prepared to offer voice services on the devices.
"We can build a different product with different features, a different look and feel, for different players," he says. "The product we supply to Telstra doesn't have voice, whereas the product we provide to another operator may have voice and fax features onboard," Stewart says.
If carriers are prepared to offer devices capable of delivering voice services, consumers will be able to bypass copper line rental charges, he says.
Virgin offers similar arrangements with its home broadband modems, which are capable of carrying voice services.
Sales of its wireless 3G Gateways to Telstra have helped turn around NetComm's business from a net operating loss of $1.34 million in the year to June 2007 to an operating profit of $512,000 for the 2008 financial year.
A one-off income tax benefit helped push NetComm's net profit to $2.15 million for the year despite a 10 per cent drop in revenue from $21 million to $19 million.
Stewart says the company is trialling the devices with several carriers in developing markets but declines to provide details.
NetComm has recently shifted its focus from selling what it describes as low-margin products but retains its core business selling modems to internet service providers.
NetComm has also acquired licences to operate network management systems designed for small and medium businesses.
The company licences the system from Mako Networks and markets it locally as NetAssure.
Rather than relying on sales of routers, modems and DSL equipment, NetAssure provides NetComm with a fee-based monthly revenue stream.