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Thirst for broadband boosts rise of mini telcos

David Ramli (via AFR) | July 9, 2013
Nuskope co-founder Michael Blake now runs a successful internet service provider connecting regional communities with high-speed broadband.

Thirst for broadband boosts rise of mini telcos
Nuskope founders Rabih Rachid, left, and Michael Blake stand on the roof of a telecommunications exchange in Adelaide. Photo: David Mariuz

For Nuskope co-founder Michael Blake there's a touch of Greek tragedy in turning a profit selling the services that killed your parents' business.

It was 2003 in their suburban Adelaide video store that Blake got his first start - an internet cafe linking 12 computers laden with video games popular with local teens.

Fast forward 10 years and everything has changed. Where the entrepreneurial young South Australian once literally worked in the shadow of VHS aisles, he now runs a successful internet service provider connecting regional communities with high-speed broadband.

"I pretty much got into what ruined their industry and I started with the death of my parents' job," he laughs. "The internet cafe was really popular . . . and it actually paid for this business to start. Everybody wants the internet, so it's a great business to be in."

Blake is among the new generation of young upstarts taking advantage of a booming demand for high-speed broadband. If online start-ups like such as Facebook and Google are the 21st century equivalent of the gold rush, then he is one of the merchants that sells the shovels.

According to Australian Bureau of Statistics figures released in April, the number of customers with broadband connections rose by 756,000 between December 2011 and December 2012.

Blake's main business is providing high-speed wireless broadband to regional communities. Where larger telcos avoid small towns because of small populations, Nuskope supplement its towers with cheaper equipment installed on the tops of buildings.

The rise in small and regional ISPs is partly thanks to Labor's $37.4 billion national broadband network, which aims to become a wholesale platform for high-speed internet services.

DeVoteD NBN manager Glenn Sansome first turned a profit importing the DVDs that his local Target didn't stock. But as internet downloads began to erode his movie profits, the high-school graduate and self-taught IT enthusiast expanded his offering to locals in the Melbourne suburb of South Morang.

"Without the NBN  we wouldn't have started our [internet] business," he said. "We've now got 900 customers and we have 70 more waiting . . . so that's about 10 to 15 per cent of all the active customers in [our area] of South Morang.

Sansome's business faces rising competition from other small rivals on the NBN and severe headwinds from major ISPs like Telstra, which has millions of marketing dollars to spare. By comparison, his team of 15 workers split their time between sorting DVDs and answering customer calls.


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