The NBN is going to change the telecommunications landscape in Australia forever.

Unfortunately the discussions around this transformation have been largely concentrated on telecoms. The debate has been completely hijacked by the industry, which, together with the government and the regulator, makes the decisions about what is the best design, architecture and regulations for the infrastructure in order for them to maximise their telecoms business.

The reality, however, is that many of these telcos will find it very difficult to change from their current, mainly  network-driven, telecoms approach to one in which the network is pure commodity and the control over it is beyond their reach – and where they will need to change to a much more retail-oriented approach.

However the NBN is much more than that. It is about e-commerce, digital media, e-health, smart grids and so on. But even if we just stick to telecoms the question arises as to how successful they will be once the network has become a utility where margins will all be more or less the same, and where regulatory gaming or Telstra gaming is no longer possible.

A retail telco model is vastly different from the telco models that currently apply. These models have, in particular, become more prominent in 2008, when the regulator opened up the market through unbundling, making it possible to obtain interesting margins through clever engineering. Once the NBN is in place much of these regulatory advantages will disappear.

There is only one large-scale telco retailer who has any experience in this market, and that is Dodo. Unfortunately it was recently attacked in a rather cowardly fashion, under parliamentary privilege, by the Liberal Opposition. Along with most telcos Dodo did not have a great reputation in relation to customer service; however to single the company out in parliament as a key culprit was bad form. Even at the height of its poor customer service delivery phase it was not attracting much more than 5% of the total number of complaints made against all the telcos in Australia.

The company admits that it did have poor customer service performance – it does not shy away from that fact. However it began to address this several years ago and has now built new customer service infrastructure that is able to handle customer issues in a much better way – and its share of complaints has since dropped to around 1%.

This is all good and important; but at the same time the company has been able to totally review its retail business operation, and the same systems that have been installed to improve customer service have also been used to finetune its retail model. It now has much better customer information and is able to use that information to commercial advantage – in particular to create better relationships with its customers. This, among other things, reduces churn and improves ARPU.

The nature of Dodo’s business means that it attracts large numbers of first users, who are difficult and expensive to handle unless first-class systems are in place to manage the process, while still maintaining a good enough margin to operate a healthy and sustainable business.

And this is the area in which BuddeComm suggests that Dodo has an advantage over the other telcos in the market. For Dodo, moving to the NBN does not necessitate any major operational changes, or any major changes to its business models, margins and so on. It will just be a case of moving from one wholesale network to another – and the new one will probably be less complicated, much easier to deal with, and much less negotiation will be required. So, in principle, less cost.

Customer service is critical in a retail environment. This applies to all telcos, and all of them will have to improve their game, as has been made abundantly clear by both the government and the regulator. If Dodo can continue to improve its customer service it will be very well-positioned to be one of the retail leaders on the NBN. With a focus on its customers from a retail perspective it can also look at other services it can offer, and it is already retailing energy and gas.

Some of the MVNOs are also moving into hardware (smartphones, tablets, game devices).

It will be interesting to see how this NBN-based retail market develops. The most likely long-term outcome will be that NBN retail will become much broader, and that telco services will become an increasingly small element of the total sales activities being conducted over the NBN.

Telco services will most likely be integrated into other retail activities, with perhaps only a few specialised online telco shops surviving. It will be interesting to see where Dodo ends up – will it remain a specialised telco shop or will it further diversify into other products and services?