Broadband success for Magnet

Sunday Business Post - Communications 2008 Supplement - June 22 2008

Magnet continues to grow and add new services to its repertoire, such as the recent acquisition of internet telephony provider Glantel, writes Dermot Corrigan.

Broadband provider Magnet Business’s recent acquisition of Irish internet telephony provider Glantel is part of the company’s strategy to add services and products that build on its high-speed broadband network, according to Mark Kellett, chief executive of Magnet Networks.

"We looked at the market-place and saw a big gap for a converged voice and data solution that could provide businesses with a better set and wider range of services," said Kellett. "We looked around at various opportunities to build, buy or partner. The acquisition of Glantel allowed us to accelerate our time to market, and bring in house a very good mixture of knowledge base and intellectual property. It was actually a very simple decision to make."

Glantel, which was formed in 2006 by Declan Murphy and Darren O’Donohoe, had built up a substantial SME customer base for its converged voice and data services prior to the acquisition.

"They had just over 100 Irish-based customers when we acquired them, and they have some customers with a European footprint as well," said Kellett. "They had demonstrated an ability to take our network and add more value to it, by offering a voice and data solution."

Magnet Business is the business services arm of Magnet Networks, which also includes Magnet Entertainment, a provider of broadband, telephony and home entertainment to residential homes.

Kellett, who was appointed chief executive late last year, said his current primary focus was on building the business services part of the company. He said the current Irish business broadband market was less competitive than it should be and offered opportunities for Magnet to grow quickly.

"The decision was taken to focus on the business-to-business marketplace and the business consumer," he said. "There were a lot of issues in the regulatory environment in 2007, and there has been a substantial degree of progress made by ComReg in moving the agenda forward, but we made a very clear decision to focus on where we could be successful and demonstrate success quite quickly."

Kellett said that most of the apparent competition in the Irish business broadband market was not real competition at all.

"There appears to be a lot of competition," he said. "But when you peel away a very thin layer, you see a lot of pseudo-competition, which I have called 'fraudband'. Effectively most of the players in the marketplace are simply taking Eircom's product and reselling it. Whatever way you bundle it you are still selling a contended, shared product. There are very few players who are truly innovating and actually being competitive from a product perspective, which Magnet does."





Magnet has built on its initial fibre-optic network with the 2005 purchase of wireless broadband provider Leap, the 2006 acquisition of internet services provider Netsource, and a total investment of over €70 million in the development and rolling out of its core infrastructure.

It now has 39 unbundled exchanges nationwide enabling the provision of advanced copper-based broadband services - including SHDSL and ADSL2+ - around the country, as well as an extensive fibre based network in Dublin, Galway, Cork, Limerick, Waterford and Portlaoise.

The company is owned by Vancouver-based Columbia Ventures Corporation, and operates from Clonshaugh in Dublin 17, where it currently employs 150 staff.

"We have well over 6,000 business customers at present," Kellett said. "They would not be small one or two person operations, we have some very large customers to which we provide services in a global context. It is a service that goes from the small home office all the way through to SMEs and up into the large corporates."

Magnet's broadband is offered over its own network, so customers do not run into problems with contention ratios, Kellett said.

“Businesses want to take online software services from people like Sage or Salesforce.com using the software as a service model, or have their storage requirements maintained and managed off site, but you can not do that if your broadband connection is shared with 24 other people,” he said. “If a customer buys a line off Magnet, it is their connection, they are not sharing it."

Kellett said that, although Magnet was always at the forefront of pushing forward the speed of broadband available in Ireland, the real competition in the business broadband market going forward would centre on quality and service level, rather than pure speed.

"You can only move so much on speed, you have to then talk about what other services you can provide that really differentiate you from your competitors," he said. "People want to start utilising voice and data, hosted environments, software as a service. The real competition, which you will see revealing itself over the coming year, is on the innovation of the product itself."