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    Broadband fires Swiftel growth

    By Hugh Halloran

    PERTH-BASED network service provider Swiftel is stepping up its push into the Eastern States on the back of a surge in broadband customers, with plans to open a Melbourne office by the end of the month.

    News of the move comes just days after the telco announced it expected to report a maiden profit of nearly $1.5 million for this financial year, based mainly on strong growth in its ADSL products, particularly in Sydney, where the company established an office in February.

    Since that time, more than 2500 customers - 800 in July alone - have chosen Swiftel's ADSL products. According to Swiftel managing director Chris Gale, the company is budgeting for more than 14,000 customers by June next year.

    Mr Gale said Swiftel had experienced "amazing growth" in customer numbers since it signed a deal last October with Telstra Corp to resell that company's DSL products.

    The company intended to build a strong sales and marketing team in Sydney, Melbourne and Brisbane in the next few months, with offices in the latter two cities to be opened by the end of the month and the end of the year respectively.

    Mr Gale also said he would need to leave Perth to lead the company's broader development in the next few months, but said Swiftel's "back-end engine" would stay in Perth because this city offered lower overhead costs.

    "At the end of the day, 10 per cent of the market is sitting here in Perth, and the rest is sitting on the east coast," he said.

    "I think this current financial year is probably one of the most important years Swiftel will have, and it's important that we're focused on the growth areas of the east coast. I think companies like iiNet have done a wonderful job growing their business out of the east . . . and I think it's something Swiftel needs to do too, and that means I need to go over there and build the business and make sure there's a focus on there."

    Mr Gale said telecommunications companies were finding that broadband, and ADSL services in particular, were starting to take over from dial-up connections as people's preferred method of accessing the internet.

    Figures from Telstra support this assertion: Australia's biggest telco reported last month that its broadband subscriber base had grown to 360,000 customers from 290,000 at March 31 - a figure that put it on track to achieve its target of one million subscribers by 2005.

    Current industry expectations were that broadband's market penetration would increase from the current 4 per cent of Australia's population to 20 per cent by 2006.

    Swiftel's predictions of even higher proportional growth in customer numbers is based not only on its regional expansion, but an increased focus on small to medium businesses - a sector the company had not catered for in the past.

    Last month it signed a deal with SME-focused telco People Telecom, which will see PeopleTel market and sell Swiftel's DSL product to its own customers.

    Mr Gale said Swiftel's corporate products ranged in price from $1000 to $10,000 a month, but such a high-end product was unattractive to smaller businesses.

    However, the company's operations had been split into two separate divisions - corporate and ADSL - and while there had been "moderate growth" in corporate customer numbers, the DSL product was taking off very quickly.

    "I think what we're seeing is basically a switch from dial-up across to broadband because the cost is now competitive, and we're going to see a massive swing from customers - those small businesses, home offices - swapping across from dial-up to broadband," Mr Gale said.

    Telstra had significantly improved its service to wholesale customers like Swiftel, probably under pressure from the Government and the Australian Competition and Consumer Commission as well as sheer demand from customers, Mr Gale said.

    He said Swiftel hoped to replicate the success of iiNet, another WA internet company that has reported such extraordinary growth in its DSL products that it is now second only to Telstra in DSL subscriber numbers.

    He said iiNet had done a "fantastic job", but added that Swiftel could match - if not better – that company's service to its customers.

    "Our whole mission early this year has been to turn Swiftel into a truly national organisation," Mr Gale said. "Sydney's growth has been, without question, beyond what Perth has been doing . . . and probably 60 per cent of our revenue within the next 12 months will be coming from the Eastern States.

    "People ask me what the driver for DSL is; DSL is the driver for DSL. People want faster connection speeds and to download quicker. It's pretty simple."
 
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