There’s only so much value you can add
You may have heard that Dublin-based Airfibre, which has been operational since 2008 and described itself as “Ireland’s most powerful complete business partner”, went into liquidation in late December last year.
According to the company website, “Airfibre’s range of uncontended, symmetrical business Internet connections enable Irish businesses to compete in an ever expanding online world where reliable connectivity is mission critical to success.”
Elsewhere, it states: “Airfibre delivers high quality service business broadband to over 300 businesses around Ireland and proudly boasts that customers who joined Airfibre’s network in 2009 still rely on its best-in-class business broadband today.”
Given the company’s proud record and pedigree how, you might wonder, did it find itself in the position where liquidators were appointed for the business on 19 December 2023?
According to John Earley, CEO at Airfibre, the business was unable to operate as it was while supporting the various liabilities it had. “We had no option other than to close it down,” he says. “It was very sad. We achieved a profit in Q3,” he claims, “but it was not sufficient to meet the financial liabilities of the business going forward.”
Part of the reason for Airfibre’s difficulties has been the huge drop in price for Internet circuits which have plummeted from €700 for an entry-level circuit in 2008 to less than €100 today. At the same time, “the underlying cost of provisioning the service has gone up”. There was also the need to constantly invest in upgrades to accommodate higher bandwidth requirements and the fact that the “crticality” of the service is “vastly more heavy than in 2008”.
Slow progress
The company sought to combat the decline in pricing by introducing value added services, specifically managed firewall-as-a-service and managed Wi-Fi-as-a-service. According to Earley, there was a good business in the provision of those services. The problem was that it took too long to get to that point.
That highlights an interesting challenge for many resellers seeking to address declines in their traditional core business with added value managed services. There are plenty of people enthusiastically endorsing the switch to managed services but managing the switch is as important as being able to make it.
For a start, you have to convince your customers to make the switch too. You still need to persuade them of the merits of paying for a service, firewall-as-a-service for example, when they have become accustomed to having it onsite and out of mind. That may have brought a false sense of security but the argument still needs to be won before they understand that and accept the rationale for making the change.
Channel partners also need to ensure they get the right recompense for providing the added value managed service. They need to get a good return from the investment needed to deliver the managed service. Also, the service doesn’t only need to be successful it needs to provide a raison d’être for continuing to provide the core service. Not forever, necessarily, but for as long as it makes sense before the company pivots to providing other managed services that have become more essential to customers.
As for Airfibre, Earley reveals that the assets, service obligations and contracts have been acquired by Netmore Ireland, the subsidiary of the pan-European Netmore Group, which has invested heavily in developing infrastructure and services largely targeted at IoT. While this is still at the early stages in Ireland with various pilots with organisations installing, testing and proofing the technology, he believes it “will explode at some point”.
The company’s five staff have been transferred to Netmore, which will also keep Airfibre’s office in Dun Laoghaire. Earley adds that all Airfibre’s customers “are protected under the arrangement with no interruption to service. For me personally, that was the real objective I wanted to achieve”.
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