Simon Hackett should “cash out”, sell Internode,
says iiNet CEO Malone

1. There’s a surprise, Malone wanting to buy up more of the landscape!

   • I know, right?

   • Om nom nom nom nom nom nom nom nom nom

2. I suspect Simon just enjoys it at this point. What’s the point of selling for more money if all it means is you don’t get to have fun with it any more?

   • I don’t know to what extent he enjoys it, but for me, at least, Internode *is* Simon Hackett, and Simon Hackett *is* Internode. Just as with Steve Jobs and Apple, his personality and approach to life pervades the entire organisation. I don’t think the term “cash out” really means anything in this context.

3. As I’ve said before, iiNet’s entire business model is driven by acquisition.

   You can thank the demands of shareholders for their pound of flesh for that. Of course Malone wants to by Internode. It’s a competitor. If you buy them out, you both take over the customer base and remove competition. They are rapidly transitioning to the Telstra model; crush your enemies, see them driven before you and hear the lamentations of their women.

   We’re fast heading towards an oligopoly that will translate to as few has half a dozen ISPs (or if iiNet buys up the entire industry) less still, via the NBN. That’s going to inevitably lead to reduced competition and a reduction of choice.

   You need a broad range of offerings to stimulate the market and keep inovation going. That means we need ISPs like Internode to remain in place, offering more than just a cheap-thrills solution (i’d rather see Simon look at an IPO for a chunk of the company, good cash injection but retaining control, rather than an iiNet acquisition which removes choice from the market).

   • We shall burn their spams, rape their scams and pillage their portals? :P

   • “You need a broad range of offerings to stimulate the market and keep inovation going. That means we need ISPs like Internode to remain in place, offering more than just a cheap-thrills solution (i’d rather see Simon look at an IPO for a chunk of the company, good cash injection but retaining control, rather than an iiNet acquisition which removes choice from the market).”

     +100

     Internode’s value to Australia goes far beyond its mere cash value. It acts as a strong competitive force in the telecommunications market, and I would hate to see it retreat from that role.

     • Internode are innovators, don’t forget that they drove ADSL2+ in Aus, Node also paid for the ratification of Annexe M in Aus. I would be more worried about the lack of technical innovation if Internode is acquired.

       • Yeah, makes you wonder why they are not rolling out FTTH then eh?

         • uh… because that would involve building “infrastructure”.

           an unfortunate sticking point for cherry-p… sorry, i mean, “innovators” like Internode.

         • Interesting take on it.

           Internode built microwave wireless backhaul and deployed ADSL into small rural SA townships that Telstra wouldn’t touch. The big T said sorry, your community isn’t important to us.

           Those microwave links were fully solar powered, using technology from a company that Hackett bought, they can run with any sunlight for 1-2 weeks.

           Oh, and is Telstra deploying Annexe M yet? ANything holding them up? Apart from trying to protect the extortionate prices they charge for antiquated competing technologies?

         • *Internode built microwave wireless backhaul and deployed ADSL into small rural SA townships*

           funded by government subsidies.

           *that Telstra wouldn’t touch. The big T said sorry, your community isn’t important to us.*

           really? who’s the biggest provider of telephony/broadband in regional communities i wonder? (hint: which is the only telco burdened by a USO?)

           *Those microwave links were fully solar powered, using technology from a company that Hackett bought, they can run with any sunlight for 1-2 weeks.*

           marvellous — nice to know our taxes have been well spent.

           *Oh, and is Telstra deploying Annexe M yet? ANything holding them up?*

           here’s a clue: the average Joe doesn’t even know or care about Annex M. (think: consumer demand)

           *Apart from trying to protect the extortionate prices*

           extortionate? really? gee, that must be why Optus prefers accessing DSL at ACCC-determined “extortionate prices” rather than fully-utilise their extensive HFC network which passes 1 out of every 4 residences.

           *they charge for antiquated competing technologies?*

           DSL is “antiquated”. wow, that must mean over 90% of the telecommunications infrastructure in the WORLD is “antiquated” by your definition.

         • Seriously, you just here to troll?

           DSL is “antiquated”. wow, that must mean over 90% of the telecommunications infrastructure in the WORLD is “antiquated” by your definition.

           If you don’t know what is wrong with that sentence then you really are just a troll. [hint: I was talking about Annexe M]

         • unless you can show evidence that telcos around the world have thrown out all their old equipment and replaced them all with optional specification Annex M over the past few years, Telstra’s Annex A technology which is the most commonly deployed specification is not “antiquated” by existing world practices.

4. I just assumed when Internode sacked Mark Newton et al earlier this year as part of a seemingly ‘trimming the fat’ type exercise they were preparing themselves to be sold. I wouldn’t be suprised if they were subject to due diligence at this very moment….

   • They are on the record as wanting to eventually list on the ASX; however if and when they do, I think they will do it in the same way that PIPE Networks did — list and sell a large slice of stock, but with the founders (Hackett, in this case) owning a controlling interest or close enough to it to make buyouts virtually impossible.

5. I’d rather see internode IPO and buy Adam or iinet :)

   • I don’t think it is a smart time to be listing on the ASX.

     :)

     • LOL

       just limit the free float ;)

       • What to Whirlpool fanbois only? :)

     • i bet you LOVED this bit:

       QUOTE:

       “On the plus side, Malcolm Turnbull has come out and – very unusual for the Abbott opposition, very unusual for any opposition – put forward their plans and their policy TWO YEARS OUT from an election. He [Turnbull] has laid out what he would do under that scenario and it starts with a six month study of what’s going to be required and what’s the best option, but his view – and I agree with him – is that a PATCHWORK network of different technologies, based on demand, is the most cost effective version.”

       some much for the skewering of Malcolm ;)

6. I hope Internode don’t sell, I think we need a provider like them to fit the niche tecchie market.

   I think the NBN will help get more people to signup to Internode, I’d be with them now if I could get their NBN or Optus/Agile plans, but I can’t bring myself to pay their Telstra Reach prices, I know of quite a few in WA who have the same mindset.

   • The problem with that is that all ISP’s will be paying the same for NBN ‘reach’ prices, the good old days of plan differentiation totally dependent on how you market your in-house DSLAM products is over under the NBN.

     • well, just think about it: Telstra only has 35% market share in the metro markets because the cherry-picking ISPs are able to massively undercut them on price and quota via parallel cheap, unbundled access to the CAN.

       if you believe the spin, the ISPs try to sell the story as one of customers desperate to get away from evil Telstra and churning away to Internode or iiNet if given the opportunity. the reality is, under either Labor’s NBN or a future wholesale FTTN model, everyone will be on a “level playing-field” in terms of wholesale cost of access (unlike the current situation where Bigpond is disadvantaged in terms of cost structure and has been forced to concede substantial chunks of market share to cherry-pickers).

       at the end of the day, residential ADSL is a commodity and all the average consumer cares about is plan pricing and quota generosity. with the interim consolidation of band 1/2/3 ESAs and the medium-term transition to the NBN with a common cost platform, all these cherry-picking ISPs will lose their most important competitive advantage over Bigpond.

       after all, just look at the howls of protest on WP when Internode revamped their broadband plans. all their customers are price sensitive too and will jump ship if another ISP offers a more price competitive plan. if it’s really true that the broadband that ISPs like Internode and iiNet flog are somehow “special” or sprinkled with magical fairy dust and customers are willing to pay a premium for “Internode-branded internet”, then these ISPs should be able to operate profitably in regional markets even with a slight cost advantage by charging that “Internode premium”.

       instead, the reality is these cherry-pickers have mostly ignored or abandoned the regional areas because they can’t undercut Telstra’s cost structure in those markets, i.e. they don’t even bother trying to compete against Telstra unless they can offer broadband plans that undercut Bigpond. this puts paid to the notion that Internode commands a “special premium” in the general market, because if it did, it would still churn subscribers away from Bigpond by offering plans with similar pricing and quota levels.

       • Revamping is a serious attempt to slowly dumbing down the plans to a simple human comprehensible level. Most people don’t know what a gigabyte is and 20mbit is a meaningless figure

         • actually, if you’re referring to Internode revamping their plans….. before they used to offer a highly differentiated pricing structure depending on whether you’re accessing an Agile / Optus / TW DSLAMs and whether you’re LSS or naked.

           the reason why Internode revamped or converged their plans to a single pricing structure (with the exception of Reach) is to reflect the future regime under the NBN where you can no longer arbitrage the cost structure and offer different pricing to your customers depending on whether you’re reselling TW or Optus unbundled or offering your own unbundled products.

           all these cherry-picking games will be over under the NBN (or a future wholesale FTTN model which i suspect will be similar to NBN with uniform wholesale pricing) and these ISPs will be “competing” on a level playing field in terms of pricing, as opposed to the current situation where Telstra can’t afford to match TPG or Internode’s retail pricing because they have to protect the value of the CAN since they own it!

           i think this is what alain was alluding to.

         • @tosh Yes and no. From an outside perspective they’ll announce plans and later reluctant reverse them with a tweaked profile

           Because Internode follows a Agile focus they’ll offend experiment with plans. But meanwhile ideally they want them to be simple and universal system(which what your suggesting). But that universal system is continuing alienates the passionate geeks which want that choice

           You keep your geekys customers happy. They’ll continue to support and provide good social recommendation for family/workmates
           When you piss the geeks off. They’ll stop recommendations and therefore business takes a sales dive

           Off-topic:
           Node will have a storm soon. When Internode announced a binary news service I always though a silly idea marketing trick to lure customer and eventually you’d announce the removal. Which is due next year according to whirlpool

7. I hope Internode don’t sell, I think we need a provider like them to fit the niche tecchie market……………………../ I have no experience with Internode. I’m with Adam (no plan,that’s just how it ended up),on basic instinct the more providers the more competition etc, but Internode come across as the stuck up princess of the isps. Good luck to Hackett for all his work and salesmanship but as the internet matures what is going to be the difference between isps an electricity companies? They are another service provider. A conduit. That’s all I want.

8. Michael Malone is sounding increasingly desperate on the issue of acquiring Internode (recall the “Internode is only half an ISP!” shenanigans a few months ago?). You only have to view the latest independent research to get a feeling why:

   http://www.roymorgan.com/news/press-releases/2011/1479/

   Internode’s customer satisfaction is *consistently* higher than iiNet. Further, it is trending *up* while iiNet is trending *down*. The gap is widening. Internode’s value is *rising*. Empirical FACT. I know who I’d rather be with. It’s just basic probability.

   • I couldn’t agree more. Don’t get me wrong, iiNet is a good company. But increasingly there is nothing special about it — increasingly it is becoming a mini-Optus. Internode, on the other hand, has a fundamentally different culture. Perhaps a more innovative one, but within its smaller capabilities. Definitely a more transparent one, and definitely one which is more focused on directly serving customer needs. iiNet is quite good at serving customer needs — as long as you fit broadly within its wide vision ;) internode is a bit more flexible.

     • When I’m sitting at home having a coffee reading the papers before I head off to work, how would Internode provide a better service an in what way?I have to tell you I am the new user,I have no baggage.I don’t care about the model T Ford guys of the internet,I’m all for what’s next.You home mechanics of the internet/computer have to realise your time is over.The consumer is here now.The romance is dead.

       • A typical Internode customer doesn’t even have to think about their internet connection. That kinda being the point… it Just Works :)

         • LOL

           a typical Bigpond customer doesn’t have to *think* about their internet connection either. “it just works.”
           everything from web browsing, SMTP, IRC, FTP to P2P.

         • 28% of BigPond customers surveyed by Roy Morgan disagree, it would seem.

         • Be interesting to know how many of those satisfied Internode customers are happy with their resold TW plans as well?

         • I’m responsible for a number ADSL plans across Internode and Telstra on both Internode DSLAM and resold Telstra.
           If I need a small tweak to my Telstra connection I email my Telstra account manager and 9/10 if it is something to do with an internet connection they don’t know the answer and will give me a contact for someone, sometimes I will repeat this process a couple of times before I get my answer one way or the other. Internode I email my account manager if they can’t answer my query they chase it up for me.

           Lines faults. Telstra Call up and sure enough the phone gets answered straight away but then I spend at least 1/2 hour getting transferred around to try and find someone actually able to fix the problem.
           Internode I call up phone may not get answered straight away but if I’m on hold more than 3minutes or so they give me a call back option. I’ve always get a call back and 9/10 the first person I speak to is either able fix the issue or arrange for it to get fixed. Doesn’t matter if it is is Telstra hardware or Internode hardware, although faults on Internode hardware get fixed quicker, faults on Telstra hardware get fixed in about the same time no matter who I lodge the fault with.

           Post NBN it is customer interactions that will help define one ISP from another. Don’t forget the value added services, such as download mirrors and usenet active IPTV, Static IP(options you get with that static IP), choice in preconfigured hardware. A happy customer is less likely to shop elsewhere based on price than an unhappy customer.

9. iiBorg :P

10. Node is aiming for a different market.

    It’s focus is shifting from being a geek ISP to focusing on developing a underground following in regional areas. Meaning they can deploy a DSLAM into an area which only serviced by Telstra

    If your the first ISP to get into the telephone exchange. It would be unprofitable for another ISP like IINET or Adam to install their own equipment into a pre-occupied exchange. Which is apparently the case for certain exchanges in SA

    Either Adam and Agile/Internode have gotten in first and the other refuses to deploy into the area until the numbers on Telstra become profitable

    • IF you wonder what this means for IINET. Both Adam and Internode are dominate players in South Australia market and have a exceptional loyal customer base

      IINET want a land grab of that lucrative subscriber customer base and more importantly increase to corporate customers would be a huge advantage. Because corporate accounts with business make the most the money makers for IINET, Adam. Node, Optus and Telstra, Which inturn will also subsidies the home users subscription/discount prices for internet services.

      Sadly you can only make a small percentage off home users thats barely profitable/sustainable

11. This potential sale just confirms the fact the NBN will polarise fringe ISP’ s and make competition similar to the the big 4 banks. One of the big 4 banks puts up their fees the rest follow.

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