news iiNet’s buyout of fellow ISP Internode demonstrated the dramatic reduction in competition Labor’s flagship National Broadband Network policy was wreaking on Australia’s telecommunications sector, Shadow Communications Minister Malcolm Turnbull said today.
This afternoon, iiNet revealed it would buy Internode, in a move that will vault iiNet into clear third place in size amongst Australia’s fixed broadband players and reduce the number of major Australian ISPs again. iiNet has also acquired a number of other ISPs over the past several years, including TransACT, AAPT and Netspace.
In a telephone press conference following the revelation of the deal, Internode managing director Simon Hackett said Internode’s inability to gain sufficient scale to compete in a National Broadband Network world was a core reason why he decided to sell the company. Hackett has previously publicly criticised NBN Co for its pricing model, which he claimed would not allow even medium-sized Australian ISPs to compete effectively on a national basis.
Responding to the buyout this afternoon, Turnbull said the acquisition demonstrated the effect which the NBN policy had on competition.
“Labor claims the NBN will provide a level playing field and enhance competition, but this merger confirms it will diminish competition – not just at the infrastructure level, but among service providers too,” the Member for Wentworth said in a statement.
“The NBN’s vast expense is the reason it is pricing small, innovative internet and phone companies out of the market. Senator Conroy’s plan will reduce consumer choice, and ultimately increase prices for broadband users.”
Turnbull has previously warned about the NBN’s potential impact on competition. The construction of the network will see a number of existing infrastructure options taken off the table for Australians, with both Telstra and Optus shutting down broadband access via their existing HFC cable networks and Telstra also shutting down its existing copper network as the NBN’s predominantly fibre network is rolled out.
In addition, the Australian Competition and Consumer Commission has previously expressed concerns about some clauses of NBN Co’s arrangement with Telstra which would prevent the telco from marketing wireless broadband services as alternatives to the NBN’s fibre.
Over the past decade, Internode has been a leader in driving competitive outcomes in the telecommunications sector on a number of fronts. On the infrastructure front, it has rolled out substantial ADSL infrastructure in competition with Telstra, Optus and other telcos, becoming one of the first ISPs to offer ADSL2+ speeds up to 24Mbps.
In addition, it has been one of the first companies to offer bundled services like Internet telephony, IPTV and other services. On the regulatory front, it has been active in lobbying the government and dealing with the ACCC to get better outcomes for consumers and in its own business. It has also maintained a strong customer service record, compared to the lesser customer service standards evinced by telcos like Telstra and Optus.
Communications Minister Stephen Conroy has been invited to respond to Turnbull’s comments.
Image credit: Office of Malcolm Turnbull