Internode sale shows NBN killing competition: Turnbull


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


  1. Oh c’mon…really Malcolm?

    Who’s to say this merger wouldn’t have happened without the NBN?

    How’s that OzeMail thing working out for you Malcolm?

    • Who’s to say this merger wouldn’t have happened without the NBN? Come on, Michael, Hackett himself said it was a factor. The potential NBN overbuild was also clearly a factor in the TransACT acquisition.

      It is clearly time for Australia to admit that the NBN IS having an impact on competition in the telecommunications sector, and a fairly drastic one. The evidence is there.

      • A “factor”, yes…not the “reason”…you listened the PC – the was a lot more to it than that :)

        I disagree that there have been detrimental effects on competition – there are a number of new players that have either enterered or are looking to enter the market. Vodafone have started their trials, and a number of electricity companies have indicated their interest.

        Australia Post have said they are looking at it – would that have happened without the NBN?


        M&A happens all the time in all markets – and while Simon indicated that it was a factor in the sale, both he and Malone were quite clear that they’ve been talking about it for over a decade, long before the NBN came along.

        • “There are a number of new players that have either enterered or are looking to enter the market. Vodafone have started their trials, and a number of electricity companies have indicated their interest.”

          Vodafone has zero fixed-line customers right now and has traditionally been a cut-rate player in mobile, offering no technical, media or product innovation. So far, no electricity companies are even trialling services over the NBN, and I would argue there are very few examples internationally where any electricity company has been successful at providing telecommunications services.

          “Australia Post have said they are looking at it – would that have happened without the NBN?”

          Great. A government-owned monopoly (NBN Co) selling services to another government-owned monopoly (Australia Post). That’s not competition.

          “M&A happens all the time in all markets – and while Simon indicated that it was a factor in the sale, both he and Malone were quite clear that they’ve been talking about it for over a decade, long before the NBN came along.”

          Sure, but you’re still discounting Hackett’s comments about the NBN as a factor. Will you still be discounting them if Primus, Adam Internet and Exetel pack up and sell their businesses in the next little while, perhaps to iiNet? I would argue that both Primus and Adam would be pretty likely to.

          • well, under NBN, some companies will go and new ones will be born. Simon has been negative about NBN anyway. So he is happy to use that excuse to sell off his company. or did he inform Turnbull before the sale, so he could get his press release ready for this? may be simon will run for liberal party at the next election and make a mess of NBN soon after – consistent with him commentary so far re NBN.

            NBN will have an impact on boradband landscape, new players, new services etc. so, if companies are merging, its not always negative. Internode goes, Australia post comes in. so what? who is to say internode services will always be better than what australia post or vodafone are going to offer. in many ways, its better for some of these ADSL companies to go,so new entrants can think differently and offer new services.

          • “Australia post comes in”

            Australia Post — a government monopoly — must not be allowed to sell retail broadband services from the NBN, another government monopoly. That would make an incredible mockery of the idea that the NBN will increase retail ISP competition in the telecommunications sector.

          • They’ve already got into the stationary business (Aus Post shops look like news agents stores now), and are getting into insurance. I agree AusPost shouldn’t get into telecoms, but I think its likely they will – if they and Telstra merged, they could change their name back to PMG.

          • i almost agree with you on Aus post not being allowed to be an RSP.

            i agree that they should not be allowed to do so while NBN Co is in government hands.

            however after it is sold off i can see no reason why it should not be allowed to offer broadband services as part of the suite of services it offers.

          • What has the presence of monopoly power in a market for postal delivery services got to do with entering into a retail market for the provision of telecommunications?

            What difference does it make if the monopoly power belongs to enterprise that is owned by the government vs an enterprise owned by the corporate sector?

            There is no logical explanation for your view that because Vodadfone is mobile-only, with no fixed line operations, that it won’t be a competitor. By adopting this view, you seem determined to construe events to suit a particular narrative – that the NBN is only detrimental to competition. Surely, when tallying up the net position on competition, the entry of a player must be added to pro-competitive side. It’s not to say that the NBN is pro-competitive, but you need to be balanced in your views. And Telstra and Optus have shown that you can leverage mobile and fixed line services off each other, so again, not sure why Voda is destined to have no effect on competition.

            That the NBN is affecting competitive dynamics is true. The question that needs to be asked is whether the net effect leads to enhanced economic efficiency and therefore greater consumer welfare.

            The answer to that question is not simple and will probably be debatable for years to come. But more operators does not necessarily mean healthy competition or efficient market operations. Similarly, fewer big players does not mean that competitive outcomes cannot be achieved. The Bertrand model of oligopoly show that a competitive market outcome can be delivered with two companies can deliver a competitive market outcome.

            I am not saying that the conclusions reached by you are wrong. Nor am I saying they are right. I am saying the arguments and logic used to support them are fallible.

        • There’s a big difference between looking at it and implementing it.

          Without question a lot of those Telstra haters out there will find themselves a lot worse off when Telstra infrastructure is de-commissioned and services moved to NBN.

          NBN is a legalised monopoly that no one can compete against. Some day soon this will sink into a lot of peoples mind. In the end all the Telstra haters are really to blame because they simply wanted access to Telstra’s network for next to nothing. Had they got together and built a network they could share together and provide real competition (against) Telstra across this vast country.

          In reality NBN has been borne out of non action of these non Telstra providers.

          Too many people forget Australia is a big place and were only willing invest in population dense areas and expected Telstra to provide the infrastructure, where they deemed it was no economic for them to go. And of course wanted access to that infrastructure for next to nothing.

  2. Another load of crap from Turnbull. iiNet have been gobbling up their smaller rivals for years, with Internode just the latest in a long list of acquisitions.

    The biggest question for Turnbull, is how will his alternate policy be any different? Who know, since all he’s done for the last year is rattle off an assortment of detail-free media releases, and alluded to all sorts of speeds, technologies without actually committing to anything at all.

    The most likely of these -A mix of HFC and FTTN- certainly won’t improve competition, since there’s not a single wholesaled HFC network anywhere in the World, and how would an FTTN system with 20,000 nodes possibly improve competition? If you make each node a POI then Telstra will again be the only player in the network, and if you drop back to a small number of POIs, you’ll run foul of the ACCC, just as the NBN did.

    • “Another load of crap from Turnbull. iiNet have been gobbling up their smaller rivals for years, with Internode just the latest in a long list of acquisitions.”

      Yeah, except Internode, and TransACT before them, are not “just another acquisition”. They’re highly competitive market players in their own right, which had built out infrastructure-based competition in Australia’s marketplace. These acquisitions are qualitatively different from the ones iiNet has undertaken previously, and both would likely not have taken place without the NBN policy being in place.

      • Maybe, maybe not. I suppose we’ll never know. Correct me if I’m wrong, but wouldn’t it be the case that larger ISPs have been swallowing up smaller ones all around the World, and even “free market” countries like the UK and US don’t have any more retail competition that we have here. If that’s the case, what evidence is there that industry consolidation wouldn’t take place no matter what?

      • TransACT have about 40,000 customers, almost entirely coming from Canberra, Geelong, Ballarat, and Mildura, which collectively cover a population of about 750,000 – giving them about 5% market share in those regions.

        I know one person with TransACT/Neighbourhood Cable in Geelong – our neighbour across the road. The throughput is lousy, and their customer service is ordinary at best. You can’t call them over the weekend.

        iiNet buying TransACT is an infrastructure play…iiNet buying Internode is a “keep TPG at bay” play.

        It is undoubtedly disappointing in many respects to see this happen, but this “marriage” helps iiNet *and* Internode keep TPG away – and that’s got to be the best thing to come out of this.

        If TPG went all gorilla on the market, bought both of them, and applied TPG-style plans to what would be the clear number two in broadband in Australia by subscriber numbers, THAT would be bad.

        • No holding out TPG is not the reason Internode sold out to iiNet, your spin as a self appointed NBN Co apologist is wonderful to behold.

          The reason is as given:

          ‘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.’

          ************ CORE REASON IS CORE REASON ************

          The loss of a significant competitive retail player is solely due to the NBN rollout, I expect more will follow, NBN is killing off retail competition already and it is still only being trialled by many ISP’s.

          When the NBN hits commercial mass when Telstra shuts down exchange areas it will be interesting to see how many ISP’s are actually left.

          In contrast to the ludicrous spin announcement about Vodafone entering the market by Conroy I except this one will be met by deafening silence or some BS spin about how consolidation of NBN competition is actually ‘really good for the end user’.

          The Coalition should quite rightly have a field day with this one.

          • Well I don’t apologise for emphasising the statement and core reason why Hackett said he sold out, it did not mention TPG only the NBN.

          • If you were listening to the press conference – (and quite clearly, you were not) – you would know that while they said it was a big factor in the timing of the sale, they have been talking about merging for well over a decade.

            Now, forgive me, but I don’t believe that the NBN was policy a decade ago.

            And once again, I don’t believe this adversely affects competition – this is my opinion. You may disagree – that would be your opinion.

          • you know it occurs to me that you can both be right.

            iinet has their reasons for buying internode and internode has their reasons for selling to iinet.

            the reasons are their own and aren’t necessarily the same.

          • @Clinton

            ‘iinet has their reasons for buying internode and internode has their reasons for selling to iinet.’

            Yeah the reasons as given by both parties was the NBN and customer base sizes competing in that market, take out the NBN as a factor and we would still have had two aggressive competitors still in the market place competing for customers.

            You and others can spin and tap dance around the issue as much as you like, but that is the outcome for end users.

          • Its very obvious this is a play to keep TPG at bay.
            Consolidations were ahppenign regardless. ABS figures bear that out undeniably.
            In the period Jun 10 to Jun11 Medium ISPs reduced by 8 and large ISPs reduced by 2. In just 12 months! This trend has been happening for years. Irrefutable!
            Hackett has previously said in the press that he was not worried about Internode size and that they had the scale to cope on the NBN.
            Whats changed since? Only TPG acquiring more iiNet shares.The correlation cant be ignored.

          • Well unless you are the real owner of Internode and not Hackett I prefer to believe what Hackett stated in his press release what the reason for selling is, instead of some desperate pro NBN apologist desperately trying to spin up a different motivation.

          • do you mean the bit where he said there were too many POI’s for small to medium businesses to be able to be financially viable on a national scale of operations?

          • Well unless I mistaken the term POI’s directly relates to the NBN in this instance, unless you think saying the term POI separated from the words ‘National Broadband Network ‘ enough times over and over you hope readers may assume there is no relationship whatever.

          • @Micheal Wyres

            ‘And once again, I don’t believe this adversely affects competition – this is my opinion. You may disagree – that would be your opinion.’

            Wow you are really pushing the boundaries of incredulity with that statement, let’s look at the history of iiNet acquisitions and what it has done to ADSL2+ plan choice at iiNet, Westnet , Netspace and AAPT.





            Spot the difference?, oh there isn’t any, they are all the same to the cent and quota, they were certainly different before the takeovers.

            I expect the Internode plans to follow that trend at some point when all the flack eventually dies down. (although there must a lot of Whirlpool Internode fanbois and moderators who think their little closeted world has just crashed in). :)

            Tell me MW, how is all that plan mirroring good for competition and end user choice?

          • Internodes NBN plans were more expensive than iiNets, weren’t they?

            So by mirroring as you suggest they will, they will soon be cheaper, great.

          • Righto, since you have taken these comments from sublime to ridiculous, perhaps they don’t have any customers and that’s why they are selling.

          • It has nothing to do with ‘sublime & ridiculous’, the point which you put on bypass is that there is more to the selection of a ISP than price, else there would be just two ISP’ s in Australia, TPG and Dodo.

      • I wouldn’t call competitive DSLAMs “infrastructure competition” – it is misleading. All competitive DSLAMs rely on Telstra’s copper (which is the more expensive than the DSLAMs). For true “infrastructure competition” you need competition among the biggest-cost component. Anything else is just “piggybacking competition”.

        Also, TransACT’s pricing was so terrible that while it theoretically counted as infrastructure competition, it failed to achieve the expected goal of competition.

        • No it’s not ‘infrastructure competition’ in the true sense of the term but competitor DSLAM’s were the key component of driving retail prices down from resold Telstra ADSL.

          The likes of iiNet, TPG, Optus and Internode survived and gained customers because of this sole factor, the NBN world does not look so rosy because everyone sells the same NBN Co produced flavour as everyone else.
          There is no tweaking around with full control of your internal cost base like your own DSLAM’s can give you.

          Survival in the NBN world depends on how many customers you enter that brave new world with at the beginning, that’s why iiNet are buying up ISP’s and why Hackett sold out.

          • “No it’s not ‘infrastructure competition’ in the true sense of the term”.

            No it’s not, so please don’t describe it as so in future.

  3. This is what shits me about Australian politics, the NBN has some problems with it’s pricing methods for sure, many of them will put pressure on smaller providers but hardly scratch larger providers – but instead of Turnbull simply suggesting some changes to be made that will reverse this (IE: CVC pricing adjustments or number of POI’s) he goes off on some dumb tangant about how the entire NBN project is bad and should be scrapped immedietly.

    Can’t politicions just for once offer some suggestions for the benefit of the people instead of this ridiculous opposittion for points scoring?

    • You’re right; Turnbull could be more specific in his criticism here, but there’s no reason for him to be — after all, he has to make a populist argument out of an industry acquisition like this. He has to make it appeal to the masses — that’s his job.

      • Renai, technically Malcolm’s job is to represent those that voted him in and act in their best interests, not to make populist arguments.

          • @Renai “So you’re saying the NBN policy as a whole isn’t a “populist argument”?”
            That’s NOT what he’s saying…and I agree with him. It has become so commonplace now to have an elected official taking on the job of tearing down the opposition rather than building up the country that it is most disheartening. I don’t know how many here are old enough to remember, but that’s not the way politicians used to behave. They would argue to be sure, but at the end of the day, they used to put forward what was best for the country before their own political carreers and actually work together to build stuff.
            It’s no wonder that something as potentially inspirational as the NBN has devolved into a “populist argument”.
            “The fault dear Brutus lies not in the stars but in ourselves”…

          • No, you said that. I am saying Malcolm’s job is to represent those that voted him in and act in their best interests. How he chooses to perform that role is another matter altogether.

            Every policy boils down to a popularist argument if you want to look at it like that.

          • Explain why he is NOT acting in their best interests, how do YOU determine that Turnbull rightly criticising the Internode buy out as killing ISP competition is not the right thing to say here?

          • Turnbull is wrong because the cause is the ACCC POI decision, not the NBN policy.

            Even if it was correct, I would still expect him to suggest improvements, rather than pushing an entirely different policy with different goals.

          • No the cause is not the ACCC POI decsion, read the core reason why Hackett said he had to sell, and this time don’t blink.

            ‘Today, Hackett said Internode, with some 260,000 active services, was “right at the bottom edge” of viability to be a player in an NBN world. “It would be a dangerous thing for us to enter the next era being not quite big enough,” he said.’

            He doesn’t have a big enough customer base, it also doesn’t bode well for those ISP’s below Internode that have less than 260,000 active services.

            Obviously ADSL2+ promotes retail competition more than the NBN does, never mind the NBN doing the opposite sounded good at the time, now it is just being outed as complete BS, and the rollout has hardly started.

          • alain, you forgot to quote this bit…

            “At the heart of the problem as Hackett sees it is the number of points of interconnect which the NBN will support — too many for small and medium-sized ISPs to connect to nationally, as well as the cost of trafficking data to each region.”

            so i think your quote is a bit misleading isn’t it?
            sure he is on the bottom edge of viability but only in order to compete on a national scale.
            he could have not sold to iinet and remained operational but on a smaller scale.

            and there is nothing wrong with that.
            in order to operate a successful RSP you don’t need to operate on a national scale.
            you can start small and grow your business until you can take the step up to the big game.

            i’ll use westnet as an example.
            it began as a small ISP in a regional city of western australia. it didn’t take long for it grow into a large national provider. (where it was promptly swallowed by a larger company, but that’s just normal business)

          • Hackett has also said the primary reason they are at the bottom edge is the 121 PoI model imposed by the ACCC in combination with CvC charges.

            But of course that would require quoting more than one sentence out of context.

          • I love it how the pro NBN apologists read the words ‘core reason’ and magically put a ‘non’ in front so they keep reading ‘non core reason’.

            It’s like as if the NBN DECREASING competition and being the SOLE REASON for decreasing competition in this case somehow does not compute and cannot be processed.

            Oh it must be the’ keep TPG out strategy’, it cannot possibly be anything else, even when the sole selling owner says it was the NBN, what would he know?

          • Don’t worry Alain, its hard for NBN zealots to admit there are issues with the NBN

          • Yes the spin cycle is wonderful to behold in this discussion, Conroy could come out and say the end date has been extended to infinity and the cost has blown out to $100 billion and that’s just NSW and the zealots would say that’s all ok, we need it.


          • Whether I am a zealot or not, I will say the NBN has lot’s of issues.

            This is our largest construction project ever, so of course there will be issues. But issues, which NBNCo are aware of and are/have been professionally, systematically working their way through and fixing, which is all we can ask.

            But looking at the overall NBN package, cost vs return, consumer affordability, technological longevity, the Telstra factor and more, it obviously has many less issues than the alternative, FTTN.

          • Your comment about FTTN, wingcommander, is ignorant, a FTTN was never constructed in Australia, or even started construction, so you have no clue that a blanket FTTH would have been a better solution than a mixed HFC/FTTN/FTTH solution

            This is the same reason why people are asking for a significant analysis (and no, your posts, nor the ones on this article, about how bad a FTTN is, is not an analysis)

          • Incorrect.

            And ignorant, to copy and paste your peculiar inference.

            Of course FTTN wasn’t built. You do not build an entire network and then say, oh, that wasn’t what we thought, tear it down and try another.

            You review the options and a FTTN review was carried out by an independent review committee, which found it unacceptable.

            Argue all you like but that’s what occurred and why we now are where we are now.

          • What independent review commity?

            If you were talking about the FTTN tender by Telstra, it was due to legal reasons (government having to compensate Telstra, due to the way that NBN mk1 was designed) and not technical reasons, why FTTN wasn’t started. In fact, the independant government advisors wanted Labor to do a FTTN in the first place, the reason why it wasn’t done was due to Telstra, and the reason why they ended up doing FTTH is because to bypass Telstra they would have to build an entirely new network

            There hasn’t, to this day, been any comprehensive report done showing the technical issues of why FTTN is not possible

            There is plenty of evidence around the world showing FTTN is being more then “viable”, the national broadband plan in America details FTTN/HFC upgrades, which outnumbers FTTH installations by <b?at least 5:1, and I showed the link to this earlier

            You have a similar story in Europe

          • ‘Explain why he is NOT acting in their best interests, how do YOU determine that Turnbull rightly criticising the Internode buy out as killing ISP competition is not the right thing to say here?’

            Alain, perhaps if you actually read what I said and stopped jumping to conclusions for a second you would realise that I made no determination one way or the other as to whether his statement was the right thing to say. I was merely commenting on Renai’s statement that his job was to make it appeal to the masses.

            However, I do see that you have made your mind up. Perhaps you could fill us in on how YOU determined that it is in their best interests?

        • Turnbull is a (rich) politician who is acting in his OWN interest, the comms concerns of his Vaucluse millionaires is irrelevant to him. He is, for the moment, doing his best to keep Abbott neutralised and pretending to oppose the NBN is one aspect of that. Watching him attempting to convince anyone that he actually believes the crap he is spilling re the NBN is hilarious.

    • totally. if Malcolm truly was concerned about competition in Australia – NBN or no – you would have DONE something about it in the many many years the Libs had while in power. you cant sit on your hands for a decade and then credibly jump up claiming to be the local Competition Hero.

      Yes the NBN has had an effect on the market – ANY different policy fielded in the last 10-20 years would have. i dont think in terms of M&A it would have been substantially different at this point had policies been any different. hell, this particular merger has been a possibility since 1998.

      so i see this as a pure political opportunism play by Malcolm – you had your chance buddy. i know you dont like it but tough bikkies. if you really want to be a Competition Hero start doing some work in the policy room and less with your press writers. show some actual policy involvement rather than the opposition carping ive been hearing for too long.

      if you can do that, *then* talk about competition or lack of it in the aussie telco sphere might have some merit. until then, a whinge session about how things arent going the way you ‘d like it isnt going to get me to vote for you, no matter how right you may be.

    • An ex merchant carpetbagger, oops, that would be banker, opposed to a takeover? Oh pleeeeeeease… Hey Mal, what about the market forces being sacred, only when it suits your agenda eh? zzzzzzzzzzzzzz

  4. Malcolm don’t you think iinet being allowed to taking over or merging with other ISP like Ozemail and now Internode is killing competition within the ISP area?

    • There is more to it that one-eyed simplistic view, Internode is selling because of the NBN.

        • Not according to the company that is being bought out

          AFAIK, OzEmail did not get sold because their company was no longer viable in the market, which is the reason that Internode is being sold in the first place

          • And the POI’s? So again, there is more to it than that one-eyed simplistic view.

          • The whole NBN model (including the NBN) is a result of Labor’s NBN policy, that is a fact.

          • You have to remember the magic term is POI, it absolves any reduction in consumer choice just by merely repeating that magic term over and over.

          • No deteego has already ascertained that there will probably be 4 or 5 nationwide RSP’s with the NBN. as opposed to the one we now have, isn’t that so deteego?

            So how is that less competition?

          • I have seen this forlorn tactic. It didn’t take you long to bring out the trump card.

            Your correspondent tangles you in knots, so you paint your self as the innocent victim and your correspondent as a bad boy. You then plant the seed in hope your correspondent is castigated.

            If you actually had a judicious and effectual standpoint, it would stand up and you wouldn’t need to do so, particularity so quickly, would you?

  5. I believe IINET and Internode have similar customer profile.

    A simple maths.
    IINET has 1.3M customers, and has Market Cap of $425.2M. This equates roughly $328 per customer
    Internode has 260K customers, and sold for $105M. This equates roughly $404 per customer

    IINET is paying 23% more to acquire Internode customers. Do you think Internode would get a better price if it is floated on the ASX? With users paying fix price and margins getting thinner due to competition, the only way to grow is to get bigger (ie more customer), and the best way to get big is to acquire someone or being acquired. Internode fits the later.

    This is more a business decision by Simon Hackett. He get more value selling now than selling later when internode is no longer competitive in the NBN world because if its smaller scale. He just used NBN as an excuse rather than saying he sold it because IINET made an offer too good to refuse.

    • And IINET and Internode have different customer service from poor at iinet to great at Internode.

      • I’ve never had a problem with iiNet’s customer service myself, and I’ve been a customer for many years. However, that doesn’t mean I count them equal with Internode on a range of other fronts ;) They are quite a bit more iiCorporate …

  6. I will miss Internode. I don’t think the direction we are all heading with this is good. Less isn’t better than more in this case.

  7. So Turnbull reckons this will decrease competition? I don’t recall him having anything to say about the news of Vodaphone offering fixed line services via the NBN. One can only assume he believes that new entrants who are established mobile providers will not be competitive with existing ISP’s. He must also be greatly concerned that having so few mobile network providers is harmful to competition, especially after the merger of Voda & Hutch. Wait, I don’t recall him saying anything about that either.

    Keep grabbing at straws Malcolm, and eventually you won’t have a haystack to hide behind…

    • As I said above:

      “Vodafone has zero fixed-line customers right now and has traditionally been a cut-rate player in mobile, offering no technical, media or product innovation.”

      I don’t see Vodafone having a real impact on fixed-line competition for many years … if ever.

      • Renai said “I don’t see Vodafone having a real impact on fixed-line competition for many years … if ever.”

        When Optus began offering fixed line competition, they had zero prescence in that market as well. It really isn’t about how you or I perceive the current state of play – more about who has the finances and the will to become a player in an NBN world. Vodaphone is far larger than Internode could ever have hoped to be, and has brand recognition and an existing subscriber base that dwarfs that of Internode. Whether Vodaphone become a player in this or not isn’t the point – it’s just hard to argue that competition is diminished when a mid-level ISP merges with a larger rival, at the same time a far larger mobile network operator known for price competitive offerings enters the fixed line market. The NBN is a nascent market, and the removal of the need to maintain a PSTN line to have a broadband connection (as exists in most areas beyond the capital cities) means there’s great potential for mobile providers to leverage their brand into this market area. I’d be more surprised if mobile vendors didn’t seek to expand their client base by offering complementary NBN services.

        As for not being innovative, perhaps you forget that Vodaphone incorporates Hutchinson who were responsible for a number of innovations including bringing 3G to the Australian market in 2003, 2 year ahead of Optus and Telstra. As I recall, Vodaphone were the first to provide visual voicemail for iPhone too, well before the others. In the brave new world of NBN, I wouldn’t discount anything being possible.

        • Thats not really a valid comparison, when Optus entered the australian telecommunications market, they did so through voice service first. They then started offering internet services, when the Internet was just starting to become available to general consumers

          That is incredibly different to entering a market that is already fully saturated with ISP’s

      • Renai, With respect I suggest you look more closely at Vodaphones international fixed service capabilities, for example in the UK they operate their own fibre network. Which raise the point of community networks which originated in Europe (Scandinavian countries ) and are a growing community based approach based on the European Models in the UK in the areas not covered by BT and Vodaphone FTTP. Could also be applicable in smaller Australian communities

  8. It was bound to happen. I said it on whirlpool earlier this year that only Telstra, Optus, Vodaphone, IInet and TPG will be around by CoB 2012. and TPG will probably buy out IInet by then,

    leaving exactly what choices for the masses? and as i have said before, there will be one morning everyone wakes up to a NBN price shock. because just like the banks.. WHAT ALTERNATIVE do you have….

    and that is why however cool, and useful and fun the NBN may be, it will end up costing a-lot more than people think.

    What people who are not in SA need to know, is internode is the STATE ISP. there are others but the node stood out, and privately owned. If they thought they would not last in a NBN world, who are anyone here to argue with what would have been some top end, heated board room meetings over the last week. 100’s in the industry are in shock that Simon sold, Many had money on that he would take the company to the grave.

    • Agreed. In fixed-line broadband, Telstra and Optus are numpty choices, TPG is dodgy and cut-rate, and that just leaves iiNet. If iiNet buys TPG, the nation is up shit creek, frankly, and even further back behind than when we began.

      The Internode sale will not be good for the industry.

      • Other way around Renai,

        TPG ownes about 8% of iinet now, and part of the deal with Simon is that his (now 7.5%) holdings in iinet will be sold as part of the bulk holdings in iinet. (ie they are dotting all the i ‘s in preparation for a sale)

        This will leave us with Telstra, TPG and Optus by the end of 2012

  9. Have to laugh about this discussion re who bought out whom and why. Seriously …. isn’t that the whole intent of free market economies? To beat/buy out the competition? To dominate the market?
    Yet somehow Turnbull (and some others on this forum) seem to forget this simple fact and imagine a world of perpetual perfect competition amongst ‘X’ no of competitors, all competing to maximize production and lower costs.

    Well for Christ’s F* Sake!! Get real people. There is no perfect competitive market, there is no perfect number of competitors, markets are dynamic, Gaaaahhhhhh. I give up.

    Don’t mind me. Just argue away amongst yourselves.


    • Normally I would agree with you, but it’s meaningless to talk about free market economics when the market has been distorted for so long by Telstra and now the NBN policy.

      • “Normally I would agree with you but it’s meaningless ….. Lol. So would you apply that same ‘But’ to Turnbull’s comments ? No?

        What about pointing out to Mr Turnbull “…. the entry of global mobile telecommunications company Vodafone into the local fixed-line phone market….”. and how it’s increasing competition.
        What? Increasing competition?

        Oops. Sorry, That doesn’t quite fit the desired narrative does it. My bad.

        I’m not saying that the takeover of Internode is a good thing. But what I Am saying is that it is not a condemnation of the NBN. There is a long way to go in the largest upheaval to the telco sector since the privatization of Telstra. And to allow oneself to become a subject to the vagaries of claims made by parties with external interests and priorities is to lose a sense of perspective.

        So if you want to support the contention that the take over of Internode is bad, or unnatural, or undesirable, then by all means do so. But I would suggest any such opinions are tempered by facts and an appreciation of the scope of the project.

        • Agree Paul. I don’t see anyone crying about less competition in the alcohol business because Fosters was acquired by SABMiller?

          • @wing commander

            ‘I don’t see anyone crying about less competition in the alcohol business because Fosters was acquired by SABMiller?’

            1. That’s because the change of ownership of Fosters is not the merger of two Australian brewers into one.

            2. The Australian Government is not building one national brewer with taxpayer funds from which all retail outlets must buy their beer from, nor is the Australian Government buying up all other brewers so there is no choice.

            Apparently No 2 if it happened would increase competition.

          • That’s all good and well alain, but to answer, do you see anyone complaining about it?

            The answer is no, because it’s not a political football like the NBN.

          • You see this is the problem and an area furtively used by those who oppose the NBN.

            Because the NBN is a political football, at times they try to separate and disassociate it from everything else, but at other times want it compared and not disassociated.

            They do/don’t, want it compared to infrastructure such as hospitals, roads etc. They will say our tax dollars should be used for roads not NBN. Then, the NBN can’t be compared to national infrastructure like roads, as it’s off budget.

            But they also do/don’t want to compare it to private companies too. The NBN needs a business like ROI. Then, you can’t compare mergers and acquisitions in telecommunications with hospitality and leisure.

            You cannot treat the NBN as government department in one comment and a private company in another, just because you choose to.

            Also the iiNet/Internode situation is not a merger, it is an acquisition. Please learn the difference.

          • You can’t separate NBN from politics.

            IT was a plan designed by, and funded (completely) by a political party, which plays as much politics as any other party

            Separating the NBN discussion from politics is deceitful and stupid for this reason, it gets us nowhere

          • No you can’t, I agree deteego. But you can limit the pertinacious political interference.

            What is most illogical, as I stated atop, is those wanting to politicise the NBN at times and not at other times.

            Oh and thank you for not calling me ignorant or suggesting I pull figures out of my arse, this time. See it’s not hard to disagree but still be civil is it?

          • No you can’t limit the amount of political interference

            NBN is politics, pure and simple

        • Vodaphone hasn’t even offered plans yet

          And if anything, the NBN is just going to create a market where we will only have 4 or 5 massive providers, which is definitely how its looking so far

          • Business Spectator Oct 12 2011.

            Anittel Group announced that it has entered into agreements with the NBN Co to offer services on the National Broadband Network (NBN). The company will be among the first carriers able to deliver the new high speed fibre network to its existing and new regional business customers. Regional customers in Townsville and Armidale are set to be the first beneficiaries of the new services. The NBN agreement follows the company’s recent acquisition of regional reseller, Future Townsville and its recognition by ARN as the nation’s 2011 SMB IT and Telecommunications reseller of the year.

          • Wing, you will find the current satellite providers are now also becoming NBN providers as the interfaces are identical. Conveniently overlooked

          • “And if anything, the NBN is just going to create a market where we will only have 4 or 5 massive providers, which is definitely how its looking so far”

            If we are talking nationally then yes, maybe there will only be 4 or 5 big players available universally, but with smaller bit players offering services only in targeted areas.

            But even this refutes Malcolm’s claims too. Because currently we only have 1 completely national provider anyway.

          • Only one National provider? – I am sure Optus, TPG and iiNet would be really happy with that statement.

          • So iiNet, Optus, TPG, Internode and Telstra are all available to everyone home and business in Australia according to you two?

          • oh ok that seals it then, that was easy eh RS because you thought about it and went ‘oops I stuffed up’ so I better not provide any detail.

          • No wrong is wrong.

            No one else except you two would suggest that every person in Australia currently has the choice of 5 companies Telstra, Optus, iiNet, Internode and TPG, as deteego was suggesting there will be 4 or 5 with the NBN.

            Your other motive has already been answered, but let me refer you to the old saying of “the boy who cried wolf”.

          • Stop twisting my words wing commander, I said 4 to 5 NATIONWIDE ISP’s

            It would do us a favor if you stopped lying

          • I just thanked you for finally showing civility and not calling me ignorant or pulling figures from my arse and now I’m a liar, deteego? That is pretty disgraceful.

            There’s no word twisting, from this end anyway, you clearly said “And if anything, the NBN is just going to create a market where we will only have 4 or 5 massive providers”.

            The NBN will cover the entire nation and you predict 4 or 5 massive providers. I am saying in essence I agree.

            So we now have 1 massive provider only, who covers our entire nation, in a similar fashion to which the NBN will, and that is Telstra. Strangely you guys said there are 4 others, who are also available to every Australian, which is wrong.

            4 or 5 “nationwide” competitors with the NBN as opposed to 1 “nationwide” now, equates to more, not less “nationwide” competition.

            Enjoy Chrissy.

          • Yes nationwide.

            You do understand what nationwide means? Let’s break it into syllables to make it easier nation wide.

            Now ponder what that means and who has nation wide coverage.

  10. I have to laugh with Paul H when we should not mind him, when his comments is in the public view?

    But iinet buying and merging ISP after ISP is the whole intent of free market economies?

    • I have to laugh with Paul H when we should not mind him, when his comments is in the public view?

      What ????

      • Come on tell the truth Paul, you know what I am talking about, you just choose not to admit it.

        Now back to Internode sale shows NBN killing competition: Turnbull and let Paul give up on leaving rants as he claim he would before.

  11. How is this for HYPOCRISY!!!!

    From Wikipedia:

    “Through 1997 and 1998, OzEmail grew at a great rate by acquisitions and aggressive growth while competing with some 850 ISPs. On 14 December 1998, WorldCom (later MCI) launched a takeover bid. It was completed on 24 February 1999 when they became 100% owners of OzEmail, removing OzEmail from the NASDAQ and ASX. OzEmail continued its previous strategy of acquiring other companies. Malcolm Turnbull, later an MP, Minister for the Environment and Opposition Leader, was then chairman of OzEmail.”

    SOOOOO, Turnbull was chairman at Ozemail at a time when the company was on an aggressive strategy of acquiring as many competitors as possible!!!! Eventually he sold off Ozemail to iiNet in 2005!!!!! There was no NBN then!


    The same company that took over Ozemail is taking over Internode yet it is the NBN’s FAULT????? REALLY?? This guy is clutching at anything he can to blame the NBN….what’s next? NBN at fault for climate change???

    • @Jzee

      ‘The same company that took over Ozemail is taking over Internode yet it is the NBN’s FAULT????? REALLY?? This guy is clutching at anything he can to blame the NBN….what’s next? NBN at fault for climate change???’

      Well it is the NBN’s fault because it is the NBN’s fault.

      Did you blink at this reason given why Hackett sold out?

      ‘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.’

    • there are many different types of business sales, Back in the early ISP days many setup small ISP’s with the idea to SELL THEM. It was a very good way to make some quick cash. (i know)

      if there was no NBN, internode would have never sold to IINET. I know this for a fact. It is the NBN that has scared the smaller ISP’s into a ‘merge or die’

      i don’t want to sell.. but as a ISP owner myself, if the NBN continues after the next election i may need to sell as it will kill us, we make nothing on NBN plans barley enough to keep the lights on in the office, and that is what would have been going though the minds of those at internode.

      NBN is, as the market stands on this day, Killing competition in the industry. Some forign owned mega ISP’s may come into play over the next 5 years but is that what we really want? the death of Aussie run and Owned and the shipping out of Jobs to foreign call centers.
      and here i though the NBN was meant to help make jobs. :) at the moment, other than the construction itself, i see it costing jobs.

  12. Lets be honest here – its not Labors policy here that is killing competition, its the ACCC mandating POI’s across the country side which annihilated any chance of an ISP getting significant amount of scope.

    • This times a hundred.

      The ACCC made the decision to increase backhaul competition at the possible expense of retail competition – and with this buyout it isn’t looking just “possible” anymore.

      • Completely agree.
        The POI decision was a compromise between two goals that worked best for no one.
        We new it was an unfortunate decision at the time. For retail competitions sake it ought to have been at least closer to 14 (not necessarily 14 exactly).

        However, I don’t believe it is the end of retail competition as some would make out.

  13. All I can say is that Malcom is sooooooooooooooo predictable.

    For those blaming the ACCC, lets look at the other facts, too small POI means more cost effective for the ISP, but could be bad for the consumer, as those distance to the POI’s make it impossible to cost.

    Blame the NBN, Blame the ACCC that’s all i here, but lets remember the fact that Internode is an ISP who has interest in it self, the 14 POI model is best for *his* provider.

    • Your criticism is invalid. How does having less POIs make it “impossible to cost”? NBNCo knows exactly what the costs will be.

      The 14 PoI model isn’t just best for Internode. *Any* ISP that doesn’t own fibre is better off with 14 PoIs. That model also would have involved additional redundancy – every NBN connection would terminate at *two* PoIs.

      • ‘NBNCo knows exactly what the costs will be.’

        Well they don’t actually, a CBA was never done.

        • Ah, the return of magical thinking. A CBA combines three concepts: “cost”, “benefit” and the analysis comparing the one to the other.

          Of these, the cost is the easiest to assess. It’s an accounting exercise, one which has taken place, and been reviewed several times (most recently with the Telstra deal). In short, when Jean W wrote “NBNCo knows exactly what the costs will be”, this was quite correct.

          A CBA doesn’t tell you what the cost will be. In fact, you need to know what the cost is before you can seriously begin a CBA. The trick is that while “cost” is a term that can be defined quite precisely by accountants and finance people, the concept of “benefit” is a much foggier term, open to many kinds of interpretation – many of these inherently political. What price do you put on future events in a sector (ICT) that has evolved faster over recent years than any other comparable industry? How much faith do you put in one person’s view of what “benefits” will accrue over another?

          • The Coalition is not in power yet so they could follow Labor’s example if they are get in 2013 and stonewall on a CBA forever, they could follow Labor’s example of 2007 announce one BB policy and change their mind after the election or they could follow Labor’s policy of the 2010 election and produce a Business Plan of their chosen strategy post the next election following 2013.

            They could also follow the NBN Co example and keep extending the finish build date as well, so much time so many avoidance strategies available to them with firm historical precedents.

          • Wouldn’t it be ironic if they did change their minds and decided the NBN was what we needed after all?

          • Well we do need a National Broadband Network, that is just a generic term, you need to distinguish between a Labor NBN and a Coalition NBN, so no it would not be ironic at all.

          • The Coalition have already changed their minds many times and have now upgraded to a FTTN option. An option which without any deals, further cost imposts to Telstra and not factoring later upgrades to FTTP, which will be necessary, has been costed by Citigroup at $17 billion.

            A similar FTTN type of option they opposed when the current government first announced it and the same FTTN which was later clearly reviewed and found unacceptable by the current government’s nonpartisan review committee.

            I now refer you to another two phrases, which mention “it’s a woman’s prerogative and flogging a dead horse”.

          • If the Coalition get into power you think a previous Labor Governments -cough-cough- ‘expert opinion’ finding or one Citigroup report means anything to them whatever?

          • No I do not think they will take notice at all. But that doesn’t make the reports incorrect.

            It is just a sad indictment of our political system and the current negative opposition, which makes a mockery of the taxpayer having to fork out for costly reports, which are of no consequence.

            So if you are and the opposition are happy to ignore such reports and forge ahead with a FTTN network, previously found unacceptable, said to be a dirty plan, which will cost a minimum of $17billion according to expert analysis – and remember years ago Sol Trujillo suggested $15 billion back then – again that’s a sad indictment that the opposition aren’t interested in their constituents.

            They just have to unyieldingly, do it differently to the others, at all costs.

          • Correction, the FTTN cost ~5 billion dollars, Labor implementing the FTTN cost around 15 billion dollars, because the intelligent lawyers didn’t even consider the fact that due to the way Labor set up the tender, they would have to pay Telstra ~15 billion dollars in compensation due government interfering with private property

            Why Labor didn’t think about this before the whole debacle happened, is anyone guess. The point however is, FTTN did not cost 15 billion

          • Incorrect again.

            Telstra FTTN was to cost $5 billion or thereabout in capital cities, with OPEL in the scrub. The $15billion estimate by Sol was for 98% FTTN coverage.

            If you are going to argue on every little aspect, please at least get one of those aspect right to start with.

          • @RS alias Wing Commander

            Once again you are deliberately misstating history and hope no one notices, the Coalition program was not about OPEL’ for the scrub’ and Sol’s Telstra FTTN for everywhere else.

            They were two totally different proposals for two different time periods – but then you know that, worth a try though.

          • I wasn’t going to bother with you or your immature trolling anymore, so refer to me correctly or not at all. Again I refer you to the phrase about the boy who cried wolf.

            Yes they were obviously different proposals, I didn’t say they weren’t impudent child.

            We are talking about past events, one being FTTN in cites and OPEL in the scrub and later Sol suggesting 98% FTTN would cost $15Billion.

            deteego was the one suggesting Telstra could have done it for $5Billion but it was going to cost Labor $15billion, hence my comment with the differentiation.

            I would have thought that obvious? But as usual every little thing has to be spelt outand even then it just doesn’t sink in.

          • This now leads me again to refer you not only to the boy who cried wolf, as that went unheeded, but also a modern phrase which I think is most appropriate at this juncture.

            I see you’ve set aside this special time to humiliate yourself in public.

  14. Lets face it liberal should have blocked the roll out of ADSL 12 years ago and enforce fibre or completed HFC.

    ADSL investment was always going to fail on the roting copper network. What good is competition on a failed product that you need to be 1KM from the extchange to get the full speed. This is what happens when you invest your money in competition rather than provide robust long term infastructure that has long term returns. DO it one and do it right and stop wasting our money libs

    • The Libs are not wasting anyone’s money, in case you didn’t notice they are not in power, you are getting confused with Labor who are blowing billions on a national fibre rollout that taxpayers will be wearing the cost burden of for decades.

      I noticed you use the term long term returns I prefer to call it zero return infrastructure, where the horrendous costs will always be far greater than the pitiful revenue.

      • this did waste everyone money 12 years ago by allowing everyone to waste their money on a failed adsl technology of the last 12 years we would have all had nbn by now the netherland have had if for over 10 years they seem to be doing fine

        all I see in your words like “pitiful revenue” is I want your money and I dont care if I sell you a crap product

  15. The buyout was mainly due to the NBN, and the reasons are obvious

    The NBN makes it more expensive to provide the lower level services in ~60-70% of Australia, at the cost of making it slightly cheaper in the least ~30-40% (which happen to hold a tiny proportion of the Australian population).

    The fact that there are only 121 POI’s around Australia is watering down the facts. Yes Telstra happens to have around 5000 exchanges, however an exchange != POI, and furthermore almost all off those exchanges are actually distributed around Australia, providing service to whopadeedoop

    It is much cheaper to provide internet access in exchanges in major city/metro areas through ULL + competition from backhaul providers than it is on the NBN due to the pricing structure. The current plans on the NBN are no indication whatsoever of what real prices could be, simply due to the fact that there is no market on the NBN and all the customers are distributed in small pockets

  16. “It’s Cold And Lonely In The Deep Dark Night…..

    ……..and I very much doubt Internode selling out to iinet was for the ‘public’ reasons stated….it was simply money… always; that and the slight fear for the future of residential services and the sheer burden of running an ISP these days….after 18 years of easy times with the last three being an increasing pressure.”

    JL – Exetel.

    He would have more idea than you boffins.

  17. Do you really believe we need need 197, I think it is, isp’s?

    Profit driven consolidation for a bigger, better iinet/internode future is all this is. For people who understand business, this is simple business jockeying, nothing more, nothing less.

  18. I may be missing something here, but competition between the country wide ISPs is only the tip of the ice-berg as far as I can see. The level playing field on each single POI will open the door for a lot of niche “Local Joe” ISPs to tailor services to the people in only that service area. Sure, they won’t make a big dent in the big 4’s bottom line, but with local ISPs on each POI service area, each offering good incentives for people that live there to use their services (local support, package deals, not treating customers like numbers, etc) and IMO THAT is where the competition will come from.

    But yes, mid level ISPs that try to compete with the bigger players on every POI are always going to be at a disadvantage, but hey, isn’t that how it works in every industry? Look at the accounting for example, you have your big 4 firms, and a metric-s**t-tonne of little ones.

    • Yes, good points – the idea of regional RSPs (focussing on a single POI or a small number of them) has been widely mooted by NBN proponents.

      For example an RSP using only the Coffs Harbour POI would be able to service the whole mid-North Coast of NSW, an area which is easy to target in terms of local media, and would find opportunities to become well known in that region – providing tech support from locally based staff, sponsoring local sports, etc etc. They might even go the co-op model, and remain user-owned and not for profit.

      One point which is frequently brought to my notice (me being a city-dweller) is that many country towns currently have NO internet competition or very little – and for those communities, the NBN is an immediate major competition booster. It’s only the city folk who think in terms of national buy-outs being the benchmark of competition. That is most emphatically NOT how it is from the regional users’ perspective.

      • You are totally ignoring the financial viability of this, which actually dictates whether such a thing will happen

        The NBN may make it technologically feasible, but as it seems in terms of financials its the opposite

          • Surely we were referring to the projects feasibility?

            But if we are talking feasibility on a personal level, well it’s actually most feasible for Simon isn’t it?

            He is now out of debt and has over 7.5% stake – more than TPG and only a few percent behind Michael Malone – in a new larger, aggressive company.

            But regardless I’ll give you that 1 anyway, because its Chrissy. So thats 1 out of 22,328,800, anyone else?

          • Yes you can and have, but proven nothing. But my figures weren’t from either my or your arse. Nasty, nasty.

            Simon will be receiving 7.5% (or just over) of shares, according to the reports.

            Debt will be paid, according to the reports.

            And your highlighting of him and him alone was one out of 22, 328,800, Australia’s population figure according to Google. The ABS says 22,783,104.

            So please feel free to argue over the difference, if that helps.

          • Are you saying that every single person in Australia, owns an ISP?

            Unless that is your claim, then using such a figure is irrelevant, and also stupid

            What the general people think about NBN is irrelevant, what matters is the reasons why the people running the ISP’s (which Hackett is one of).

            And Hackett explicitly stated that he agreed to sell Internode because of the NBN environment. Obviously Malone doesn’t hold the exact same opinion, but then again iiNet has such a huge customer base that they would survive in an NBN world (so its not really something that iiNet is concerned about)

          • As I have done with another poster here, I refer you to the old phrase about one “asking a silly question”.

          • It’s like kindy time dealing with a few here. But to take a leaf out of your book, It would do us a favor if you stopped lying. Now scroll up and look at your first line.

            In case you wish to try to again dodge the issue or alter what you said, let me reflect exactly what you asked.

            “Are you saying that every single person in Australia, owns an ISP?”

            You will note the question like grammar and the giveaway question mark at the end. So yes, you did indeed ask a question.

            So again I refer you to the old phrase about one “asking a silly question”.

        • I think we can take it as axiomatic that for any enterprise x, financial viability will determine whether or not x can happen. That’a pretty generic sort of wisdom, deteego.

          But the small, regional nature of a new RSP as I have mooted is exactly the sort of thing that can improve financial viability:
          – Costs for securing backhaul to a single POI are considerably reduced than having to provide a larger or entire national network. Because this market is wide open, there may be opportunities for clever people to do clever deals that maybe go around the big providers with their big overheads. Find someone with surplus capacity to your region? Do a deal to get a stake in some dark fibre or underused capacity owned by a local business? The opportunities are all there for someone enterprising to ferret out.
          – Overhead costs in another department are reduced by avoiding the hangover of legacy systems. A new startup that offers NBN only doesn’t have to worry about combining NBN with existing ADSL services, through Telstra or otherwise. The onboarding process with NBN Co is fairly clean and streamlined, and in the end, cheaper than having to run multiple billing and other systems, and their OSS/BSS systems are modern and pretty much state-of-the-art.
          – Some of the NBN Co charges apply on a per-POI basis (I don’t have a comprehensive breakdown of these). By focussing on one or two POIs, you reduce these.
          – Keeping it local also means not having to keep up a larger network of service staff.

          Anyway, these are just some off-the-cuff ways that financial viability can actually be improved by having a local, small NBN-only RSP.

          • I do see potential for IT service providers working in the SME space.
            Locally we already have a IT service provider selling infrastructure as a service to larger SMEs by providing Wireless links back to their local data centre.

          • Your pulling threes out of your arse at this point….

            The point is, the NBN imposed a market structure which was financially infeasible for internode (and apparently Nuskope as well) to provide a service

            The world is not just about whats technologically feasible, and I think the NBN proponents need to accept that

          • Gwyn, Correct, do some research on what is happening in Europe and the UK, BT and Virgin and Vodaphone’s fibre miss many “remote” areas in the UK. What is happening is that Community ISP’s based on the successful Scandinavian models are being established . We could learn from them

  19. hmm its funny how people are ignoring some simple facts.

    first simon said in the conference that internode DO have the scale to survive in an NBN world its just not the scale he wanted.

    second internode have a debt of something like 80 million dollars. but hey that wouldnt be a major factor for selling would it ?

    simon pointed out that the companies have been talking about merging for years. simon even pointed out an email from 1998 about a possible buyout.

    michael malone said acquisitions would have continued even without the nbn. as has been happening well before the nbn was ever announced.

    sorry but anyone that thinks internode wouldnt have been sold if there wasnt an nbn is kidding themselves. simon may be trying to claim the nbn is a major factor(and it may be for timing only) but any claims that it probably wouldnt have happened anyway are ignoring the evidence.

    • ‘simon may be trying to claim the nbn is a major factor(and it may be for timing only)’

      Yeah you know best, what would Hackett know? – he only owned Internode.


      • try looking at the evidence and EVERYTHING that simon mentioned(and even didnt) and it becomes clear that a sale has been on the cards for a long time.

        so the only thing that the nbn would have effected is the timing. its people like you that are the ones claiming the nbn caused the sale and it would never have happened otherwise. simon only says it was a factor and doesnt say in what real way. the evidence that includes things he mentioned clearly points at timing and that a sale could have happened at any time even if there was no nbn.

        but hey you know better right ? of course ignore all the facts and everything simon said. the only important part to perpetuate your view is it was a factor, so the cause.

        got to love those FUDsters that take single comments in isolation to try and push their opinion.

        • No he sold because Internode didn’t have enough customers to survive in the NBN world, that’s what he said, it also gives iiNet a more substantial customer base to survive in the NBN world, both previously had enough customers to survive in the ADSL2+/Naked DSL world, the NBN was the trigger, pure and simple.

          • Well to be more accurate, iiNet had enough customers to survive in the NBN world regardless if they bought internode or not

            However this is not the case for internode

          • “No he sold because Internode didn’t have enough customers to survive in the NBN world, that’s what he said”

            WRONG. he said internode do have enough customers actually but it is at the bottom end. so he considered it “dangerous” .

            sound a little like ” with my large debt i will have to pull my horns in a bit and live within my means and try to compete harder to gain more customers. dont want to do that, its too hard” to me.

            and as i said you are totally ignoring everything else, such as the debt and merger talking that have been happening for years before the nbn was even concieved.

          • No Alain is write, as was quoted explicitly before, the NBN is what caused Internode to be sold

            In pre NBN world, Internode could have changed their figures around more to stay alive, as they have been doing a decade. Whether it was buy building DSLAMS to save on costs, or a fiber network (AGILE) to bypass Telstra’s, or even changing the pricing of their plans.

            Most of this is simply not possible in NBN world, Internode simply put didn’t have any options left to them. The only way to survive in NBN world is to be big (have a lot of customers)

          • I think both you abd Alain are confusing the straw that broke the camel’s back with the sole reason for the merger. The fact is, the NBN expedited matters. It was also shown that they have been in talks for the past decade over this.

            This argument you having here is this utterly pointless. Don’t all three of you have something better to do, especially on Christmas Eve?

          • you are right i do have better things to do. especially considering all the posts i have seen by these 2 in the past and how they wont be convinced of anything.

            i knew the moment they responded that the fact that simon said they do have a big enough customer base that wouldnt matter.
            i knew that simon showing merger talks have been happening for over a decade wouldnt matter.
            i just knew no matter what was said they would stand strong to the evil nbn being the cause of all evil.

            so i will now go spend time with my family and wish you all a merry xmas as i wont waste any more of my time here.

          • Companies talk about merging all the time, what actually matters is actions, not words

            Simon has been for some time been saying, explicitly, that he would have difficulties surviving in the NBN world. Those actions were put to words when he sold for that reason

            The only thing that matters is the reasons for why Internode was sold and Simon said specifically due to NBN. Internode has gone through many ups and downs through the 10+ years that they have been in business

            The NBN was however too much for internode to handle

          • But this ok?

            ‘Don’t all three of you have something better to do, especially on Christmas Eve?’


          • I am not convinced.

            I wonder if this is far more about saving iiNet from TPG than real NBN issues.

            Who is funding TPGs march on iiNet, and why?

            Why does a company that is so different to iiNet want such a large stake in it?

          • ‘I wonder if this is far more about saving iiNet from TPG than real NBN issues.’

            No that’s not what the seller (Hackett) and the buyer (Malone) said where the reasons.

  20. the reason middling isps cant compete is the 121 POI’s (they cant afford backhaul to all of them to stay national) – but that was not nbn policy, nbn policy was for 4 POI’s in each state, something that would have allowed pretty much anyone to become an RSP – that was an ACCC decision, presumably to keep the backhaul market intact instead of the retail one.

    perhaps mr turnbull should ask the ACCC why it thought it was a good idea to reduce retail competition?

  21. Oh for the love of god.

    The 121 POI’s were at the behest of Telstra (who wanted more I believe) – the very same people Malcolm feels are perfectly suited to his FTTN idea.

    If we went down his path, ISPs wouldn’t so much merge, as be pushed out of the market entirely. Regulation around ADSL services is beyond broken.

    And Renai, whilst the NBN has hastened the decision, Malone and Hackett have been having the conjoining conversation for years, with Simon rejecting the advances.

    It makes sense today, when it perhaps didn’t make sense 5 years ago.

  22. Looking from the outside (non it) …. iinet’s growth strategy is by acquisitions, as stated in its asx financial reports its organic growth is insignificant for the last few years.

    The question is when there is no more decent smaller players to buy, where are the growth going to come from?

  23. Half of the posters on this site didn’t even listen to the press conference, before whining about the NBN.

    “iiNet CEO Michael Malone was more reserved, saying that acquisitions would have continued regardless of the roll-out. *

    “I’d certainly say it contributes, [but] I think consolidation would have been happening in this market even if NBN wasn’t in the backdrop,” he said.”


  24. Less competition Malcolm?

    Excerpts from 3 different publications

    “Internode will remain separate from iiNet, under the leadership of Hackett, who said that the merger will allow the companies to increase their national presence”.

    “Following the acquisition, Internode will trade as a separate business unit and will continue to be managed by its current managing director Simon Hackett, and his existing team”

    “Internode will continue to operate as an independent brand under Hackett’s leadership”.

    So Malcolm, Business as usual, for internode but together, they will be able to increase their national presence.

    Sounds like they intend to increase competition Malcolm.

  25. What I see is a particular Conservative, Big business attitude. The obsession with CBA’s when the CBA by the conservative experts post WW2 instigated by the conservative government determined that the government funding for technology research by the CSIRO and Aust Uni’s was curtailed as there was no forseeable value in computer, semiconductor or integrated circuit technology, they are just geek fads of no real practical value. Look up “CSIRAC: Australia’s first computer” , we were among the world leaders in research and development. The Libs decided we should be a primary production country with manufacturing being a service industry largely local manufacturing or assembly of designs and technology from the “old country”. The reason for our limited two speed economy. The big business aspect, two relevant articles . One re the shareholder and investor attitudes to Googles research projects “At Google X, a Top-Secret Lab Dreaming Up the Future” – also the fact that Palo Alto research lab originated the computer as we know it, yet the Xerox board and investors decided that developing and building them was too great a financial risk – read the obituary for the man who ran the research lab “Jacob E. Goldman, Founder of Xerox Lab, Dies at 90”
    Private sector does it better, then how come China is looking to invest in US infrastructure, as they see it, it has been allowed to run down and decay and they see an opportunity to rebuild and develop it.
    Let us not forget the NBN is NATIONAL INFRASTRUCTURE

    • I think you need a update in history, FTTH is not new, Telstra and others have been doing in Australia for years, the Labor NBN Co ‘research labs’ did not invent it.

  26. alain, I have been an observer for quite some time and I must say your obtuseness is most fascinating, precisely what are you talking about. ???, I know Telstra installed FTTH trials in Toorak in the 80’s and would more than likely have installed much FTTH by now if it hadn’t been privatised and forced to allow access to it’s competitors at marginally above MAINTENANCE cost. So what, that was Liberal idiocy blindly expecting the private sector to build competing networks rather than the reality of cherry picking and piggybacking expecting Telstra to carry the maintenance and upgrade can

  27. Guys Alain is clarly a trolling pro liberal activist that has no clue about the techechnology stop feeding him

  28. Sorry for revisiting an oldie, but some here were claiming that Simon sold because of the NBN and nothing else.

    Well I stumbled across this:

    First sentence – “Internode chief Simon Hackett has revealed to the Financial Review newspaper that he expects the Coalition to win the next Federal election and cancel the National Broadband Network”

    So just 3 months ago Simon was saying the Coalition will win and the NBN will be cancelled. But now some expect us to believe that he sold, exclusively because of the NBN?

    • Oh yet another armchair ‘Internode owner’ that knows more about the real reasons why the actual owner sold out, amazing, that makes it about six owners posting in Delimiter we had no idea existed.

  29. If that wasn’t Simon Hackett saying those things, who was it?

    Which leads me to a phrase from Lord Chesterfield.

    In seeking wisdom thou art wise; in imagining that thou hast attained it – thou art a fool.

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