How The iiNet Deal Affects Internode Customers

Despite the NBN-inspired imminent $105 million buyout of Internode by iiNet, there will be no short-term change to the products offered by either company. But in the long term, offerings such as iiNet's expanded Freezone are likely to be available on plans from both iiNet and Internode.Internode will continue to operate as a separate division with its own brand. Speaking in a conference call to discuss the deal this afternoon, iiNet CEO Michael Malone said that there would be no immediate change to any of Internode's existing consumer plans. "There's no short term intention to do that," he said.

The first area where changes might be seen will be in the content area. "Internode will get extra Fetch TV channels and we'll expand their access to our Freezone content," Malone said. While both Internode and iiNet offer unmetered access to the ABC's iView, one obviously appealing feature for Internode customers would be the unmetered iTunes store access which iiNet customers already enjoy. That may come to Internode as well, but not for a while. "In terms of the specifics, we'll hammer that out over the next few months," Malone said. "It's still to be decided."

Other ISPs which iiNet has acquired, notably Westnet and Netspace, have ended up with virtually identical pricing plans to iiNet despite operating as separate brands. However, Malone says that was because their pricing models were already closer, notably in the area of peak/off-peak timing, something which iiNet, Westnet and Netspace all use, but Internode does not. "I wouldn't be surprised to see a lot of things get more similar over time but there's no intention to do that in the short term," Malone said.

At the back end, the companies will merge their networks and exchange equipment, as well as their backhaul arrangements. However, there's no immediate intention to cut staff numbers. "It's very much a business as usual approach we are taking for this. We are both very well scaled for the size of our respective customer bases," Malone said.

What it means for the company

While no-one expects a major ISP merger to happen three days before Christmas, rumours of iiNet and Internode joining forces have been a staple of the local industry for years. "Michael Malone and I have been in conversation about this particular marriage on and off for more than 10 years," Hackett said, recalling an email he sent to Malone about the topic back in 1997. "This deal was done at the moment it was ready. It's taken a long time to reach the point where it makes sense. "

So why sell out? Hackett says the National Broadband Network (NBN) is the main incentive. "We are heading into the NBN era and it's all about scale. We would have had the money in the bank but we wouldn't have had scale. The size of Internode on its own is right at the bottom edge of what we've considered to be viable for an NBN retail provider. It would be a dangerous thing for us to go into that era only just being big enough."

Hackett will continue to run the company, and gets shares amounting to a 7.5 per cent share of iiNet as part of the buyout. He has agreed to terms which block him buying more iiNet shares for a period of 12 months. But he seems very content with the deal. "The things we do as organisations are brilliantly aligned culturally and technically. Our cultural similarity is enormous. The two of us have a customer satisfaction rating that leaves everyone else in the dust."


Comments

    There you have it, signed sealed and delivered. Marriage for some but I wonder at what cost to competition. Different brands but similar pricing. Who is next?

    Not only similar plan pricing but probably similar plans too. I loathe on/off peak :(

      This... on/off peak needs to go through a revolutionary uprising, be overthrown & dispensed of forever.

      I'm not going to lie, I have been contemplating a switch to Telstra, competitive prices, but decided to hold off for the completion for the RBBP to see what that meant to the prices of Internode. ah well something to worry about in the new year

    Thanks but No thanks, I'm gone, iiNet suck.

    the accc is interested in this and mroe complaints they get, the more the better

    Just....
    Wow.

    I always knew this was a possibility, but I hope I continue to get great service from Internode.

    it will be look under the under anti competitive act

      It might be, but in the call Malone said that the combined market share was about 15%, and the normal trigger for the ACCC is 20%. So perhaps not.

      I agree with Angus 20% flashpoint .

    I'm long time Internode customer on Naked via a wholesale Optus port... will be interesting to see how that pans out when things are merged...

    Last week I've had two calls from Optus (where I have my mobile) regarding selling me internet... they claim to be able to sell me 500GB / month for $59pm still on a Naked connection.... (versus the $89 for 250GB I happily pay Internode now ).

    Depending how well, or how badly the "i" 's go with the merge...

    I haven't stopped laughing. Watching all the fanboys tie themselves in knots trying to justify how this will be a GREAT thing for everyone - its just going to be delicious!

    Any word on if iiNet will change Internode's free usenet? If not... free Usenet, unmetered itunes and Xbox makes me happy, as long as the excellent service I get from Internode continues.

    One wonders, since new plans are almost inevitably going to have split data caps, whether iinet will use this as a chance to shave off yet another hour of off peak time making it even more of a rip than it is presently.

    At this stage TPG is starting to seem attractive and thats something I never thought I'd say...

    What about free access to Usenet :( Hopefully that's not a victim of the merger.

    We just switched from Iinet to internode because of bad service. I hope Iinet merger doesn't drag internodes brilliant service levels down

    Does anybody know if Internode's unmetered access to Steam will become part of iiNet?

    Long term node customer here. I don't care. This merger will be forgotten by January at the latest, sooner if Silcar and the ditch witches finish and I have access to NBN at home. Good for the companies and their vested interests, but as a customer it doesn't affect me and I don't care.

    Having said that I've enjoyed reading the editorials and the ridiculous unintelligent fanboy responses on WP and other places.

    No unmetered uploads.
    No working IPv6.

    A great leap backwards.

    Noooooooooooooo!!!!

    Simon, buy iinet instead, please!

    There are only two things i dont want to change.

    First would be the no on/ off peak usage and PLEASE dont get rid of unmetered steam content.

    Simon's Internode Blog made it very clear that there is space for only 5 RSPs directly connected to the NBN. My guess is:
    * Telstra
    * Optus
    * iiNet
    * TPG
    * Vodafone

    In the ADSL world I think Internode > iiNet - no peak time, usenet, the unmetered uploads option. In the NBN world it's likely that situation would reverse due to scale. In the end, the test to see if this is good or not comes down to how fast iiNet neuters Internode's current offerings, and what happens to the NBN rollout, especially with a possible change in government. Too much change in either of those areas pushes the deal further into negative territory.

    So much for competition - 5 RSP's aint gonna be enough... i went with Internode over IInet because of no long term contracts + no on peak off peak crap and great customer service.... i guess this will be thrown out the window in the near future...
    A sad day for the Aussie interweb
    Massive FAIL for the consumer

    As iinet is buying out and merging with other ISP companies left, right and centre.

    Why didn't The Federal Government stop it like when they can stop overseas companies buying Australian companies?

    My company has been with Internode since the mid 1990s, their service is extraordinary. I am afraid this will be a victim of the iinet bottom line. However, I trust Simon's intentions, am am really proud of this South Aussie gem. Good luck!

    I've worked for both telstra and optus - and we are long standing customers of iinet.

    I can not fault them. Call centers are Australian, queue times are never ridiculous, product pricing is fantastic and competitive and their product range is great.

    Node customers will be happy with the merger - iinet are a good company to deal with.

    Thinking long term and the nbn - of the 5 companies that will live into it's launch, service wise I wouldn't deal with anyone other than iinet. Telstra and Optus are offshore support - not sure about voda but their platform is crap and tpg have horrific offshore service as well.

    I am a customer of both. Both were great, it is a pitty that we won't have the choice any more.

    I really don't like on peak/off peak plans, so the second they change that I'm gone.

      Agree..

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