What Telstra Bailing On Buying Adam Means For Broadband Customers

Telstra has abandoned its plan to purchase (much) smaller internet service provider (ISP) Adam Internet. What does that change of tactics mean for customers?

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Telstra announced its plans to buy out Adam back in October last year, and has spent the intervening nine months trying to persuade the Australian Competition and Consumer Commission (ACCC) that doing so would not result in a substantial lessening of competition. Telstra didn’t manage that task, and having not met a contract target date of 30 June 2013, has abandoned the deal.

It’s not entirely surprising that Telstra couldn’t make the case; it is already Australia’s largest provider of consumer broadband services in its own right, and controls the copper used by many rival ISPs as well. That scenario would change in the current model of the National Broadband Network (NBN), though under the Coalition alternative, much of that copper would remain in place.

Telstra’s plans for Adam were to use it as an alternative broadband channel, potentially selling cheaper packages than it does under its own name, where pushing bundles of services (broadband, phone, mobile and pay TV) is the main strategy. (A similar logic applies to Telstra-owned Boost in the mobile space.) As such, Adam might have been a welcome introduction for customers who find themselves stuck in areas where Telstra is the only effective provider.

The other element of the Adam strategy was to continue pushing for the South Australian market, where a local brand name is seen as potentially valuable. The big fish in that pond is Internode, which has so far maintained its independence despite being purchased by iiNet back in December 2011. That said, an increasing number of Internode plans are now identical to the iiNet equivalent — the NodeMobile service being the most recent example — and it seems likely that distinction will eventually become one essentially of name only, as it is with iiNet-owned Westnet.

As for Adam? Life as a small ISP is tough, especially with the potential for the NBN to be radically changed in the near future. Another buyout suitor might be its best bet; of the remaining big players, TPG seems the most likely possibility.

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