Conroy gives blessing to Telstra acquisition of Adam Internet

Communications Minister Senator Stephen Conroy has thrown his support behind Telstra's move to buy Adelaide-based internet service provider (ISP) Adam Internet.

Telstra announced this morning that it will be buying Adam Internet, which was founded by Greg Hicks 25 years ago, for an undisclosed sum in an agreement that is subject to approval by the Australian Competition and Consumer Commission (ACCC).

The purchase will give Telstra around 100,000 additional customers, but the company has denied that the decision was a bid to squeeze more money out of the government-owned NBN Co.

Under the AU$11 billion deal between Telstra and NBN Co, the telco will decommission its copper network and migrate customers onto the National Broadband Network (NBN). Telstra said today that it will not receive extra payments from NBN Co, despite acquiring new customers through Adam Internet.

At least Senator Conroy doesn't see any nefarious intentions behind Telstra's new purchase.

"It's always sad to see a small, regional-place company [bought out] — Adam Internet always said it wanted to stay focused on South Australia, and obviously Telstra has much bigger plans for them," he told ZDNet. "It's a great brand, a great company, and I wish both the Hicks family and Telstra good luck."

The ISP market has seen a huge amount of consolidation in the past year, with iiNet at the forefront of snapping up smaller companies to grow its market share and build scale ahead of the NBN. But Adam Internet is Telstra's first major retail acquisition.

Senator Conroy was unperturbed by the fact that the telecommunications giant has forayed into acquiring smaller players, even though this could mean less competition as large companies like Telstra gain even more commercial advantage.

"Consolidation has been taking place long before the NBN," he said. "It's about taking advantage of what the NBN has to offer. I expect to see growth and movement [in the industry]."

He highlighted the fact that new ISPs have begun to enter the market, which will result in increased competition.

"So there's competition coming in," he said."If you look at the NBN customer base — retail service providers [RSPs] — you will see there are new virtual RSPs right now operating in the marketplace."

'Pausing' the NBN breaks contracts

Late last week, opposition leader Tony Abbott said that he would "pause" the NBN to bring the federal budget back into surplus.

Senator Conroy has shot back at Abbott's comments, claiming that even pausing the NBN would mean spending more taxpayer dollars.

"There will be costs — NBN Co is engaged in the volume rollout right now, [so] there will be costs if you want to break contracts."

As it stands, Australian taxpayers are liable to pay AU$2.3 billion in compensation for associated NBN contracts, should the network be cancelled.