iiNet ends bush broadband hiatus

iiNet is "taking applications again for regional ADSL at lower speeds (512Kbps)", the ISP's managing director, Michael Malone, said in his presentation to the company's annual general meeting today. Documents detailing the speech were sent to the Australian Stock Exchange (ASX) this morning.

Earlier this month the ISP announced it had stopped signing up rural and regional customers for broadband services due to the "unrealistic pricing" Telstra charged for its wholesale services.

iiNet chairman Peter Harley also took the opportunity to update shareholders on the integration of OzEmail's customers following the acquisition of the ISP earlier this year.

"Over the past several weeks we have integrated the OzEmail customer base into the iiNet network and billing systems," said Harley in a copy of his speech sent to the ASX. The chairman admitted the transition had not been smooth.

"Due to the magnitude of the project and the changes involved for many customers, our support centres in Sydney and Perth have experienced unusually high call volumes and our call centre performance has been negatively impacted," he said.

"However, as the integration is now complete, call volumes should return to normal levels from December onwards."

Malone's presentation stated his company had contracted call centre specialist Genesys to upgrade iiNet's customer service infrastructure to the tune of AUD$2 million, with a 'follow the sun' model of call centres being implemented in Perth, Sydney and Auckland. The project is due to kick off in the first quarter of 2006.

The managing director confirmed iiNet had closed its Adelaide office in July, with Melbourne to follow in January. Malone told ZDNet Australia earlier this month the Melbourne centre had employed less than 20 staff, who had all been offered roles in the larger interstate offices back in August, as well as relocation assistance, and appropriate benefits for those not staying on.

In terms of its ongoing rollout of ADSL infrastructure, iiNet said it had installed its own DSL Access Multiplexers (DSLAMs) into 185 of Telstra's telephone exchanges, with 154 of those now active and providing services.

The DLAM rollout allows iiNet to sell ADSL services over its own hardware rather than resell Telstra's wholsale DSL offering, in the process garnering higher margins.

"55,000 customer are now on our own infrastructure," said Malone's presentation, "on target for over 70,000 active customers by January".

iiNet's customers also appear to be gaining an appetite for the ISP's telephony offerings, despite the fact fixed line services were only launched in early February, and Voice over IP services late in August.

Around 38 percent of iiNet's ADSL customers also subscribe to the ISP's fixed-line telephone service, which is based on Telstra's wholesale offering. And 74 percent of new customers take up a bundled voice and data service.

"We now have over 71,000 phone services," said Harley, "some 12,000 of which utilise our nearly launched Internet telephony service."

Ultimately iiNet plans to stop reselling Telstra's phone services, however, with voice hardware starting to be delivered into telephone exchanges by the first quarter of 2006.

"MSANs (Multi-Service Access Nodes) will revolutionise telephony, like DSLAMs have done for broadband," said Harley.

iiNet's presentation noted it had successfully tested the equipment in its labs and expected a user trial to be under way by Christmas, with the first customers on its own live equipment by March.

Regulatory certainty?
Recent statements by Telstra executives were on the mind of their iiNet's counterparts. Malone's presentation noted iiNet expected Telstra to "significantly" increase its wholesale pricing from January.

The managing director also took aim at Telstra's recently announced plans to extend its fibre-optic network from its telephone exchanges out to neighbourhood street-side 'nodes' with the aim of providing higher-speed ADSL2+ access.

Although this 'Fibre to the Node' strategy could cut off iiNet's customers from being able to access the ISP's ADSL infrastructure, Malone noted it was unlikely the Australian Competition and Consumer Commission would allow Telstra to do so.

In addition, the executive said, any desire by Telstra to restrict access to its new network to its own retail division was also "highly unlikely" to succeed.

The involvement of the Australian competition regulator was "critical" if a competitive telecommunications environment was to be maintained, he said.

The current problematic environment was also likely to accelerate consolidation of tier 3 ISPs and telcos, according to Malone.

In other technology plans, Malone confirmed iiNet was trialling television services delivered over the Internet, as well as video-on-demand services.

He noted the 3,000 OzEmail customers using Personal Broadband Australia's iBurst wireless broadband service iiNet acquired with the ISP had been sold to wireless carrier Big Air in October.