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Telstra-Adam deal may spur competition: Exetel

Exetel has defied the statements made by other ISPs, and has said that Telstra's proposed takeover of Adam Internet could help competition.
Written by Josh Taylor, Contributor

Exetel CEO Steve Waddington has said that Telstra's takeover of Adam Internet to make it a budget internet service provider (ISP) could improve competition, contrary to the claims of the likes of iiNet and Optus.

The Australian Competition and Consumer Commission (ACCC) has twice delayed making a decision on the reportedly AU$60 million deal for Telstra to buy Adelaide-based ISP Adam Internet following complaints by iiNet and Optus. ACCC chairman Rod Sims has said that the takeover could potentially lessen competition in the sector.

But Waddington told ZDNet that if Telstra was to turn Adam into a budget ISP, it would mean more competition in the lower end of the market.

"In my view, the ACCC has it the wrong way around. Say Telstra do use Adam as a low-price vehicle, what does that mean? It means that there is another low-price ISP in the market, so more competition," he said.

However, he noted that Adam Internet's current pricing is not cheap, and that Telstra would be limited in what it could do.

"[Telstra] will have to follow their own corporate governance rules, they will have to have their own oversight of operations. I can't see how under those conditions, a small ISP like Adam would be able to retain its cost benefits or local focus."

Waddington said it is sad to see consolidation of smaller "country town" ISPs in the industry, but that Exetel has its own area carved out.

"We have made our own space in the broadband industry, and our year-on-year growth shows there is a market for what we offer. No one has been able to duplicate that so far, and if anyone could or wanted to, I guess they would have done so by now."

Waddington took over as Exetel CEO following the passing of founder John Linton just over a year ago. Waddington had worked with Linton for 16 years, and was Exetel's head of engineering. He said it was a steep learning curve, but that Exetel's existing engineering focus helped.

"Exetel has always been, essentially, an engineering company, and I think our sales success is based as much on the solid engineering we can provide to our customers as it is the hard work of our salespeople," he said.

The last year was a tough year for the company, but Waddington said Exetel met the ambitious targets that he and Linton had set together.

"We finished the financial year on target, and half-year results for 2013 are a little ahead of target. Overall, 15 percent revenue growth across the business, our corporate services being the star performer with 65 percent revenue growth on last year," he said.

"I am very privileged to work with such great people at Exetel, that despite such a terrible event have performed to such an exceptional level."

Waddington indicated that soon, the company will look to offer Quickflix services to its customers.

Copyright infringement notices

While the copyright industry, the Attorney-General's Department, and select ISPs continue to negotiate for a potential copyright-infringement notice scheme to cut down on users sharing infringing films, TV, music, and software online, Exetel has had an infringement notice scheme in place for several years. Waddington said that Exetel has offered to make this system available to other ISPs at no cost, but none have taken the company up on the offer.

"We developed and pioneered the use of a system that ran at almost totally no cost to the ISP, caused no inconvenience to customers, and, according to the advice we got from an SC, fulfilled any possible interpretation of ISP's responsibility for copyright infringement," he said.

"What I thought was interesting was that even though we were cited as some sort of 'paragon of virtue' by AFACT [the Australian Federation against Copyright Theft] in the case against iiNet, there was no lobbying by anyone to have the system adopted, and any mention of copyright infringement is glaringly absent from the [telecommunications consumer protection] code," he said.

Notably, after winning its High Court case against AFACT, iiNet has refused to participate in any trials of an infringement notice system unless compelled to by the Australian government, stating that the company refuses to be the "copyright police" while content owners do not provide access to content in a more timely and affordable way.

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