Internode rejects takeover rumours, cautions on NBN price rises

Mid-tier internet service provider Internode has rejected suggestions it is ripe for takeover, saying it is happy to remain independent as the telecommunications industry continues to respond to the Government’s National Broadband Network.

Internode chief Patrick Tapper says while Internode, Australia’s fifth-largest ISP with more than 200,000 customers, isn’t growing market share, it is happy with its size and is focused on offering more to its customers rather than aggressively chasing market share.

“We’re at 4% of market, which is a really good size to be,” Tapper tells SmartCompany.

“We’re not interested in saying, ‘We want 10% market share’, for example, but we want to serve the customer base and grow it, because there’s a place for us in the industry.”

Tapper says while the privately held company needs to change with the environment, it is “happy to fly the independent flag for the time being.”

He adds that now is the most volatile time for telcos that he’s seen in his 13 years in the industry, with the NBN build and planned structural separation of Telstra creating a dynamic environment, “for better or for worse”.

Tapper adds that there are about a million customers per year churning through ISPs, providing opportunities and challenges for existing players.

And underscoring the challenge telco giant Telstra faces as it improves customer service, Tapper says that in a post-NBN world, the companies to excel will be those which have formed solid relationships with their customers.

Tapper says with the NBN designed to create a level playing field, everyone is going to be doing similar things, so service innovation will come to the fore.

“The internet is one of those things that when everything’s working, great, but when something’s broken and you really want to talk to someone, you need to be able to do so.”

Tapper believes Internode is differentiating itself by providing good customer service at its local call centres, becoming a one-stop-shop by focusing on bundling products, launching Fetch TV, and keeping right up on the edge of NBN developments.

“When and if it [the NBN] happens, we will be there, and we’ll have access for our customers to transfer over to the NBN,” he says.

But he cautions that consumers will need to brace themselves for price rises under the NBN, adding that NBN Co., the Australian Competition and Consumer Commission and Broadband Minister Stephen Conroy still have work to do on offering products at attractive prices.

“The average broadband connection now is around $50 per month, and that’s where NBN has to be at a base for it to be successful,” he says.

“We’re a wholesale purchaser of NBN, but we know how important it is for it to hit around that mark, and the company and Government have a lot of leeway to make that work.”

Tapper adds that market penetration for broadband is closely to getting full, and the NBN should take that to 100%.