Published on the 26/03/2015 | Written by Beverley Head
Australian internet pioneers Simon Hackett and Michael Malone have predicted yet more shakeout for the nation’s communications landscape…
This month’s $1.4 billion bid from TPG for rival ISP iiNet shook the Australian telco market – threatening to drive down the number of major retailers to just three. While both Hackett (founder of Internode, now angel investor and NBN Co board member) and Malone (iiNet founder, now tech sector director) came out swinging this week against the scale of TPG’s iiNet bid. They agreed that there will be more consolidation in the telco space with mobile provider Vodafone identified as the most likely prize.
Both Hackett and Malone are veterans of telco consolidation – iiNet has scooped up around 40 smaller ISPs over the years, including Hackett’s company, Internode. That merger was a long time coming. Speaking at the RewindFastForward conference held in Sydney this week to mark 20 years of the commercial internet, Hackett confirmed that when he finally decided to sell the business to iiNet he replied to a 15-year-old email that Malone had sent him in 1997 suggesting the two companies might merge.
Market concentration is already intense. According to Hackett, iiNet, TPG, Optus and Telstra already control more than 90 percent of the retail market. But even more consolidation is now expected and comes as consumer demand and bandwidth requirements are tipped to surge following the launch this week of internet content streaming service Netflix, adding to Stan, Presto and Quickflix.
Malone said that if TPG was “brave enough” to buy out Vodafone the market would support it.
“I think we will find three consolidated players in this market – if not then Telstra will win,” said Malone, who forecast that the shakeup would be completed in one to two years.
However he said that he felt consumers had been let down by the main players. “TPG is purple and cheap; what the hell does Optus stand for? The industry has been let down.
“We (iiNet) stood up for something and said we would fight for customers. Who’s left? This industry has become faceless and I think that’s a real shame.”
Both were similarly scathing about the data retention legislation which seems set to pass through the Senate this week, requiring ISPs to retain metadata logs for two years, and about proposals that new laws be passed to track and shut down file sharing sites in order to limit online piracy.
On the issue of data retention Malone said: “This is bad legislation and is bad for consumers.”
Meanwhile Hackett said: “In a perfect world I hope this is a category of thing that future generations of politicians will change and apologise about.”
