iiNet was acquired by TPG in September 2015 for $1.56 billion[1] but retained its retail brand name. iiNet acquired or merged with smaller ISPs, building a customer base in Western Australia and then, by acquiring ihug and OzEmail, expanded into the eastern states.
History
iiNet was founded in 1993 by Michael Malone and Michael O'Reilly, who started the business in a suburban garage in Perth as iiNet Technologies. It began as one of the first Australian ISPs to offer TCP/IP Internet access [citation needed], as opposed to the store-and-forward techniques (such as MHSnet) that were then in use at other ISPs. It claims it was the first ISP to offer PPP access in Australia and to be the first to base operations on the then-new Linux operating system.
In 1995, the company moved to a CBD office. Early growth during the Internet boom was hampered by the ability of Telstra (not releasing Bigpond as an ISP until 1997) to cope with the demand for needed telephone lines and by the sheer competitive pressure in the Perth market, which had a comparative oversupply of low-cost providers. In 1996, iiNet expanded into the Adelaide market under the name light.iinet.net.au (named after Colonel Light), in partnership with locals John Lindsay and Leigh Hart. The South Australian branch moved to become the number three ISP in the state before being acquired by Auslink in 1998.[citation needed]
Early growth
In 1997, due to growing demand for infrastructure and an increase in staff numbers, the company relocated to the central QV.1 building. Additionally, during the same period, the Western Australian Internet Association established a peering and interconnection arrangement called WAIX[2] among its members, including iiNet and several other Perth-based ISPs.
With the internet market transitioning to 56K technology in late 1997,[3] traditional racks of modems at ISPs became redundant and expensive. CBD-hosted equipment from Cisco, Ascend, and Livingston became essential to adapt to the changing marketplace. The Perth market also faced competition from budget national providers, notably One.Tel.
In 1998, iiNet's founding partner, Michael Malone, acquired the company entirely and subsequently listed it on the Australian Securities Exchange in September 1999 (ticker symbol IIN). With new capital, iiNet acquired its major local competitors in the Perth area, including Wantree Internet and Omen Internet, and several smaller competitors like Networx Internet, Infinite Data, Octal, and Net Trek Online Services.
This was perceived by most observers as a rationalisation of an unsustainable services market and allowed not only iiNet, but also other providers such as Westnet, EFTel (itself an agglomeration of several ISPs formed in 2000), ArachNet and Global Dial among others to grow in the local market and to expand into fully-fledged national providers.
After the dot-com bubble burst in mid-2000, iiNet fared poorly on the markets – with shares at one stage falling to A$0.20 from a A$1.00 issue price – however its share price recovered as time progressed. In September 2000, iiNet became the first Western Australian provider to offer ADSL technology.[4]
Growth through acquisition
The company created a new registered telecommunications provider iiTel, later renamed Chime Communications, that sought to improve Internet access prices by making wholesale telephone access much cheaper. This was possible through new interconnection agreements mandated by the Australian Government's deregulation of the telecommunications industry and provided the foundation for iiNet's later move into telephony via its iPhone (later Phone Advantage and Phone 1) and iiNetPhone (later iiNet VoIP) products.
In the early 2000s, iiNet expanded their national coverage by acquiring the following companies:
In 2003, iiNet made what was then its biggest acquisition, purchasing key New Zealand provider ihug. The acquisition significantly increased iiNet's share of the Australian and New Zealand Internet market.
In 2005, iiNet acquired the residential ISP business and trademarks of rival OzEmail. That business's business side and infrastructure remained in the ownership of US-parent MCI. OzEmail had been Australia's largest ISP until 2000, when it was acquired by MCI. The retail arm had been neglected, and the company moved very late into ADSL, meaning that it had difficulty positioning itself as a broadband player. iiNet initially used both the OzEmail and iiNet brands on the east coast, but by 2006 iiNet had largely abandoned the OzEmail brand, using its own corporate image across Australia.
DSLAM deployment
In late 2004, throughout 2005 and into 2006, iiNet moved to introduce their own DSLAM infrastructure (colloquially known as iiSLAMs or iiDSLAMs in the industry) into telephone exchanges Australia-wide. This move allowed iiNet to be the first Australian DSL carrier to offer speeds of over 1.5Mbit/s to many customers. The maximum download speed was initially 8Mbit/s (ADSL1), which increased to 12Mbit/s and later to 24Mbit/s, as ADSL2/ADSL2+ standards have been ratified and tested with iiNet's equipment. There are currently over 406 enabled exchanges active around Australia, and a list of these exchanges can be found at iiNet's official website.[5]
Launch of telephony products
2004 saw the introduction of iiPhone in the form of a long-distance carrier.
In February 2005, iiNet launched their full-service iiPhone telephony service with their new range of iiBroadband2 packages, allowing customers to pay their telephony costs entirely through iiNet, including line rental and local calls.
In August 2005, iiNet released iiNetPhone, their consumer VoIP service. The product was an add-on service, available only to customers that also use their iiPhone service. As with most VoIP services, call costs were well under standard market prices for a regular copper line. The iiNetPhone service supports inbound and outbound calls to normal Australian PSTN numbers.
In 2006, iiNet were trialling its MSAN services in three Perth telephone exchanges; but release and expanded trial of these has since been put on hold until further notice. MSANs are iiNet's own full telephone service, meaning they can be completely off Telstra's phone service and onto their own. This would result in a lower line rental price for its customers and free additional add on options to the phone service.
Regulatory conflict with Telstra
In late 2005, Telstra Wholesale changed its pricing arrangements, each of which forced iiNet to change its product line and pricing. The first of these changes was to the DSLAM port rate, which resulted in an increase in the cost of a 1.5Mbit port. iiNet reduced the speeds for their two cheapest plans to 512kbit/s, while doubling the data allowance on these plans in an attempt to placate users. They also rebranded the plans available to their Telstra Wholesale customers (512kbit/s and 1.5Mbit/s plans) to iiBroadband1, reserving the iiBroadband2+ moniker to uncapped "Up to 24Mbit/s" speed plans, only available in areas connected to an exchange with an iiNet DSLAM. In April 2006, another iiBroadband1 (using Telstra Wholesale) plan's speed was reduced to 512kbit/s (though existing plan users were allowed to keep their speed).
The second was an increase in line rental for iiPhone. The rate was increased from A$29.95 to A$33.36, and was also blamed on price increases from Telstra Wholesale. Michael Malone said in regard to both changes, "We're disappointed in the changes to our broadband arrangements and line rental prices from Telstra Wholesale and we're challenging this."[6]
This dispute was resolved, and line rental returned to A$29.95 a month under the re-branded Phone 1 plan on the iiNet website.[7]
Suspension and resumption of share trading
iiNet's share value slid from A$3.40 in September 2005 to A$1.69 in April 2006. On 18 April 2006, iiNet requested a trading halt pending the release of an announcement. Two days later, it suspended its shares from quotation. Initially, the company advised it intended to resume trading on the ASX the following week, but on 21 April, a local newspaper, WA Business News, speculated that "One line of thought is that uncertainty on behalf of iiNet's bankers, will result in the company embarking on a capital raising to address concerns over banking covenants, and provide its bankers with a measure of confidence." Other speculation in the same article suggested that iiNet may be about to exit New Zealand or the CEO was about to sell his shareholding.[8]
On 1 May 2006, iiNet advised the ASX that its shares would remain suspended, as its March quarter results had been "well below expectations". The company announced on 11 May 2006 that updated financial figures for the previous year would not be released for "one to two weeks".[9][10] On 13 May, The West Australian business section reported on the matter, and claimed that founder Michael Malone had been "sidelined", and that the company was "open for takeover" according to analysts, who rated Singtel Optus as the most likely suitor. On 18 May, WA Business News agreed with the West's claim that takeover offers were being evaluated, however contradicted the claim that Malone had been sidelined.[11] Meanwhile, ZDNet reported, "It is likely iiNet's management will move more conservatively now that their financial dirty laundry has been so publicly aired. They'll need to remain focused on consolidating their assets after what is expected to be a large drop in iiNet's share price when the stock resumes trading."[12]
On 26 May, the stock was reinstated to official quotation and fell on its first trading day to A$0.85, after the 27 May edition of The West Australian reported that iiNet was in the red for the first time in five years and had vowed not to repeat costly mistakes. PowerTel, a Sydney-based telco, would emerge with a diluted stake of 13% at 85c a share[13] and Michael Malone's share would be diluted to 14.4%.
On 31 May, Amcom Telecommunications announced it had acquired a 19.96% stake in iiNet, becoming the company's largest shareholder.[14]
On 21 June, the Malone family increased their holding to 19.97%.[15]
Sale of ihug – New Zealand subsidiary
On 20 July 2006 iiNet announced that they were wanting to sell their New Zealand subsidiary – ihug. Potential buyers included Orcon Internet, Vodafone and TelstraClear. The sale to Vodafone NZ was announced on 9 October 2006, at a price of A$36 million[16] – roughly six times ihug's EBIT at the time.
2008 acquisitions
January 2008 saw iiNet recommence its acquisition strategy with the purchase of the customer base of local Perth ISP Up'n'away. This was followed in May with the purchase of rival Perth-based ISP Westnet, in a friendly acquisition worth $81 million.[17] In a departure from previous acquisitions, iiNet also announced that Westnet would continue to operate as a separate entity. However, as of 2013 some marketing copy is identical, suggesting at the very least a degree of back-office collaboration now exists.
As part of the Westnet acquisition, iiNet's online gaming presence was closed in August 2008,[18] with operations being moved to the former Westnet gaming site 3FL.
2010 acquisitions
iiNet continued to grow through acquisitions by purchasing rival ISP Netspace in March 2010.[19] The deal, valued at $40 million, increased iiNet's total number of broadband subscribers to 520,000, and also followed the pattern of the Westnet takeover with Netspace remaining operational as a separate entity under iiNet.
In late July 2010, iiNet agreed to purchase AAPT's consumer operations for $60 million from Telecom New Zealand.[20] As part of the acquisition, Telecom New Zealand entered into a block-trade agreement to sell their 18.2% share holding in iiNet to "institutional and sophisticated investors", a move viewed by many[21] as a defensive action against a takeover bid from industry rival TPG. The purchase of AAPT increases iiNet's total broadband subscribers to more than 652,000 and total active services to more than 1,326,000.
2011 acquisitions
On 16 November 2011 it was announced that iiNet was in the final stages of negotiations in the acquisition of Canberra-based telco TransACT.[22] The acquisition was completed on 30 November 2011 at a cost of $60 million.[23]
On 22 December 2011, iiNet announced it would acquire rival ISP Internode for $105 million with the transaction due to be completed late February 2012.[24][25]
2013 acquisitions
On 4 August 2013 iiNet announced it would be purchasing the South Australian ISP Adam Internet for $60 million, after an identical bid by Telstra was rejected by the Australian Competition & Consumer Commission (ACCC) on grounds that the telco giant would use its acquisition of Adam to undercut its rivals' offers through the use of favourable wholesale supply deals. The sale process was completed at the end of August, with Adam becoming a subsidiary of iiNet.[26]
On 20 November 2008, the Australian Federation Against Copyright Theft (AFACT) filed a lawsuit against iiNet in the Federal Court of Australia claiming that iiNet infringed copyright by failing to prevent its subscribers from downloading illegally copied material using the BitTorrentpeer-to-peer protocol.[27] The lawsuit was co-filed by 34 film and affiliated companies including Village Roadshow, Universal Pictures, Warner Bros. and 20th Century Fox as well the Seven Network, an Australian television broadcaster, and alleges breach of copyright on a number of popular movies and television shows.[28] It was later revealed in a WikiLeaks document AFACT was backed by MPAA.[29]
In response, iiNet issued a statement[30] indicating that iiNet had been passing on the reports of infringement received from AFACT to law enforcement authorities and that iiNet could not disconnect a customer's phone line based on an allegation unproven in the courts. Michael Malone, managing director of iiNet, went on to state that "AFACT is arguing that they don't want to talk to the police, and we should just cut the customers off".[31] However, the Statement of Claim filed at the Federal Court does not indicate AFACT are asking for users to be disconnected but that iiNet subscribers are "prevented" from committing copyright infringement.[32]
In 2010, Justice Cowdroy in the Federal Court found in favour of iiNet, noting that while iiNet users did infringe, this was not the responsibility of iiNet to deal with.[35]
On 20 April 2012, the High Court of Australia handed down its decision in Roadshow Films Pty Ltd v iiNet Ltd which confirmed the intervening Federal Court Full Bench decision affirming the first instance decision of Cowdroy, though not supporting all his reasons.[36] In his reasoning, Gummow J. noted, in particular, that the current legislation did not provide a mechanism to deal with peer-to-peer infringements, and it needed to be addressed by the legislature.
Products and services
iiNet Limited provides Broadband and IP telephone communication services to consumers and business customers. Its flagship products are broadband2+ (ADSL2+) services and, more recently, reselling NBN as well as services for businesses.
iiNet is now a Retail Service Provider (RSP)[37] to serve customers with the NBN (National Broadband Network). Australian consumers can now sign up for services such as fibre to the home (FTTH), FTTC, HFC and fixed wireless. From 2011, iiNet also sold services on the NBN Interim Satellite Service; however, demand for these connections exceeded the available capacity, severely congesting the service. As a result, iiNet withdrew the product from sale in November 2013,[38] and NBN co issued a cease sale for all RSPs in December 2013.[39]
iiNet also offers a variety of mobile services to businesses and the public, which includes post-paid mobile plans and mobile data plans that run on the Vodafone network;[40] iiNet has offered 1000MB to members at no additional cost for website hosting from the beginning. As of 1 August 2023 the parent company (TPG) killed all the hosted sites which now re-direct to a page saying hosting is EOL.[41] As of 7 August, they advise that email will also cease: iiNet has made the decision to stop providing email services in 2023. This change will help us focus on creating better experiences for our core products: internet and mobile.
Telstra Group Limited is an Australian telecommunications company that builds and operates telecommunications networks and markets related products and services. It is a member of the S&P/ASX 20 and Australia's largest telecommunications company by market share.
Telecommunications in Australia refers to communication in Australia through electronic means, using devices such as telephone, television, radio or computer, and services such as the telephony and broadband networks. Telecommunications have always been important in Australia given the "tyranny of distance" with a dispersed population. Governments have driven telecommunication development and have a key role in its regulation.
TPG is an Australian internet service provider that specialises in consumer and business internet services as well as mobile telephone services. As of August 2015, TPG is the second largest internet service provider in Australia and is the largest mobile virtual network operator. As such, it has over 671,000 ADSL2+ subscribers, 358,000 landline subscribers and 360,000 mobile subscribers, and owns the second largest ADSL2+ network in Australia, consisting of 391 ADSL2+ DSLAMs. It also operates in New Zealand.
Internode Pty Ltd is an Australian Internet service provider (ISP) that provides NBN broadband services, business-class broadband access, web hosting, co-location, Voice over IP, and a variety of related services. Internode became part of TPG Telecom in July 2020.
One New Zealand, is a New Zealand telecommunications company. One NZ is the largest wireless carrier in New Zealand, accounting for 38% of the country's mobile share market in 2021.
TransACT is the trading name of TransACT Capital Communications, an Australian telecommunications company based in Canberra which provides broadband internet access, fixed telephony, cable television services, and mobile phone services in Canberra and a subset of these services in Queanbeyan, throughout South-east New South Wales and in Victoria.
Exetel is an Australian ISP which provides ADSL, web hosting, VoIP, and other internet services to customers across Australia. Exetel's headquarters are in offices in Sydney, and its switching centres are distributed in capital city secure data centre facilities around mainland Australia.
Virgin Media is a telecommunications company from Britain, founded in 2007, which provides telephone, television and internet services in the United Kingdom. Its headquarters are at Green Park in Reading, England. It is owned by Virgin Media O2, a 50:50 joint venture between Liberty Global and Telefónica.
Eftel Limited was an internet service provider and telecommunications provider in Australia, with approximately 120,000 active accounts. It was established in 1999. Eftel offers a range of services including: DSL and dial-up Internet access, web hosting and telephony services - to the retail, corporate and wholesale telecommunications markets.
Internet in Australia first became available on a permanent basis to universities in Australia in May 1989, via AARNet. Pegasus Networks was Australia's first public Internet provider in June 1989. The first commercial dial-up Internet Service Provider (ISP) appeared in capital cities soon after, and by the mid-1990s, almost the entire country had a range of choices of dial-up ISPs. Today, Internet access is available through a range of technologies, i.e. hybrid fibre coaxial cable, digital subscriber line (DSL), Integrated Services Digital Network (ISDN) and satellite Internet. In July 2009, the federal government, in partnership with the industrial sector, began rolling out a nationwide fibre-to-the-premises (FTTP) and improved fixed wireless and satellite access through the National Broadband Network. Subsequently, the roll out was downgraded to a Multi-Technology Mix on the promise of it being less expensive and with earlier completion. In October 2020, the federal government announced an upgrade by 2023 of NBN fibre-to-the-node (FTTN) services to FTTP for 2 million households, at a cost of A$3.5 billion.
Internet access is widely available in New Zealand, with 94% of New Zealanders having access to the internet as of January 2021. It first became accessible to university students in the country in 1989. As of June 2018, there are 1,867,000 broadband connections, of which 1,524,000 are residential and 361,000 are business or government.
Roadshow Films Pty Ltd & others v iiNet Ltd was a case in the Federal and High Courts of Australia between members of the Australian Federation Against Copyright Theft (AFACT) and other movie and television studios and iiNet, Australia's third-largest Internet service provider (ISP) at the time. The alliance of 34 companies unsuccessfully claimed that iiNet authorised primary copyright infringement by failing to take reasonable steps to prevent its customers from downloading and sharing infringing copies of films and television programs using BitTorrent.
NBN Co Limited, known as simply nbn, is a state-owned corporation of the Australian Government, tasked to design, build and operate Australia's National Broadband Network (NBN) as the nation's wholesale broadband provider. The corporation reports to two shareholder ministers: the Minister for Finance and the Minister for Communications.
Westnet is a Perth-based Australian telecommunications company providing broadband ADSL, broadband ADSL2+, satellite broadband, dialup Internet, telephony and web-hosting services to homes and businesses across Australia.
The National Broadband Network (NBN) is an Australian national wholesale open-access data network. It includes wired and radio communication components rolled out and operated by NBN Co, a government-owned corporation. Internet service providers, known under NBN as retail service providers or RSPs, contract with NBN to access the data network and sell fixed Internet access to end users.
Connexus is an Australian-owned and operated business telecommunications provider founded in 1989 and based in Sydney, Australia, which primarily caters to the business sector. Connexus specialises in business-grade phone, mobile and NBN.
AusBBS was an Australian Internet service provider (ISP) offering Internet and phone services. It was one of the first ISPs to launch with a specific focus on Australia's National Broadband Network (NBN) which is being rolled out by the Federal Government via the fully owned NBN Co. Providers such as AusBBS have also been referred to as Retail Service Providers (RSPs) since the commencement of the NBN.
SkyMesh is an Australian telecommunications carrier and ISP owned by Bigblu Broadband that provides NBN, Wireless and Satellite services, as well as legacy IPSTAR Satellite services. SkyMesh is headquartered in Fortitude Valley, Brisbane.
Michael Malone is an Irish/Australian technology entrepreneur and business executive. He was the founder and managing director of the Perth-based telecommunications provider iinet starting the business in his parents' garage. He is a pioneer of dial up access back in 1993 before the Internet became mainstream. Over the years he has been an advocate for Internet consumer rights as well participating in the metadata debate. He was appointed as a non executive director of the NBNco in 2016.
Activ8me is the trading name of an Australian telecommunications carrier and Internet service provider (ISP) operated by Australian Private Networks Pty. Ltd. Activ8me specialise in regional and remote Australian telecommunications and are the largest provider of satellite broadband services in Australia.
↑ Mitchell Bingemann (16 November 2011). "iiNet to buy TransACT". The Australian. Retrieved 26 December 2011.
↑ "iiNet acquires TransACT". iinet.net.au. iiNet Press – Media Releases. 30 November 2011. Archived from the original on 25 May 2012. Retrieved 26 December 2011.
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