IiNet
Encyclopedia
iiNet Limited is Australia
's second largest internet service provider
with over 1.3 million customers as of 15th August 2011. Their focus is primarily on ADSL
-based Internet access, using their own ADSL2+ infrastructure, and reselling Telstra ADSL1. iiNet also provides dial-up and voice services.
iiNet has acquired (or merged with) many smaller ISPs in its growth. It built a substantial customer base in Western Australia, and then expanded significantly into the eastern states by acquiring ihug
and OzEmail
.
, Western Australia
as iiNet Technologies Pty Ltd. It began as one of the first Australian ISPs to offer TCP/IP Internet access, 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.
The company outgrew its suburban home in 1995 and moved to CBD office accommodation. Its early growth during the Internet boom was hampered by the ability of Telstra
(not releasing Bigpond
as an ISP until 1997) to deliver enough telephone lines to cope with demand, and by the sheer competitive pressure in the Perth market, which had a comparative oversupply of low-cost providers. In 1996, iiNet successfully 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 SA arm moved quickly to become the number three ISP in the state, before being acquired by Auslink in 1998.
In late 1997, the Internet market was moving towards 56K
technology). As one end of a 56k connection must be digital, the racks of modems found in every ISP became redundant overnight and expensive CBD-hosted equipment offered by Cisco, Ascend and Livingston became a requirement in order to survive in the marketplace. Also, in 1998, competitive pressure from budget national providers, led by One.Tel
, started to reach the Perth market.
In 1998, founding partner Michael Malone purchased the company outright and listed it on the Australian Stock Exchange
in September 1999 under ticker symbol IIN. The newfound capital was used to acquire its two major local rivals in the Perth area - Wantree Internet and Omen Internet - along with numerous smaller rivals such as 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 from a issue price - however its share price recovered as time progressed. In September 2000, iiNet became the first Western Australian provider to offer ADSL
technology.
Based on its new abilities, and after consolidating its local position, iiNet focused on expanding to national coverage in the early 2000s through strategic acquisitions and natural growth. The acquisitions were:
With the advent of ADSL access, iiNet and several other Western Australian providers on the WAIX were at the forefront of the price and service wars, and were able to make a sizable push eastwards into larger lucrative markets.
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 Australia/New Zealand Internet market.
In 2005, iiNet acquired the residential ISP business and trademarks of rival OzEmail
. The business side and infrastructure of that business 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.
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 1.5 Mbit/s to a significant number of customers. The maximum download speed was initially 8 Mbit/s (ADSL1), which increased to 12 Mbit/s and later to 24 Mbit/s, as ADSL2/ADSL2+ standards have been ratified and tested with iiNet's equipment. There are currently over 320 iiSLAMed exchanges active around Australia, and a list of these exchanges can be found at iiNet's official website. In future this infrastructure is expected to be used in conjunction with MSANs to allow iiNet to offer increased telecommunication services.
In February 2005, iiNet introduced their full-service iiPhone telephony service with their new range of iiBroadband2 packages, allowing customers to pay their telephony costs completely 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 3 Perth telephone exchanges; but release/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.
The second was an increase in line rental for iiPhone. The rate was increased from to , 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."
This dispute has now been resolved, and line rental has since returned to /month under the re-branded 'Phone 1' plan on the iiNet Website.
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". On 13 May, The West Australians 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. 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."
On 26 May, the stock was reinstated to official quotation and fell on its first trading day to , 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 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.
On 21 June, the Malone family increased their holding to 19.97%.
, Vodafone
and TelstraClear
. The sale to Vodafone NZ was announced on 9 October 2006, at a price of - roughly six times ihug's EBIT
at the time.
, in a friendly acquisition worth . In a departure from previous acquisitions, iiNet also announced that Westnet would continue to operate as a separate entity.
As part of the Westnet acquisition, iiNet's online gaming presence was closed in August 2008, with operations being moved to the former Westnet gaming site 3FL.
in March 2010. The deal, valued at , 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 from Telecom New Zealand
. 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 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.
claiming that iiNet infringed copyright by failing to prevent its subscribers from downloading pirated material
using the BitTorrent peer-to-peer
protocol. 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.
In response, iiNet issued a statement 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". 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.
The case is regarded as being a test case
for copyright infringement
in Australia, and AFACT is being represented by the same law firm
that successfully sued the makers of Kazaa
in 2005.
In 2010, Justice Cowdroy ultimately found in favour of iiNet, claiming that AFACT had misled the court in regards to the number of infringing users and while iiNet users did infringe, this was not the responsibility of iiNet to deal with.
iiNet is also a part of the Terria consortium that bid to build the National Broadband Network in 2008.
It was the focus of a dispute regarding access to the Telstra
PSTN
network which was settled by the ACCC
in 2007.
Australia
Australia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area...
's second largest internet service provider
Internet service provider
An Internet service provider is a company that provides access to the Internet. Access ISPs directly connect customers to the Internet using copper wires, wireless or fiber-optic connections. Hosting ISPs lease server space for smaller businesses and host other people servers...
with over 1.3 million customers as of 15th August 2011. Their focus is primarily on ADSL
Asymmetric Digital Subscriber Line
Asymmetric digital subscriber line is a type of digital subscriber line technology, a data communications technology that enables faster data transmission over copper telephone lines than a conventional voiceband modem can provide. It does this by utilizing frequencies that are not used by a voice...
-based Internet access, using their own ADSL2+ infrastructure, and reselling Telstra ADSL1. iiNet also provides dial-up and voice services.
iiNet has acquired (or merged with) many smaller ISPs in its growth. It built a substantial customer base in Western Australia, and then expanded significantly into the eastern states by acquiring ihug
IHUG
ihug was New Zealand's third largest ISP , before it was bought, then absorbed by Vodafone New Zealand . According to 2005 estimates, it had over 100,000 internet and phone subscribers...
and OzEmail
OzEmail
OzEmail was a major Internet service provider in Australia, until it was acquired by the iiNet ISP on February 28, 2005.-History:In the early 1980s, Sean Howard was the editor of the Australian Personal Computer magazine and was running a small electronic mail service called Microtex...
.
History
iiNet was founded in 1993 by Michael Malone and Michael O'Reilly, who started the business in a suburban garage in PerthPerth, Western Australia
Perth is the capital and largest city of the Australian state of Western Australia and the fourth most populous city in Australia. The Perth metropolitan area has an estimated population of almost 1,700,000....
, Western Australia
Western Australia
Western Australia is a state of Australia, occupying the entire western third of the Australian continent. It is bounded by the Indian Ocean to the north and west, the Great Australian Bight and Indian Ocean to the south, the Northern Territory to the north-east and South Australia to the south-east...
as iiNet Technologies Pty Ltd. It began as one of the first Australian ISPs to offer TCP/IP Internet access, as opposed to the store-and-forward techniques (such as MHSnet
MHSnet
MHSnet is a store-and-forward messaging system for wide area networks. MHSnet and its precursor, SUN3, were used to implement the Australian Computer Science network ....
) that were then in use at other ISPs. It claims it was the first ISP to offer PPP
Point-to-Point Protocol
In networking, the Point-to-Point Protocol is a data link protocol commonly used in establishing a direct connection between two networking nodes...
access in Australia, and to be the first to base operations on the then new Linux
Linux
Linux is a Unix-like computer operating system assembled under the model of free and open source software development and distribution. The defining component of any Linux system is the Linux kernel, an operating system kernel first released October 5, 1991 by Linus Torvalds...
operating system.
The company outgrew its suburban home in 1995 and moved to CBD office accommodation. Its early growth during the Internet boom was hampered by the ability of Telstra
Telstra
Telstra Corporation Limited is an Australian telecommunications and media company, building and operating telecommunications networks and marketing voice, mobile, internet access and pay television products and services....
(not releasing Bigpond
BigPond
BigPond is an Australian Internet service provider and is a product of Telstra. BigPond is Australia's largest ISP and based in Melbourne.- Internet :...
as an ISP until 1997) to deliver enough telephone lines to cope with demand, and by the sheer competitive pressure in the Perth market, which had a comparative oversupply of low-cost providers. In 1996, iiNet successfully expanded into the Adelaide market under the name light.iinet.net.au (named after Colonel Light
William Light
Colonel William Light was a British military officer and the first Surveyor-General of the Colony of South Australia...
), in partnership with locals John Lindsay and Leigh Hart. The SA arm moved quickly to become the number three ISP in the state, before being acquired by Auslink in 1998.
Early growth
A growing demand on infrastructure and a rapidly increasing number of staff saw the company relocate again in 1997 to the central QV.1 building. Also in early 1997, the Western Australian Internet Association, formed in 1995 to represent the Internet community in Western Australia, created a peering and interconnection arrangement known as WAIX (Western Australian Internet Exchange) between its members, which included iiNet and several other Perth-based ISPs.In late 1997, the Internet market was moving towards 56K
56K modem
56k modems are voiceband modems nominally capable of download speeds up to 56 kbit/s . In the late 1990s, they were the most popular access method for personal Internet usage, but their use had declined as broadband technologies such as DSL gained wider availability.-Speed:The 56 kbit/s...
technology). As one end of a 56k connection must be digital, the racks of modems found in every ISP became redundant overnight and expensive CBD-hosted equipment offered by Cisco, Ascend and Livingston became a requirement in order to survive in the marketplace. Also, in 1998, competitive pressure from budget national providers, led by One.Tel
One.Tel
One.Tel was a group of Australian based telecommunications companies, including principally the publicly listed One.Tel Limited established in 1995 soon after deregulation of the Australian telecommunications industry, most of which are currently under external administration by court appointed...
, started to reach the Perth market.
In 1998, founding partner Michael Malone purchased the company outright and listed it on the Australian Stock Exchange
Australian Stock Exchange
The Australian Securities Exchange was created by the merger of the Australian Stock Exchange and the Sydney Futures Exchange in July 2006. It is the primary stock exchange group in Australia....
in September 1999 under ticker symbol IIN. The newfound capital was used to acquire its two major local rivals in the Perth area - Wantree Internet and Omen Internet - along with numerous smaller rivals such as 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
Westnet
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.See also Internet in Australia...
, EFTel
Eftel
Eftel Limited is 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,...
(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
Dot-com bubble
The dot-com bubble was a speculative bubble covering roughly 1995–2000 during which stock markets in industrialized nations saw their equity value rise rapidly from growth in the more...
burst in mid-2000, iiNet fared poorly on the markets - with shares at one stage falling to from a issue price - however its share price recovered as time progressed. In September 2000, iiNet became the first Western Australian provider to offer ADSL
Asymmetric Digital Subscriber Line
Asymmetric digital subscriber line is a type of digital subscriber line technology, a data communications technology that enables faster data transmission over copper telephone lines than a conventional voiceband modem can provide. It does this by utilizing frequencies that are not used by a voice...
technology.
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 iiPhone (Later Phone Advantage and Phone 1) and iiNetPhone (Later iiNet VoIP) products).Based on its new abilities, and after consolidating its local position, iiNet focused on expanding to national coverage in the early 2000s through strategic acquisitions and natural growth. The acquisitions were:
- RuralNet (Mildura and regional VictoriaVictoria (Australia)Victoria is the second most populous state in Australia. Geographically the smallest mainland state, Victoria is bordered by New South Wales, South Australia, and Tasmania on Boundary Islet to the north, west and south respectively....
) - Tas Access (TasmaniaTasmaniaTasmania is an Australian island and state. It is south of the continent, separated by Bass Strait. The state includes the island of Tasmania—the 26th largest island in the world—and the surrounding islands. The state has a population of 507,626 , of whom almost half reside in the greater Hobart...
) - Granite Internet (Fleurieu PeninsulaFleurieu PeninsulaThe Fleurieu Peninsula is a peninsula located south of Adelaide in South Australia, Australia. It was named after the French explorer and hydrographer Charles Pierre Claret de Fleurieu by the French explorer Nicolas Baudin as he mapped the south coast of Australia in 1802.Towns of interest in the...
, South AustraliaSouth AustraliaSouth Australia is a state of Australia in the southern central part of the country. It covers some of the most arid parts of the continent; with a total land area of , it is the fourth largest of Australia's six states and two territories.South Australia shares borders with all of the mainland...
) - RockNet (Rockhampton, QueenslandRockhampton, QueenslandRockhampton is a city and local government area in Queensland, Australia. The city lies on the Fitzroy River, approximately from the river mouth, and some north of the state capital, Brisbane....
) - Hartindale (SydneySydneySydney is the most populous city in Australia and the state capital of New South Wales. Sydney is located on Australia's south-east coast of the Tasman Sea. As of June 2010, the greater metropolitan area had an approximate population of 4.6 million people...
) - Country Netlink (regional Victoria)
- Origin Internet (regional Victoria)
- Froggy Internet (Sydney)
- Virtual Communities (MelbourneMelbourneMelbourne is the capital and most populous city in the state of Victoria, and the second most populous city in Australia. The Melbourne City Centre is the hub of the greater metropolitan area and the Census statistical division—of which "Melbourne" is the common name. As of June 2009, the greater...
) - Octa4 (DarwinDarwin, Northern TerritoryDarwin is the capital city of the Northern Territory, Australia. Situated on the Timor Sea, Darwin has a population of 127,500, making it by far the largest and most populated city in the sparsely populated Northern Territory, but the least populous of all Australia's capital cities...
)
With the advent of ADSL access, iiNet and several other Western Australian providers on the WAIX were at the forefront of the price and service wars, and were able to make a sizable push eastwards into larger lucrative markets.
In 2003, iiNet made what was then its biggest acquisition, purchasing key New Zealand provider ihug
IHUG
ihug was New Zealand's third largest ISP , before it was bought, then absorbed by Vodafone New Zealand . According to 2005 estimates, it had over 100,000 internet and phone subscribers...
. The acquisition significantly increased iiNet's share of the Australia/New Zealand Internet market.
In 2005, iiNet acquired the residential ISP business and trademarks of rival OzEmail
OzEmail
OzEmail was a major Internet service provider in Australia, until it was acquired by the iiNet ISP on February 28, 2005.-History:In the early 1980s, Sean Howard was the editor of the Australian Personal Computer magazine and was running a small electronic mail service called Microtex...
. The business side and infrastructure of that business remained in the ownership of US-parent MCI
MCI Inc.
MCI, Inc. is an American telecommunications subsidiary of Verizon Communications that is headquartered in Ashburn, Virginia...
. 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 DSLAMDigital subscriber line access multiplexer
A digital subscriber line access multiplexer is a network device, located in the telephone exchanges of the telecommunications operators. It connects multiple customer digital subscriber line interfaces to a high-speed digital communications channel using multiplexing techniques...
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 1.5 Mbit/s to a significant number of customers. The maximum download speed was initially 8 Mbit/s (ADSL1), which increased to 12 Mbit/s and later to 24 Mbit/s, as ADSL2/ADSL2+ standards have been ratified and tested with iiNet's equipment. There are currently over 320 iiSLAMed exchanges active around Australia, and a list of these exchanges can be found at iiNet's official website. In future this infrastructure is expected to be used in conjunction with MSANs to allow iiNet to offer increased telecommunication services.
Launch of telephony products
2004 saw the introduction of iiPhone in the form of a long distance carrier.In February 2005, iiNet introduced their full-service iiPhone telephony service with their new range of iiBroadband2 packages, allowing customers to pay their telephony costs completely 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 3 Perth telephone exchanges; but release/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 made changes to their pricing arrangements, each of which forced iiNet to make changes to their product line and pricing. The first of these changes was to the DSLAM port rate, which resulted in an increase of the cost of a 1.5 Mbit port. iiNet reduced the speeds for their two cheapest plans to 512 kbit/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 (512 kbit/s and 1.5 Mbit/s plans) to iiBroadband1, reserving the iiBroadband2+ moniker to uncapped "Up to 24 Mbit/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 512 kbit/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 to , 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."
This dispute has now been resolved, and line rental has since returned to /month under the re-branded 'Phone 1' plan on the iiNet Website.
Suspension and resumption of share trading
iiNet's share value slid from in September 2005 to 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.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". On 13 May, The West Australians 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. 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."
On 26 May, the stock was reinstated to official quotation and fell on its first trading day to , 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 and Michael Malone's share would be diluted to 14.4%.
On 31 May, Amcom Telecommunications
Amcom Telecommunications
Amcom Telecommunications Limited is a Perth, Western Australian based telecommunications company. A subsidiary Amnet offers residential broadband internet services.-History:...
announced it had acquired a 19.96% stake in iiNet, becoming the company's largest shareholder.
On 21 June, the Malone family increased their holding to 19.97%.
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 LimitedOrcon Internet Limited
Orcon Internet Limited , is a state-owned New Zealand telecommunications company. It is currently New Zealand's fourth largest ISP.-History:...
, Vodafone
Vodafone
Vodafone Group Plc is a global telecommunications company headquartered in London, United Kingdom. It is the world's largest mobile telecommunications company measured by revenues and the world's second-largest measured by subscribers , with around 341 million proportionate subscribers as of...
and TelstraClear
TelstraClear
TelstraClear is New Zealand's second-largest telecommunications company and is a wholly owned subsidiary of Telstra Corporation , with around 400,000 customers....
. The sale to Vodafone NZ was announced on 9 October 2006, at a price of - roughly six times ihug's EBIT
Earnings before interest and taxes
In accounting and finance, earnings before interest and taxes is a measure of a firm's profit that excludes interest and income tax expenses. Operating income is the difference between operating revenues and operating expenses...
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 WestnetWestnet
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.See also Internet in Australia...
, in a friendly acquisition worth . In a departure from previous acquisitions, iiNet also announced that Westnet would continue to operate as a separate entity.
As part of the Westnet acquisition, iiNet's online gaming presence was closed in August 2008, with operations being moved to the former Westnet gaming site 3FL.
2010 Acquisitions
iiNet continued to grow through acquisitions by purchasing rival ISP NetspaceNetspace
Netspace is one of Australia's major Internet service providers.On 29 March 2010, an agreement was entered into in which Netspace would be acquired by another ISP, iiNet, for $40 million.The company focuses primarily on ADSL-based Internet access....
in March 2010. The deal, valued at , increased iiNet's total number of broadband subscribers to 520,000, and also followed the pattern of the Westnet
Westnet
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.See also Internet in Australia...
takeover with Netspace remaining operational as a separate entity under iiNet.
In late July 2010, iiNet agreed to purchase AAPT
AAPT
AAPT is Australia's third largest land line telecommunications company and is a wholly owned subsidiary of Telecom New Zealand. The company is a member of the Infrastructure Assurance Advisory Group for the Critical Infrastructure Protection branch of the Attorney-General's...
's consumer operations for from Telecom New Zealand
Telecom New Zealand
Telecom New Zealand is a New Zealand-wide communications service provider , providing fixed line telephone services, a mobile network, an internet service provider , a major ICT provider to NZ businesses , and a wholesale network infrastructure provider to other NZ CSPs...
. 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 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.
AFACT Lawsuit
On 20 November 2008 the Australian Federation Against Copyright Theft (AFACT) filed a lawsuit against iiNet in the Federal Court of AustraliaFederal Court of Australia
The Federal Court of Australia is an Australian superior court of record which has jurisdiction to deal with most civil disputes governed by federal law , along with some summary criminal matters. Cases are heard at first instance by single Judges...
claiming that iiNet infringed copyright by failing to prevent its subscribers from downloading pirated material
Warez
Warez refers primarily to copyrighted works distributed without fees or royalties, and may be traded, in general violation of copyright law. The term generally refers to unauthorized releases by organized groups, as opposed to file sharing between friends or large groups of people with similar...
using the BitTorrent peer-to-peer
Peer-to-peer
Peer-to-peer computing or networking is a distributed application architecture that partitions tasks or workloads among peers. Peers are equally privileged, equipotent participants in the application...
protocol. The lawsuit was co-filed by 34 film and affiliated companies including Village Roadshow, Universal Pictures
Universal Pictures
-1920:* White Youth* The Flaming Disc* Am I Dreaming?* The Dragon's Net* The Adorable Savage* Putting It Over* The Line Runners-1921:* The Fire Eater* A Battle of Wits* Dream Girl* The Millionaire...
, Warner Bros.
Warner Bros.
Warner Bros. Entertainment, Inc., also known as Warner Bros. Pictures or simply Warner Bros. , is an American producer of film and television entertainment.One of the major film studios, it is a subsidiary of Time Warner, with its headquarters in Burbank,...
and 20th Century Fox
20th Century Fox
Twentieth Century Fox Film Corporation — also known as 20th Century Fox, or simply 20th or Fox — is one of the six major American film studios...
as well the Seven Network
Seven Network
The Seven Network is an Australian television network owned by Seven West Media Limited. It dates back to 4 November 1956, when the first stations on the VHF7 frequency were established in Melbourne and Sydney.It is currently the second largest network in the country in terms of population reach...
, an Australian television broadcaster, and alleges breach of copyright on a number of popular movies and television shows.
In response, iiNet issued a statement 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". 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.
The case is regarded as being a test case
Test case (law)
In case law, a test case is a legal action whose purpose is to set a precedent. An example of a test case might be a legal entity who files a lawsuit in order to see if the court considers a certain law or a certain legal precedent applicable in specific circumstances...
for copyright infringement
Copyright infringement
Copyright infringement is the unauthorized or prohibited use of works under copyright, infringing the copyright holder's exclusive rights, such as the right to reproduce or perform the copyrighted work, or to make derivative works.- "Piracy" :...
in Australia, and AFACT is being represented by the same law firm
Law firm
A law firm is a business entity formed by one or more lawyers to engage in the practice of law. The primary service rendered by a law firm is to advise clients about their legal rights and responsibilities, and to represent clients in civil or criminal cases, business transactions, and other...
that successfully sued the makers of Kazaa
Kazaa
Kazaa Media Desktop started as a peer-to-peer file sharing application using the FastTrack protocol licensed by Joltid Ltd. and operated as Kazaa by Sharman Networks...
in 2005.
In 2010, Justice Cowdroy ultimately found in favour of iiNet, claiming that AFACT had misled the court in regards to the number of infringing users and while iiNet users did infringe, this was not the responsibility of iiNet to deal with.
Products & services
iiNet Limited provides Broadband and IP telephony communication services to consumers and business customers. Its flagship products are broadband2+ (ADSL2+) services and VOIP services for businesses.iiNet is also a part of the Terria consortium that bid to build the National Broadband Network in 2008.
Chime Communications
Chime Communications is an Australian telecommunications company founded by iiNet in 1996.It was the focus of a dispute regarding access to the Telstra
Telstra
Telstra Corporation Limited is an Australian telecommunications and media company, building and operating telecommunications networks and marketing voice, mobile, internet access and pay television products and services....
PSTN
Public switched telephone network
The public switched telephone network is the network of the world's public circuit-switched telephone networks. It consists of telephone lines, fiber optic cables, microwave transmission links, cellular networks, communications satellites, and undersea telephone cables, all inter-connected by...
network which was settled by the ACCC
Australian Competition and Consumer Commission
The Australian Competition and Consumer Commission is an independent authority of the Australia government. It was established in 1995 with the amalgamation of the Australian Trade Practices Commission and the Prices Surveillance Authority to administer the Trade Practices Act 1974...
in 2007.
External links
- iiNet Official Website
- Westnet - an iiNet WA subsidiary
- 3FL - iiNet's Gaming Network
- iiNet's discussion forum on Whirlpool
- iiNet's listing on Broadband Choice
- iiNet's listing on Internet Choice