How TPG’s acquisition of iiNet could affect you
TPG's acquisition of iiNet is one step closer, with iiNet shareholders voting in favour of the deal earlier this week. The acquisition is still subject to approvals from the Australian Competition and Consumer Commission (ACCC) and the Federal Court, but if it goes ahead, it will make TPG Australia's second largest internet service provider (ISP).
There's been concerns about what effect the acquisition will have on iiNet's customers, as well as on the Australian telecommunications industry in general. We had a chat to Teresa Corbin, CEO of the Australian Communications Consumer Actions Network – Australia's peak body for consumer advocacy when it comes to services such as internet – to find out how these changes could affect you.
CyberShack: What happens when one ISP takes over another?
Teresa: Usually the brand or product offering keeps going for a little longer. We're hoping that will be the case with iiNet; a lot of the products and services shouldn't change for some time, at least as long as customers have got a contract.
Ultimately, what will happen in the long term is more of a concern. Whether in fact people's products will change, whether their terms will change, and whether this will have an impact on customer service quality.
CyberShack: There's been plenty of ISPs who've merged or been acquired in Australia, what has precedent shown us?
Teresa: This is quite common in the Australian telecommunications industry. One for example, was iiNet, where iiNet bought out a company called Internode. iiNet kept Internode as a separate brand, and it has continued to keep their good reputation.
We're expecting to see this a lot more, because NBN will allow there to be more competition in areas where there hasn't been competition before, but it could also end up being more expensive for small providers to actually provide services. We're expecting there to be a lot more mergers in the future.
CyberShack: So what's the effect on customers? What happens to your existing contract?
Teresa: The acquisition won't the existing contract that you've got. Under the telecommunications consumer protection code, what happens when your contract changes significantly in any way, is that your provider is required to tell you what that change will be. If you think the change will have a significant impact on you, you can request to be released from that contract without any detriment to you.
But we don't think there will be significant impact initially; iiNet has a very good name, it has a very strong customer base, and I think those customers are known to be quite active and vocal. It would be in TPG's interest to continue the products and services as they are, but of course we'll be watching it very closely because TPG's actual plans and services aren't as good value as iiNet's.
CyberShack: The ACCC has raised concerns about the acquisition, can you tell us why?
Teresa: Of course the ACCC express concern when there's lack of choice, and we've seen this in the past when Vodafone merged with Orange. What happened there was the Orange products continued for some time, they were required by the ACCC to continue the Orange brand as a separate brand, so that could be an outcome here too.
Anything that leads to less choice is not good for consumers, as prices tend to go up, not down, and it also has an impact on customer service.
CyberShack: Are there any non-financial ways this acquisition could affect customers?
Teresa: TPG doesn't actually provide a customer service guarantee. The customer service guarantee provides a safety net in regards to how timely fault repairs will be or how long connections will take, and provides compensation if those timeframes are not met. It's a concern to us, because iiNet does offer the customer service guarantee, and we want to see that continue.
iiNet has won awards for their customers service; there's thing called the net promoter score which represents how many customers are willing to recommend a company, and iiNet has one of the highest ratings – not just in Australia, but in the world – for customer service. We're really concerned that this could go down, because people choose iiNet for itheir customer service.
The other thing about iiNet is they have a record of innovating. They were the first to provide Naked DSL, and they were the first ones to bundle VoIP with handsets that made it easy.
The other concern is that iiNet has really stood up for customer rights on privacy and copyright. They had a record of going to court and defending the interests of their end-users – and obviously, their own – but no other telco has taken these things up in the same way as iiNet. Their customer base are great supporters of iiNet because of this, and this is part of their brand.
CyberShack: So what you're saying is, if iiNet customers are forced to come across to the TPG style product, not everyone's going to be happy?
Teresa: People choose different providers for different reasons, and the more choice out there the better. From our perspective, that also drives better innovation – not just in technology, but the kind of services available. That will be a sad thing, that we have one less provider that's out there doing that.
Ultimately, we hope the TPG brand and their modus operandi is influenced by the iiNet's way iiNet has done things.
This interview has been edited for clarity.