Netspace and Internode, two mid-sized Internet service providers attempting to crack the ADSL market by reselling Telstra's bandwidth, have banded together to overcome geographical and political barriers in the market.
Adelaide-based Internode and Melbourne-based Netspace have come to a reciprocal arrangement whereby each ISP provides access to any customer its partner signs within its geographical region. For example, if a customer signs to Netspace from Adelaide, Netspace handles the contract, while Internode provides the service.
Simon Hackett, managing director of South Australian ISP Internode, said both companies made arrangements with like-minded ISPs to counter Telstra wholesale pricing models which, he says, make it expensive to enter new markets.
Hackett, also president of the South Australian Internet Association, said the agreements essentially create a two-tiered wholesale model where each player can leverage each other's brand. He said both ISPs have had to add a variety of value-added services to their offerings to survive, as the retail price Telstra offers for its ADSL access is no higher than what it offers its wholesale reseller customers. "This is a matter everyone, including the ACCC (Australian Competition and Consumer Commission), is looking closely at," he said.
Netspace managing director Stuart Marburg said that while both ISPs can offer some capacity in geographically distant markets, neither could have promised the maximum bandwidth possibilities for customers, but together they can.
Both ISPs claim their value-added services have earned them a lot of respect in the market, with interest in new services being registered by businesses before the services are even launched.
According to Marburg, Netspace received 2000 expressions of interest from up and down the eastern seaboard within the first month of offering ADSL connections. Hackett said most interest has come from business customers currently subscribed to ISDN connections who want to pay less for dramatically higher performance offered by an ADSL connection. "Relative to any other offer, ADSL is brilliant value for money," he said.
Hackett also said the home market is starting to warm up to ADSL, with serious gaming fans and SOHOs subscribing to Internode's Virtual Private Network over ADSL.