EscapeNet enjoys life as an indie ISP

Australia's Internet service provider market has gone through an extended period of consolidation.

In mid-2010, the Australian Bureau of Statistics reported that there were 72 'medium' ISPs in Australia — that is, ISPs with 1001-10,000 subscribers. The ABS reported 23 'large' ISPs (10,001-100,000 subscribers) and 12 'very large' ISPs (100,001+ subscribers).

The most recent edition of the ABS's Internet Activity report, which covered the period ending December 2013, revealed the numbers for the three categories had shrunk to 48, 19 and 9, respectively.

Recent high-profile mergers have included M2 buying Dodo, iiNet snapping up Adam Internet (after Telstra failed its bid to snaffle the South Australian ISP) and TPG grabbing AAPT.

But despite this seeming unstoppable process of consolidation, Stavros Patiniotis, the founder of Adelaide-headquartered ISP EscapeNet, said he's happy with sticking to the road of independence.

"I've never been interested in the takeover scenario," the ISP's MD said. EscapeNet has been approached "countless" times with offers to buy the ISP, he added.

EscapeNet was founded in 1996 after Patiniotis "caught the bug" when he was exposed to the Internet at university. "I guess I love technology; I'm amazed by what we can do," Patiniotis said.

The ISP began by providing dial-up services, then along with the rest of the industry moved to broadband and eventually added telephony to the mix.

The majority of the ISP's customers — some 70 per cent — are residential; the balance is made up of small businesses with fewer than 100 employees, Patiniotis said. Customer service has been the key to surviving, he added.

"I think if you've only got a couple of thousand customers it's really difficult to stay in business unless you're doing other things on the side — like it's part of your IT business or something like that," Patiniotis said.

"We're a bit luckier — we've got enough customers to survive."

He happily admits it's been a tough market though.

"The pressure has stepped up," Patiniotis said. The price squeeze from Telstra and market saturation have made life hard for smaller players.

EscapeNet offers services nationally, but maintains two points of presence: One in South Australia and one in Victoria.

In the December-January period the ISP refreshed equipment at the PoPs in anticipation of growth, switching out aging Cisco gear for a collection of Brocade equipment.

Patiniotis said he went for routers and switches that could deal with 500 per cent growth in traffic over the next half decade. Choosing Brocade kept costs to a third of what the equipment refresh would have costed otherwise, the ISP's MD said.

The National Broadband Network has been a "fantastic opportunity" and helped drive the ISP's growth and the decision to invest in gear that can keep pace with increased traffic, he said.

"We've seen 100 per cent growth on the network in six months."

There's also been some limited growth in Ethernet services the ISP offers for businesses, he added.

He said that although the new direction of the NBN won't change things substantially from the ISP's perspective, it is likely to have an impact on the support burden.

"It will be a little bit more support-heavy — fibre's a fairly simple product to run," Patiniotis said.

"Fibre typically just works or doesn't work, whereas ADSL and VDSL can drop and not give you a particular speed because you're a little bit further away [from the exchange or node]."

He added that the decision to switch from a primarily fibre based rollout is "short sighted" though.

"In SA we famously built a one way expressway. It's like that," he said. "I think they should just do it once and do it right."

The next step for EscapeNet is building a third PoP in New South Wales. "We will continue expanding as our traffic levels grow and it makes sense to expand," Patiniotis said.

"We'll go to Brisbane next and after that we'll just see where our customers are coming from."