Netspeed buys Canberra ISP Velocity

ISP Netspeed has acquired another Canberra service provider Velocity Internet after two months of negotiations.

Netspeed also revealed it is launching its own DSLAM network, with the first exchanges set to go live before the end of the year.

"We're just about to launch our own DSLAMs installed in six exchanges in the ACT," Netspeed founder and chief Brian Morris told iTnews.

Morris said Netspeed would launch new plans for the DSLAM network, including its own Naked ADSL products.

On the acquisition front, Morris said that Netspeed and Velocity would remain separate brands in the Canberra market.

But there were immediate plans to merge the respective backend infrastructures to cut out duplication and achieve economies of scale, Morris said.

The process was expected to create "dividends" that could be passed on to customers after a plan review was completed.

Both ISPs offered services on the Telstra ADSL and TransACT networks.

The acquisition gave Netspeed another 5,000 broadband customers - representing about one-tenth of Netspeed's existing customer base.

Velocity had become known, in particular, for its TransACT plans, which combined modest peak download quotas with "unlimited" downloads between midnight and 7am.

Morris believed the usage pattern was complementary to that of Netspeed customers, who used most of their data "during the day and early parts of the evening".

He declined to reveal the price paid for Velocity but said it was "market average".

"There was a fair price paid for it," he said. "It certainly wasn't a fire sale."

Morris was "delighted" with the merger in part because it gave the combined entity "literally thousands of customers in Gungahlin" in Canberra's north - an area destined to be the first part of Canberra to be given a National Broadband Network (NBN) connection.

He said Netspeed was "already in talks with the NBN Co" to be admitted as a retail service provider for the area.

Morris said that with the advent of the NBN, it was a case of "grow or die" for smaller to mid-sized ISPs.

"The smaller ISPs don't have the economies of scale to be able to [meet] the bandwidth requirements for supporting something like the NBN," he said.

"For us, it was a case of growing to ensure the viability of the business in the future."