Speaking to iTnews, CTO Greg Bader said the success of discussions with Basslink would be dictated by the same parameters as those it is undertaking with other backhaul operators nationwide.
Specifically, it appears iiNet is uncertain if exchange economics in Tasmania justify a market expansion there to compete with the likes of Internode and Netspace.
Internode is the first to sign up to the Basslink cable and Netspace are rumoured to be hot on their heels, although negotiations are continuing.
"The challenge for us is that our Tasmania exchanges aren't as big as some of our mainland ones," Bader said.
"For example, we've got around 2,000 customers sitting in a single exchange in Geraldton [WA] but in Tasmania we'd be lucky to have more than 500 customers on any exchange.
"With Basslink offering competitive backhaul solutions the logic would be that there's more interest [but for us] it simply comes down to the size of the opportunity."
Bader said iiNet was in discussions "with a lot of people" to increase the availability of its Naked broadband products in Australia.
"The challenge with going into regional areas is the backhaul cost is a big variable," he said.
"Where we can get fibre at the right price we'll expand. We can't offer Naked on Telstra Wholesale [capacity] obviously."
iiNet reported today that residential VoIP subscriber numbers on its network had surpassed 100,000.
Of particular interest, the average minutes per VoIP subscriber exceeded that of iiNet's PSTN services for the first time, surprising even iiNet.
"That's surprising because when we first put out Naked products it was for people who loved broadband but didn't want to pay for line rental because they weren't using their PSTN phones anymore," Bader said.
"There's a global decline in minutes per user on PSTN but what we're seeing is the number of calls per subscriber growing on iiTalk."
Customers are averaging around 50 calls per month, Bader said.
Although the iiTalkpack phone bundle plans provide free local and national calls, Bader said there was margin for iiNet in pursuing the VoIP business.
"Early VoIP users tended to make long duration, low margin calls," he said.
"Now the call patterns [on our network] are fairly typical of PSTN. There's a healthy mix of international and mobile calls terminating on there."
Bader also foreshadowed improvements to the Naked products to make VoIP simpler for residential users to configure.