iiNet has announced it will purchase fellow WA-based ISP Westnet in a deal worth $81 million, but will retain the staff and brand of the company.

iiNet said it would cement the ISP as the third largest in Australia. "With Westnet's 215,000 active services, including 138,000 broadband users, iiNet's total number of active services will grow to over 680,000, including over 470,000 dialup and broadband subscribers", said the announcement.

iiNet managing director said that iiNet and Westnet are two of Australia's "best loved brands", and that iiNet will be able to learn from Westnet's award winning customer service history.

"Westnet has worked very hard over a long period of time to build its reputation of award winning customer service", said Westnet managing director Peter Brown. "This opportunity allows the company to continue that same level of customer service and also offer many new products to our agents and customers."

iiNet will be able to use Westnet's mainly resold services to boost the use of its own DSLAM infrastructure. It also gains Westnet's large agent/reseller network and will now be able to offer satellite services. Westnet will gain access to iiNet's ADSL2+, naked DSL and VoIP products.

The purchase is set to be finalised mid-June. Westnet has posted a FAQ for customers on the announcement.

UPDATE | A new consumer action group called Digital Tasmania (DigiTas) has been created, whose first goal is to "Get Basslink Going!" You can visit its website here.

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Internode has become the latest ISP to reduce service offerings in Tasmania due to lack of affordable backhaul to the state.

"Currently, broadband backhaul capacity across Bass Strait is limited to a monopoly supplier, Telstra", said Internode. "As a result, it is six times more expensive for Internode to transfer data between Melbourne and Hobart than it is to move data between Melbourne and the United States."

Internode will continue to offer its high end SOHO and Business ADSL2+ plans, but will not offer Home ADSL2+ or 8Mbit/s plans to new customers in Tasmania from Tuesday. Netspace made a similar move, but eventually resumed selling high speed plans in the state. It has however placed its ADSL2+ plans on hold for Tasmania.

But the issue could have been avoided if the Basslink optical fibre cable had been lit up. The cable began carrying electricity for the national power grid in early 2006, but negotiations between involved government and commercial parties on activating the network portion of the link have not produced an outcome.

The demise of OPEL has meant a potential third link to Tasmania has been scrapped, but Netspace told Australian IT that this was a good thing. "We don’t need three links into Tasmania, we just needed one that wasn't Telstra", it said. "That's already built and that's Basslink."

But even the new Singapore owner of Basslink has doubts about the commercial viability of the link, believing Telstra could use predatory pricing. CitySpring told Australian IT that even if terms could be agreed between parties, "the incumbent operator, Telstra, may react to competition by reducing its current rates, thereby eroding the margins expected by the winning bidder. Accordingly, there is no assurance that any increased telecoms revenue from the commercialisation of Basslink’s fibre optic telecommunications cable will materialise."

Internode also fired a shot at the Federal Government's current national broadband network tender, believing that Tasmania's backhaul issue offers an example of Telstra's behaviour when it owns the only network infrastructure around. "It underscores the potential for national retail broadband prices to rise, should Telstra construct a monopoly-owned FTTN network", said Internode managing director Simon Hackett.