WA based ISP iiNet has launched its naked DSL service today -- where customers can take broadband without an accompanying phone line -- the first of its kind to be made available on a large scale basis in Australia.
"Landline phone services are old technology that simply won't keep up with the needs of Australian consumers in the 21st century," Michael Malone, managing director of iiNet, told ZDNet Australia.
"At the moment it's very early days and as with the launch of any new service there's a lot of work to do," he said.
Malone went on to say that he expects a good uptake rate for the service, but anticipates that it will in the first instance come from niche users, such as existing VoIP customers, Generation Y users and other early adopters.
"Our market research indicated that the people who are most prepared to take up the service initially were those who used VoIP or a mobile phone as their primary line, for them paying line rental just to use broadband is a grudge cost," said Malone.
"Consumers have been telling us they only have the phone connected at home to gain access to ADSL broadband," he said.
iiNet's quoted prices for the service start at AU$49.95 per month for residential users and AU$84.90 per month for businesses.
Malone told ZDNet Australia that iiNet had received about two thousand expressions of interest in the service so far.
Naked DSL has been a prominent method of delivering broadband and VoIP services in Europe for some time, and Malone believes that a number of reasons have contributed to the technology being held back in Australia, saying: "Some of the technical aspects, in terms of getting the technology integrated have caused quite a few problems; there had also been some uncertainty about the pricing."
iiNet's chief operating officer Mark White said recently: "The capacity to provide this kind of service has always been there, but it's a new technology to Australia because of the way our market's configured."
"This is not a good product for Telstra," said Malone, who suggested that the telco had not been interested in offering naked DSL themselves, saying: "Any move to an unbundled local loop delivery removes the direct relationship with the customer, so from their perspective why would it be a priority?"
iiNet warned earlier this month that naked DSL could disrupt some other services and devices such as Foxtel and back to base alarms, Malone advised customers using these services to "wait a little bit longer" before converting to Naked DSL.
Malone said that iiNet was not expecting to see a return on investment for some time: "If it goes great, it's still going to take a year or two to make a significant contribution to our bottom line."
The price of naked DSL is too high to tempt existing users to switch. It should be $10 a month less to be compelling.