Elders this week announced it would make 80 per cent of its telecommunications staff redundant as it closed its internet service provider division.

The decision to stop offering telecommunications services came on the heels of the Federal government's announcement in April that it was canning the OPEL contract to build a national wireless network, an equal joint venture between Elders and Optus.

"[After OPEL was dropped] there was no viable business model for Elders selling or reselling broadband," Elders Communications general manager Jason Horley told ZDNet.com.au today.

Elders' retail broadband and internet operations employed around 50 staff, Horley said, of which 20 per cent will be continuing on with Elders. So far 30 staff have already been let go.

Horley said most of those who had left had found positions elsewhere. "The South Australian economy's quite buoyant," he said.

Most of the division's efforts were focused on building an internet service provider of the future, Horley said, involving "people with specialist skills in engineering, or management or building an IT platform." Only around 10 help desk staff were actually supporting customers.

Most of the customers who were being serviced by Elders were transitioned to other internet service providers on 31 July 2008, with the rest to follow within the month.

Harbour IT will handle the satellite customers, and People Telecom was chosen for the ADSL customers.

The reasons for choosing Harbour IT were that it already dealt with Optus; was highly regarded by the Department for Broadband, Communications and the Digital Economy; had access to the Australian Broadband Guarantee which subsidises broadband connection to Australians without established broadband options; and had good management, Horley said.

"For [customers] the change is zero," he added. "They use the same Optus satellite; the dish stays the same way." The contract and pricing also remain the same, he said.

People Telecom was chosen because it had a sizable customer base, dealt with Telstra, Optus and Vodafone, was competitive, and had undergone large acquisitions of customers in the past, he continued.

Horley could not disclose the number of customers involved in the transition.