news Long-time Internode managing director Simon Hackett has broken his pledge to customers that he would continue to lead the company he founded after its acquisition, signalling today his intention to leave his formal executive role at Internode and instead take up a role on the board of Internode’s new parent iiNet.

Rumours about Hackett’s departure from Internode first surfaced on May 18 this year. At the time, neither iiNet nor Hackett himself would confirm or deny the rumours on the record, instead highlighting the shift of Internode executive John Lindsay into the chief technology officer role at iiNet. However, in a statement issued this afternoon, Hackett noted that he “intends to leave his executive role” at the company to join the iiNet board in August 2012.

It is believed that Hackett could not have remained an executive at Internode while taking up a position on the iiNet board as well, as such a role would have placed Hackett in a conflict of interest position, both reporting to iiNet’s executives and/or board in his managing director role while also sitting on the board which oversees such executives. Hackett’s board position is backed by the substantial weight of iiNet shares which the executive acquired as part of the iiNet acquisition of Internode in December 2011.

In this afternoon’s statement, Hackett said the technical integration between iiNet and Internode’s systems had gone “much faster” than he expected. “While I will continue to represent Internode as I always have, I am keen to contribute at a group level, influencing the strategy of the entire iiNet group,” he said.

The move comes despite the fact that Hackett had assured customers when the iiNet acquisition was announced that he would not leave the company following the buyout. “Internode will be remaining as a separate operating company within the group, with its own identity, and its own staff,” he said in an extensive blog post on Internode’s company blog at the time. “I am staying at the helm of Internode, as is the rest of the management structure of the Internode & Agile company group.”

Hackett’s move to leave executive duties at the company he founded several decades ago in Adelaide comes as part of a wider restructure that will leave the ISP without formal leadership within the broader iiNet Group, and again run counter to Hackett’s statements about Internode’s management remaining in place following the acquisition.

Internode’s statement this morning also revealed that the company’s low-profile chief executive Patrick Tapper would leave the company at the end of July in order to move to Queensland and spend more time with his family. Earlier this month, it was revealed that iiNet’s gaming network 3FL would merge into Internode’s games.on.net service, with Internode stalwart Heidi Angove to head the combined games network. In addition, this morning it was revealed that Internode’s general manager Business and Government Daryl Knight will now take on this role for the entire group, reporting to Greg Bader, CEO of iiNet Business. Hackett, Lindsay, Angove and Knight will remain based in Adelaide, according to the statement.

In its statement today, Internode made no mention of a process to replace either Hackett or Tapper, meaning the company will shortly have no formal independent executive leadership of its operations.

iiNet CEO Michael Malone today said of Hackett’s move: “Simon Hackett has an enormous amount of experience and credibility in the industry. We are very pleased that he is willing to step up and join the board.”

Further integration

The restructure comes as iiNet and Internode continue to increasingly tie their operations together.

In March iiNet introduced Internode’s data blocks feature to its own broadband plan structure, and then several weeks later iiNet also dumped the on-peak/off-peak split of its broadband plans, offering customers the same base system as Internode has long promoted for its own plans. Both moves came after Internode announced its intention in February to migrate customers using wholesale offerings from rival companies like Optus and Telstra to iiNet’s ADSL infrastructure where possible. With similar moves occurring on iiNet’s end, the move effectively integrates the ADSL infrastructure owned by the two broadband companies.

However, iiNet and Internode do retain separate operations in a number of areas. The pair’s wider plan structures remain separate, and each has a slightly different product offering set.

Hackett today said the technical integration of the iiNet and Internode networks had been extremely smooth. “I think it’s safe to say that the pace of integration of our networks and other systems has happened faster than anyone expected, which is a great thing,” he said.

“While it’s been mostly invisible to our customers, lots has happened to integrate our DSLAM backhaul, inter-capital and international networks, and to start carrying the combined Internode and iiNet traffic. Our customers have already started to benefit, with the delivery of seamless access to iiNet’s larger DSLAM coverage map being deployed for Internode customers at an impressive pace. This network integration is important because success in our industry really does require scale and efficiency, which means avoiding unnecessary duplication. We have much to do that can further benefit our customers, who love the great things about Internode, including our personality and innovative products, as well as our passion for customer service and service delivery excellence.

“Already the convergence of iiNet and Internode contains a healthy dose of Internode’s approach to business. Just take a look at the recent evolution of iiNet’s retail broadband plans! The excellent direct-managed Internode global IP network is already serving iiNet customers as well. In a very real sense, we can be proud that key parts of iiNet are benefitting from having ‘Internode Inside’. Our ultimate goal is to become a single, well-integrated organisation that operates multiple strong, respected and loved brands in the market. I’m looking forward to continuing to innovate and disrupt the Australian telecommunications market for the better.”

opinion/analysis

I am extremely disappointed that Simon Hackett has broken his promise to customers and left his role at Internode. I am also disappointed that Hackett’s pledge that Internode’s management structure would remain in place and that Internode would not simply become another iiNet portfolio brand appears to be withering by the day.

I know that Hackett will remain on iiNet’s board and that he will continue to influence the fate of Internode and the wider group. And that is a very positive thing. But that is not what he promised customers. He explicitly promised that he would continue to lead Internode and Internode’s management structure would remain in place. And just as clearly, this promise has been broken. A high-level board role at a company is very different from having an active, executive employment position. It is a very top-level strategic role, not an active employment role. Hackett may continue to work at the merged iiNet/Internode group, and he may continue to actively represent Internode in public. But there is very little doubt that his days as a daily active force at the company are over.

I don’t see this in itself as a problem. Hackett’s had a very long run at Internode and contributed an immense amount to Australia’s telecommunications landscape. We all owe him a debt of gratitude, and I personally count him as a living treasure of the telecommunications industry. If I were him, I would leave Internode behind following the acquisition, take a long break for a while, and then do something completely new with recharged batteries.

But none of this excuses the fact that Hackett has very publicly broken a pledge to customers about continuing to lead Internode, and we need to hold him to account on that. As tired as he probably as after twenty years leading Internode, it’s a promise he should never have made in the first place.

Image credit: Internode