Michael Malone is the epitome of the technology-based rags-to-riches success story that fuelled the Internet boom of the 1990s. He co-founded Internet Service Provider (ISP) iiNet in his Padbury garage back in 1993 when ‘web browsing’ had not yet been invented. He has come a long way in fourteen years: iiNet is now a WA technology icon and the third largest ISP in Australia, servicing hundreds of thousands of homes.

Malone_Michael_Jun07.jpgiiNet’s Michael Malone – WA’s internet maestro

Michael remains iiNet’s Managing Director and largest shareholder, and his optimism for the company goes well beyond techno whiz-bangery. The secret to iiNet’s unflagging success, he said, was a pivotal decision made in 1995 to choose people over machines.

“Until then, we had been recruiting people with IT backgrounds and were finding obvious problems. They were not very good with customers. We then made the suggestion to look for hospitality and tourism staff instead. They have great communication skills and within a month we can teach them to handle 80% of the calls.”

Even with the best people, the Internet has never been a predictable beast, and Michael has faced a few challenges.

“The technology itself shifts every two to three years, so there is a constant gamble on the ‘next wave’. I am trying to guess where the next three to five years is going to go. For example, in 2001, when broadband was starting to take off, there was wireless, cable, satellite, and ADSL. Rather than picking a winner, we created four different product teams and pursued all four types of broadband. By 2003, we could see ADSL as the clear winner and so we focussed all of our attention on it.”

However, change is not necessarily a dirty word in the IT field. Boredom can be more fatal than being left behind.

“A lot of us are change junkies. 2001 was probably the only year in my history that I have considered leaving iiNet. We had reached a point where the market was saturating. We were trying a number of different things but it was all pretty flat and stable, whereas in most years, you don’t know what next year is going to look like. It is a fascinating sector.”

Another of iiNet’s hurdles, perhaps its biggest, has been the love/hate relationship with Telstra. Michael is spearheading a consortium of prominent ISPs, including Optus, known as ‘G9’ to establish a new national high speed national broadband network. Naturally, Telstra want nothing to do with the plan.

“Telstra is an interesting beast because it is our biggest customer, our biggest supplier, and our biggest competitor. The relationship with Telstra is fascinating. The idea behind the G9 network proposal is that it would be fair, open, and reflective of cost. From Telstra’s point of view, it is mainly around defending their existing revenues. G9 estimates a $21-$24 average cost of access. The media state Telstra will be around $85.”

Michael has tried his hand with many projects, including the Broadband For Health scheme. So why did iiNet pull the plug?

“The reason for withdrawing was fairly simple. About a year ago, we went through our own hump internally. We had to re-evaluate the way our business operated and Telstra increased the price iiNet was paying for access to Telstra’s network by as much as 50%. We only propose products able to be delivered for the next three years, and with Broadband for Health, we weren’t confident that we could deliver to pharmacies and doctors over the next three years at the guaranteed price.”

“If technology does not improve your quality of life and that of your patients, then why are you using it?”Michael views today’s Internet glut as similar to the disastrous Sydney cross-city tunnel (a tollway built last year that is losing money because it is not widely used).

“Most Australians are now using 256k for broadband even though they have access to speeds 50 to 100 times faster for the same price. Australians have moved from dialup to broadband, and what are they doing on broadband? Email, web browsing, and online banking – in that order. E-medicine and online education have been much-touted but sometimes the demand takes a while to build up and the market should be responding in pace to that. The way doctors are using the Internet already is quite amazing, but it is probably a generational shift for it to become absolutely mainstream.”

In the medical field, he forecasts a rise in online patient records, information sharing, and e-referrals – technologies already established in WA. For a self confessed “geek”, his views on technology are surprisingly down to earth.

“Use the technology that makes your life easier; don’t embrace it just because it is cool and fun. If you’re a 60-year-old doctor who can’t type, and using the Internet is going to make your life harder, then stick to paper! If it does not improve your quality of life and that of your patients, then why are you using it?”

As for the future, he believes the Internet is moving from “words to pictures” with the rise of online TV, movie clip sites (such as YouTube), and VOIP (Voice over Internet Protocol) with images – the videophones of the future. But he isn’t carried away by the prospect of an e-medicine revolution.

“Why wouldn’t I just use my videophone to talk to my doctor? Well, why hasn’t that happened with voice phones that have been around for 100 years? Medicine is fundamentally a service industry. There is a level of trust that comes from seeing someone face to face. That said, I’m sure follow-ups could move to video. Someone may install an MRI or other more creative implements into my phone one day!”

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