When an executive from a leading Australian ISP threatens to ‘cut you off at the knees’ one can’t help but think theres something pretty serious going down. What’s more the threat came across as if the person was drunk, nice!

“I think their term was that they threatened to ‘cut us off at the knees’ and ‘make us their special project’. So it was a pretty interesting phone call,” Mr Slattery said. “I think he was drunk.”

Confused? OK, if you’re not up-to-date with the scenario it goes a little something like this….. PIPE Networks, who is Australia’s largest peering provider, has embarked on a project which consists on rolling out a 9000km submarine fibre-optic data link from Australia to Guam (U.S.). After this is in place and switched on, sometime in August 2009, it is believed that it should go a long way in making Broadband prices/usage limits more competitive and thus apply a little more pressure on the current duopoly of Telstra and Optus. Starting to get the picture?

You see, both Telstra and Optus, who are big players in the ISP market, also own huge shares in other cable links that deliver data in and out of Australia. Telstra have a 47% share in the Australian Japan Cable while Optus has a 40% stake in Southern Cross Cable. So up until now, these two Telecommunication providers have basically been able to control the price of broadband and data usage limits to a degree.

It’s believed that the new PIPE Networks undersea cable will significantly reduce the cost of International bandwidth and force further competition within the Australian Broadband Industry. PIPE Network chief executive Bevan Slattery, who led the revival of the project from the clutches of the Q4 2008 financial crisis, said the journey had been ‘arduous’, while iiNet’s managing director Michael Malone indicated that his company is seeking to pass on the cost saving to the consumer by increasing bandwidth limits which could be anywhere up to 15%. iiNet are one of two other  ISPs, namely Primus and Internode, who have invested in the submarine cable project.

If what Mr Slattery said about the threat is true, in my opinion it’s pretty bloody bad form by a leading Telecommunication provider to carry on like this and threaten PIPE Networks …This might be the nature of business, but I’m sure that most Australian broadband consumers out there would agree with me on that one. I just hope that iiNet and co deliver on their expectations and pass on the value to the consumer once the project is operational. Good luck PIPE!