I will never merge Kordia and Orcon brands: Bartlett

Scott Bartlett on the Kordia split, the review of telco regulation and why the ComCom investigation into Sky TV is a waste of time

While Vodafone CEO Russell Stanners has pledged to bury the TelstraClear brand following the buy-out last year, Kordia NZ’s new CEO Scott Bartlett says the Orcon name will remain under his watch.

“I will never merge these two brands, ever. They stand for different things, they play in different markets, they’ve got strengths and weaknesses that balance each other out, and I will not be the CEO that gets rid of the Orcon brand or visa versa folds the Kordia brand into Orcon.”

Prior to taking over KordiaNZ, Bartlett was chief executive of Orcon, a position he was appointed to when the ISP was bought by Kordia in 2007.

Orcon has often taken a different path. It is the only ISP in the top four — with CallPlus and Orcon well behind the combined 80 percent market share of Telecom and Vodafone — not to have a contract with Sky TV.

It was one of the first to unbundle copper lines, and at over 1000 connections on the Ultra Fast Broadband network it’s out in front with consumer fibre deployment.

And while Vodafone brought its call centre back to New Zealand from Cairo, Orcon controversially sent its operation off to Manila last year, albeit under the management of Datacom. “I don’t deny it [outsourcing] is unpopular, it is a difficult pill to swallow, it caused me a number of sleepless nights, but it was the right decision for the business,” says Bartlett.

Kordia splits

Running an ISP is one thing, taking over Kordia New Zealand quite another. The company is effectively split from Kordia Australia with two CEOs reporting separately to the same board of directors (along with the chief financial officer). Aside from sharing a board, some IT systems and the same owner – the New Zealand taxpayer – the two Kordia’s are run quite separately.

“What we’ve got is a very robust, solid network business in New Zealand – it’s got Orcon and Kordia on it, it’s growing, but it also throws off a lot of cash,” he says.

“In Australia we’ve got a business which is growing like that [up] and engineering firms are growing fast, they need lots of cash in the form of capital and other things.

When we get paid for the big exciting projects we’re doing in Australia, it underwrites network investment in New Zealand.

“So from a portfolio perspective I think it’s a nice fit, as opposed to having any one business.”

But why does the taxpayer need to own Kordia, why does it need to own an ISP?

“Those are definitely questions for the chair, my job’s not to resolve ownership,” he says. “I have no control of that. I have an opinion, but I’m not going to share it.”

Telco review

What Bartlett does want to talk about is the telco industry, and Kordia/Orcon’s role in it. First up, the sweeping review of regulation that was announced by ICT Minister Amy Adams. He’s upbeat about it.

“I support the review and I want to have a great big loud voice in the review. I think it’s an opportunity to provide a picture for the future because what the industry doesn’t have right now is a clear view of what the government wants. We know they want fibre and we know that’s the most important thing, we don’t know how and we don’t know at the expense of what and what the trade offs are,” he says.

“I’m keen to see clarity in the regulatory landscape; I’m also keen to fight the good fight on making sure Chorus isn’t achieving super profits on the back of copper. I don’t think that’s right. We know what it costs to run a DSL network because we run one in LLU (Local Loop Unbundled, the raw copper price) and we know it doesn’t cost anything near what we’re charged on UBA (Unbundled Bitstream Access product, the raw copper plus electronics price).”

UFB installation

But is the UFB ready for consumers? We’ve been hearing from the chief executives of both Vodafone and Telecom that installation has been a difficult experience for customers, although the latter has pledged to roll out commercial services soon.

“With all respect to my competitors I don’t think they know what they’re talking about, because they haven’t done it,” he says.

“They’re talking about an imagined scenario where it’s not as easy as copper and it’s not in the early days. It’s taken us a year of hard work to get it right.”

Orcon had some problems at the beginning, such as digging up the wrong person’s driveway and compromising the weather tightness of someone’s garage.

“There were issues, there were hundreds of them, I could write a book,” says Bartlett. “But we’re almost at business as usual.”

“I would not recommend my friends go on it personally, I would not be charging money for it if I didn’t think I could give you as good, if not better experience. The experience is better because it doesn’t break as often as DSL because it is better technology. It goes faster, the customer experience is better.”

Bartlett says a fibre customer rang him recently and wanted to know what he could do with the faster speeds.

“It was a beautiful phone call and it kind of epitomised what everyone is concerned about, which is demand for services.”

Bartlett is hoping Adams’ regulatory review will tease out issues to do with demand side of the equation.

He’s says business models are changing and Orcon and Kordia intend to be more than a dumb pipe.

“We want to be involved in partnerships with those Over The Top providers, we want to be working with business providers to get their apps online, and we want to be adding market places for cloud.”

He cites two examples where the company has partnered with companies to provide added value. “In business with Blue Coat to deliver managed security services, and we’ve done stuff with Alcatel Lucent to deliver the CDN (content distribution network), which is a value-add on top of networks,’ he says.

Sky TV’s relationship

So what about Sky TV, where does that company fit into the equation? Kordia NZ has a complicated relationship with the pay TV provider.

It is a supplier. Orcon’s CDN delivers Sky TV’s content. “We’re their satellite provider on the internet, which is nice and I think that’s a growth market.”

It is a competitor. Kordia’s core business is broadcasting transmission on the sub-700MHz spectrum– it was the transmission arm of TVNZ before being split into a separate company in 2003 – but 50 percent of all households receive broadcasting transmission from Sky TV.

As for Sky TV’s role in creating demand for UFB, Bartlett says the forum to discuss that is the Adams’ review, not the current Commerce Commission investigation into competitive issues to do with Sky TV and other telcos.

“I think it is a thinly veiled attempt to shake up a debate around content access rights which in my view is not the purview of the Commission. We have been asked to provide information for it and we have complied with our requirements under the Act.

But I don’t think this investigation is worth the paper it’s written on.”

CEO Forum

He’s equally dismissive about telco CEO’s forum inside the Telecommunications Carriers Forum, although he had yet to attend his first meeting when Computerworld spoke to him.

“I honestly don’t think getting a bunch of CEOs together is the right forum to get good ideas about how to lead the technology vision of this country. There you go, said it. I think it needs a cross-section of stakeholders.”

Mobile matters

In the meantime Bartlett’s focus is mobile, Orcon have had an MVNO with Vodafone since 2010 and it has not gone well for the ISP.

“Every single month I lose money on the MVNO. [I’m] happy for Mark Callander [CallPlus CEO who shifted its MVNO arrangements from Vodafone] to know all about that. He can crow on about how wonderful his MVNO is with Telecom, that’s great.”

Bartlett says Orcon has “regrouped” and will launch a new mobile offering soon, sticking with Vodafone.

Is he interested in a slice of the 700MHz spectrum, which Kordia is being forced to give up with the analogue switch off?

“No, we don’t want it [700MHz spectrum], we’ve had it for decades, we don’t need it any more.”

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