Connection costs could make UFB a 'tough sell': Moutter

CEO Simon Moutter confirms Telecom is set to launch consumer UFB plans next year

Telecom is on track to deliver Ultra Fast Broadband (UFB) plans early next year, despite its new CEO Simon Moutter expressing the same concerns about its readiness as his counterpart at Vodafone.

Following Moutter’s first Telecom AGM as chief executive today, Computerworld asked if he was worried about issues around connecting consumers to UFB.

“We have a similar set of concerns to most of the big telcos around,” he says. “Once we go to market on scale, we need to know that the service is going to perform and that customers are going to have a positive experience for both the install and post-install operation and performance.”

Earlier this month Vodafone CEO Russell Stanners said the company had found during the UFB trials that connecting to fibre was often a poor experience for customers. In addition Chorus, which has 70 percent of the UFB build, is only obliged to pay for up to 15 metres of the connection from the kerb to house, and the issue of who pays beyond that has not been resolved.

“I know it’s a topic for debate and all I can say from my previous history is significant upfront charges are a massive disincentive to uptake,” Moutter says. Before his previous role as Auckland airport CEO, Moutter was chief operating officer of Telecom between 1999 and 2008.

“The issue needs to be resolved nationwide and I haven’t had time to assess exactly where the commercial issues lie, or who should cover them... but I do know if there are large upfront costs, that will be a tough sell.”

Chorus spokesperson Robin Kelly says there are no announcements about a resolution at this stage. The company earlier signalled discussions would be concluded by the end of September.

“We’re still in discussions with the industry, but in the meantime our offer to retail service providers is that we’ll connect residential customers irrespective of the distance from the boundary to the home until the end of the year,” says Kelly.

Retail challenges

Moutter, who took over as CEO seven weeks ago, is formulating a strategic plan for the company that is expected before the board by the end of the year. Until that time, he is wary of holding press conferences or making general media statements.

“The right time to come to market is when you’ve got a clear view of where the company's at and I’m still working to understand that by talking to customers and talking to staff... and I haven’t finished that process,” he says.

Top of his media to-do list will be the appointment of a head of corporate communications, as the incumbent Ian Bonnar resigned this week.

When asked by Computerworld what his three top strategic goals will be, Moutter replied: “I’m focussed on how we improve our performance, particularly in the retail market. Gen-i has done a great job and I’m looking for similar strong market performance and leadership from Telecom Retail in New Zealand.”

On Monday Gen-i CEO Chris Quin officially becomes the head of Telecom Retail. Ffollowing the AGM he announced in a press statement that Telecom will begin rolling out dual-carrier HSDPA - which boosts download speed from 21Mbps to 42Mbps - by Christmas. Rivals Vodafone and 2degrees have already begun deploying this technology.

During question time at the AGM, a shareholder queried the performance of youth-orientated brand Skinny. “I notice you don’t provide any figures around Skinny, this suggests it is a flop.”

Telecom chairman Mark Verbiest refuted this statement, “we’re seeing massive uptake in recent months”. He said the company does not separate the number of Skinny mobile connections from the main brand for commercial reasons.

Moutter told the AGM that Skinny enables Telecom to present itself to the youth market in an “extremely different way,” and that was why it was located in another office and had a different style.

“It’s quite challenging for us boring old farts in corporate suits to get our head around the way they run that business,” Moutter said.

Verbiest also said that content delivery over fixed and mobile networks “is front and centre to some of the strategic choices we'll have to make”.

Shareholders vote

At the AGM, shareholders voted on the re-election of Verbiest and Paul Berrimen and the election of Moutter to the board.

They also voted to approve Moutter’s remuneration package which provides for equity incentives of up to 1 million shares and up to 2.5 million share rights during the period to 27 September 2015. Together with his annual salary of $1.35 million, these incentives could see Moutter earn up to $5.4 million a year.

One shareholder queried the need for equity incentives, but Verbiest said incentive packages are required to attract top talent and that the role of Telecom CEO could not be done by the “average New Zealander”.

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