Forum: Smart versus dumb back on the agenda

Sarah Putt questions why Telecommunications Commissioner's role is up for re-appointment

Conferences come and go, but the Telecommunications and ICT Summit (Tel.Con) in Auckland is the most important for those of us covering the telco round. It’s the only event left on the calendar in which you get an insight into how the telcos are thinking.

Now there are many who will yawn and say ‘who cares?’ To which I reply that the telcos own the platforms upon which the country will deliver its goods and services to the world. If we want to be a hi tech nation, that is not solely dependent on milk powder prices, then these platforms are vital for our economic prosperity.

Networks are owned by companies, and the main driver – enshrined in the law – for companies is that they generate a return for their shareholders.

This is why the telco executives for the seven years that I’ve been attending Tel.Con have moaned about their business cases, showing these depressing graphs with diagonal lines in which revenues are depicted as plunging towards zero.

They generally follow this slide with a few depicting the phenomenal growth of over-the-top players such as Google, Facebook, Apple. In the past they have depicted these players as leeches on their network, but this year the rhetoric changed — they now see them as partners.

And so it is that we revisit a debate that many had hoped was dead and buried – the smart versus dumb pipe.

Telecom chief products officer Rod Snodgrass delivered a whole presentation on the topic. At the end I asked him: “Is the business case for Telecom going to be clipping the ticket on every over-the-top service and looking at the packets that go through your network and finding data to onsell to companies like Google?”

Snodgrass replied that this wasn’t necessarily the business case for Telecom, but it was his personal view that telcos have to move away from a dumb pipe (interestingly, he didn’t dispute my definition of a smart pipe).

So I said, what’s wrong with being a dumb pipe? New Zealanders spend about $5 billion a year on telco services, why can’t you be like the electricity industry and be content to provide just a connection?

To which Snodgrass replied that it’s a choice for the telcos to make. And the customer will accept it if the telcos provide value.

At which point I stopped hogging the microphone and someone else asked a question.

Snodgrass isn’t alone in holding this view. Last year Vodafone’s head of corporate affairs Tom Chignell advocated a similar position during a media briefing.

“The American school of thought suggests it is a socialist republic of data and all bytes are equal. So they’ve come down in favour of the over-the-top players camp and say you can’t discriminate between the types of use.”

“In Europe they have taken a different view. You can [differentiate] because there are different sources of revenue and we need future investment, therefore we need to give flexibility for networks to seek that cash from different sources. By the way, if they do it in a way that customers don’t like then there are plenty of operators around, so just switch operators”.

But do we, the end-user, really want smart pipes? And who will stand up for our rights?

Which brings me to news that the telecommunications commissioner’s position is up for renewal and the position is being advertised widely. This is despite the incumbent Ross Patterson indicating last year that he would be willing to serve another three years in the role.

Patterson has done a huge amount of good work in this space, he knows the issues, he knows the players. At this critical time when we are transitioning from copper to fibre, and when we are on the cusp of investment in 4G networks, you might think that government would see stability in this area as essential.

But no, I’m hearing dark rumours that Patterson will not be reappointed because he’s upset too many telcos and broadcasters. The job description itself contains basic errors – for example it mentions one of the responsibilities of the Commissioner as overseeing operational separation, even though that ended last year. There is no mention of structural separation

What shoddy treatment for a person who has performed his tasks with integrity and courage and who has made a real difference to New Zealand. I hope for the sake of end users that Patterson reapplies — but I wouldn’t blame him if he told the government, and the industry, to get stuffed.

Finally, Computerworld has been running a series of articles about Sky TV and the telcos in the past few weeks - yesterday I spoke about it with Colin Peacock on Radio NZ's Mediawatch programme.

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