TelstraClear CEO warns on broadband build

Project could turn to 'mush', Allan Freeth suggests

TelstraClear CEO Allan Freeth says plans to invest billions in broadband at a time when the telecommunications industry isn't growing do not add up.

He also took Christchurch City to task for taking $12.5 million of ratepayers' money to compete with TelstraClear's broadband services in the city.

In a speech at the 10th Annual Telecommunications and ICT Summit in Auckland today, Freeth said wider issues of demand draw into question the sustainability of such plans. He cited the Castalia report from last year showing demand for high-speed broadband services is not mature enough at the moment.

Earlier today, communications minister Steven Joyce also addressed such “demand-side” risk, as the market terms it, saying one possible solution would be to aggregate government demand to support new networks.

Freeth warned the media not to get overexcited about the comments, adding that he believed demand for such services would grow, but was not there yet, with people not yet prepared to pay for high speed broadband.

Freeth flagged his concerns about overbuilding networks and stranding assets, with particular reference to Christchurch. He added that building networks was easy but running them was hard, citing issues of getting VoIP services to work in TelstraClear's network venture with NorthPower.

Freeth said he was speaking in the interests of his shareholder, Telstra, but he was also a New Zealander and a taxpayer and as such was concerned to see his money “squandered” in palce of investments to drive real economic growth.

“Snow looks good when it's falling,” he said, “but it still turns to mush when it hits the ground.”

Freeth took the rest of the telecommunications industry to task for failing to support TelstraClear's opposition to S92A of the Copyright Act last year.

The industry's silence, he said, “may have been good politics, but it was poor form”.

He described S92A as an "ineffective, unfair and stupid process” that transferred costs from rights-holders to ISPs to fix an issue that “was not and is not” their problem.

Freeth went on to say the Telecommunications Carriers' Forum should not have tried to come up with a code to manage the law.

“Codes can't fix bad law,” he said.

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Tags broadbandTelstraClearallan freeth

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