Real competition may only just be hotting up, but New Zealand already has a few next generation telcos.
Computerworld looked at four companies: Worldxchange, Digital Island, Zintel and BayCity Communications, all offering distinctly different services but emphasising the same key element — service.
Digital Island’s general manager, Blair Stewart, says SMEs are being poorly serviced.
“Only the corporates are on Telecom’s radar. They’re well taken care of, with tickets to Eden Park lavished on them.”
Meanwhile, smaller customers endure a mass market approach that doesn’t satisfy their needs, he says. Overseas call centres are one point of customer discontent but Stewart says that Digital Island’s customers aren’t directed to a “MySpace teenager in the Philippines” for service.
Zintel’s general manager, Lindsay Cowley, says his company’s customer service phones are manned by “people not machines” — and are based in Auckland, Wellington and Christchurch, not overseas.
Simple, transparent billing is another point of difference.
Digital Island explicitly says one of the keys to its success is its “focus on taking any confusion out of telecommunications”, while Worldxchange’s CEO, Cecil Alexander, says his company is extending its online billing service to allow users to micro-manage their accounts online — so there are nasty billing surprises.
In the rural market, BayCity Communications (BCC) general manager Duncan Boenic says users have been particularly confused by the complex offerings available, as they are early-stage users who have experienced either slow dial-up or no internet service at all so far.
While very different, all of the companies emphasise a “customer intimate” approach.
Zintel is an Auckland-based company that has been selling its toll-free services for 14 years. It also operates in Australia, partly because there was an opportunity but also because of demand from New Zealand businesses that are trans-Tasman, says GM Lindsay Cowley. For instance, a national office might come to Zintel because it wants to do complex geographic routing, either around the country or across the Tasman.
Cowley says the company is “really focused on being the best in the toll-free market for 0800 and 0508 numbers”.
“Customers include top-tier corporates and ma and pa companies,” he says. “People come to us because toll-free is important to them. We are focused on understanding our customers by offering them account management.”
Cowley says one of the company’s points of difference is its reporting platform for billing. It needs to be complex internally, but the idea is to make it simple for customers.
Zintel is a pure wholesale operation, says Cowley. It buys network capacity, upon which it bases its toll-free services, and is uninterested in network building. As one of Telecom’s biggest customers, it can negotiate quite large discounts.
The company also has a customer equipment unit, selling PBX phone systems and contact centre equipment. This extra service deepens its relationship with the customer, Cowley says.
Digital Island is just four years old and targets the SME market, which, it thinks, is neglected by Telecom and TelstraClear as they focus on the corporates.
The Auckland-based business centres on reselling services that run on the two giants’ networks, says Digital Island GM Blair Stewart, has no plans to build infrastructure itself. Indeed, Stewart expects there to be a wholesale glut, particularly in tolls, as a result of government-mandated improvements in competition.
Stewart says the company works off an outsourcing business model. Its points of difference are two-fold: cost savings of 20% to 30% and the kind of personal account management Telecom reserves for corporate customers.
For example, a company may have a “fruit salad” of Telecom lines, Telstra tolls and ihug broadband.
“We’ll bundle this up with account management,” Stewart says.
The company handles everything but mobile, although its new $199 NetDepend internet guarantee service — for when an SME’s cheap but unreliable copper wire-based service falls over — switches over to mobile back-up.
“There’s no point in having great products if they are not the right price, or having the right product at the wrong price… What they [customers] need is better service,” Stewart says.
Many clients, he says, are Baby Boomers and all they have known is big telco service.
“They don’t realise there are other choices out there and that small telcos are more likely to bring new products to market… You’re not going to find the ‘you never got fired for buying IBM mentality’ in the new telco space.”
This 10-year-old survivor of the collapse of Worldxchange US sells cheap tolls and IP services to residential customers, although CEO Cecil Alexander says the company also has business customers.
He describes Worldxchange as a full-service telecomms company which buys capacity, mainly leased lines from Telecom and Vector, along with some wireless capacity — rural capacity from Kordia — to package up an IP-based suite of VoIP products.
Because the company’s networks are well configured, they don’t have the quality problems of Skype. However, he says, Skype had been a Godsend for Worldxchange as it has educated people into the idea they can make cheap calls. They then find the quality is so low they develop an interest in better-quality VoIP.
The Auckland company’s business model is based on offering customers lower-cost tolls and IP services, plus moving into transparent billing and micro-management of telecoms costs online. For example, a new Viewbill service allows the user to see immediately how much has been spent on calls or on data and, say, uncap data.
Alexander says average savings are difficult to estimate, but he reckons residential users can save 25% to 65% on tolls and broadband; and business customers 50% on tolls and 20% to 50% on internet services.
‘Easy’ satellite broadband farmside
Rural users are being left out of the game, with newcomer BayCity Communications (BCC) packaging up a broadband satellite service that, while a little pricier than the Telecom service, offers much higher speeds — up to 2Mbit/s download and 1Mbit/s upload.
Christchurch-based BCC isn’t totally new. It is the new wholesale division of Farmside, which used to resell capacity from the IPSTAR-1 Thai satellite service provider. The latter wanted a New Zealand wholesaler and Farmside stepped up to the plate in 2006. It now supplies other rural resellers as well as Farmside.
BCC has streamlined an earlier service which saw users buying and installing a satellite dish and then paying for services.
Now, all this is rolled into one for a $149 set-up price and basic $49 service price thereafter, with support included — via Farmside’s Timaru call centre.
General manager Duncan Boenic says the basic 500MB data cap for Rocket Broadband is good for basic farm business use but admits that during the school holidays, when kids come home from boarding school, usage explodes and families temporarily up their data caps.
“Our frustration is that there are residential and business customers who could receive the benefits of satellite service but we are in a very political environment where everyone is jumping on the FttH (Fibre to the Home) bandwagon when 5% to 10% of New Zealanders will never get fibre and we already have a [satellite] service that gives you broadband, and it’s not expensive,” he says.