— Crutches, cul-de-sacs and customers
— In a backhaul
Crutches, cul-de-sacs and customers
Telecom CEO Paul Reynolds' first management briefing in Sydney turned into something of a disaster recovery session. Describing the company as having its crutches taken away from it, Reynolds is hopeful that, despite this, Telecom will do the Lazarus thing and get jiggy with the others in a more competitive environment.
It won't be easy though: Reynolds inherited a company that in its customers' view was completely deaf to their needs because, as the only game in town, it didn't have to listen. Now however a third of managers incentives will be based on how happy their customers are. Whether or not this will be enough to break through the Anything But Telecom sentiment remains to be seen, and the initiative seem to be countermanded by service centres being offshored to reduce operational expenditure.
Evidence of the ABT sentiment can be seen in the Commerce Commission's latest telecommunications market monitoring report: while Telecom still sits on 60% of the retail broadband market, its competitors are snagging 70% of the growth in DSL connections. With Telecom's image being what it is, its competitors have an easy time of it when it comes to picking up new customers.
Reynolds also said Telecom's previous regime got the political angle wrong. This is a bit backwards, because New Zealand's regulatory environment for the telco industry was extremely hands-off and relaxed. The politicians weren't interested, not until the public got so fed up with being offered sub-standard and expensive telecommunications service that the whole thing became a social issue. If Telecom had listened to its customers and worked with them, Cunliffe's new regulation would never have happened. Seriously; the politicians didn't want to touch an area that very few of them understand.
Telecom needs to pull out all stops and start by not just asking what its customers want, but also meet those demands — and do it fast.
Noteworthy too is that Reynolds described Telecom's existing CDMA mobile network as a "cul-de-sac". It kind of is, even though the data overlay it provides works pretty well. The new UMTS network Telecom is building should in theory be good — it'll use new gear and run in a low frequency band with good reach and building penetration — and provided the handsets and data devices have cool factor, shouldn't be a hard sell either.
The network won't be in place until end of this year though, and most likely not kick off in earnest until 2009. That gives Vodafone ample time to poach 027 customers who want a GSM/UMTS solution now and not next year, bruising Telecom's bottom-line further.
It looks like Telecom won't pull out of Australia either: AAPT seems to be off the life-support despite billing system troubles, and Gen-i is embarking on a trans-Tasman expansion campaign.
That's a good chunk of work for Reynolds and team. Good luck, and here's hoping they'll pull it off.
In a backhaul
Going back to the Commerce Commission's recent telecommunications market monitoring report, the short summary is that we're still paying "high prices by international standards" for both mobile and landline calls. Yes, depressingly enough, little changed in last year, despite all the grand announcements.
At times, you wonder about the direction the Commission's regulatory hive mind is taking. For instance, the report says:
"Epitiro data shows that backhaul and other services arranged by the Internet Service Provider (ISP) appear to make a significant difference to the quality of the broadband service delivered to the end-user."
Well, doh. Of course it does. Residential broadband is delivered over a network where the capacity is shared with lots of other customers. It follows that the more capacity there is, the less painful that sharing arrangement will be. We don't need Epitiro or the Commission to tell us that.
Backhaul, local, national and international is very expensive for New Zealand providers. Not so because it has to be due to our geography, location, market size and so forth, but because, as with so many other things, there's not enough competition in the area. International bandwidth especially costs ISPs big dollars, as they don't have any real options beyond using Southern Cross.
This is starting to change however. Last year, PIPE Networks announced with much fanfare that it was laying a cable between Sydney to regional hub Guam, to break the vice-like grip that "The Gang of Four" (Telstra, Optus, AAPT/Connect and MCI/OzEmail) has on the international transit market there.
Called PPC-1, the Sydney-Guam cable will have up to 1.92 Tbit/s capacity. This is important for us because Kordia and PIPE have teamed up to lay a spur between NZ and Australia called PPC-2, hooking it up to PPC-1. Seeing that PIPE likes to sign up customers for its cables before putting them into the water, I wouldn't be surprised if other providers than Kordia-owned Orcon are in talks with the Aussie provider about buying capacity on PPC-2. Tyco is likely to be laying the cable for Kordia/PIPE, although this is still unconfirmed.
PPC-1 one isn't the only new cable for the Aussies. Telstra and Alcatel landed a cable in Sydney this week, stretching 9,000km to Hawaii. This will provide some 1.28 Tbits/s capacity and reportedly, the reason for Telstra laying the cable was the high prices Southern Cross charges. Oddly enough, Telstra isn't planning a spur to NZ for its subsidiary here, TelstraClear. Given that TelstraClear is in charge of the NZ academic network, KAREN or whatever the name for it is this week, and needs to feed its cable and broadband customers around the country, you'd think the mothership would insert a NZ cable into its business plan for the Hawaii one. Not so, according to TelstraClear.
Southern Cross meanwhile is feeling the pinch, and announced on April 1 that it lit up 260Gbit/s for a total of 860Gbit/s capacity on its cable. Yes, SCC says it will lower the cost of bandwidth too.
This should be good news for NZ broadband users — while connection prices probably won't drop dramatically, data caps ought to increase considerably as providers don't have to scrimp as much as they had to in the past on international bandwidth. Well, that's the theory at least.
Cartoon: www.xkcd com
Robert X Cringely
Blog and/or Die It seems blogging has joined parajumping, rattlesnake wrestling, and being personal assistant to Naomi Campbell as the world's deadliest professions. Last week The New York Times revealed just how dangerous writing weblogs can be. Two prolific tech bloggers, Russell Shaw and Marc Orchant, recently dropped dead of heart attacks in mid-rant. A third, Om Malik, suffered a nonfatal attack at just 41 years of age. Then there are the lesser maladies: Other bloggers complain of weight loss or gain, sleep disorders, exhaustion and other maladies born of the nonstop strain of producing for a news and information cycle that is as always-on as the Internet. Now the truth can finally be told about the Living Hell that is Infoworld's blog factory. Over the last year, The Company (as it's known) has instituted policies to ensure its bloggers keep up a steady stream of posts. For example, we're no longer allowed to file from home. Instead, we're all locked inside The Blogging Pen, a steel mesh cage lined with tiny desks and glowing Citrix terminals. Mine is between Lewis and Schwartz. It's too dark down there to see much, but from the moans I'm guessing Yager sits directly behind me. It's all blogging all the time down in the Pen. We're not allowed to leave until we've made our daily quota. Posts that don't make it onto Infoworld's site are sold on the blogging black market to websites in Malaysia. Twice a day our Handlers (we don't know their real names) feed us by spraying a mash of beer, Red Bull, and corn nuts through the holes in the cage. The only time the Handlers enter the Pen is when somebody drops from exhaustion and they have to haul the bodies away. Sometimes, they never return. (And frankly, just between us, Foster isn't looking too healthy these days.) Another requirement: At least once every two weeks I have to say something nasty about Microsoft or they turn up the juice on the electrodes. Fortunately, it's one of the few things I enjoy about this gig. (The nastiness, not the electrodes.) So: Bill Gates makes an offhand comment about Windows 7 coming out "some time in the next year or so," and everybody's treating it like the Book of Revelations. ("And furniture shall rain from the sky, and Cupertino shall be torn asunder...."). It's just more evidence of how much everybody really wants Vista to retire along with Gates, preferably sooner. What I want to know is, when did Sir Bill become famous for telling the truth? Well, back to work. Or as we say down in the Pen: ABB – Always Be Blogging.