Wholehearted wholesale?

Compared to BT, Telecom has opted for a soft approach to accounting separation

I met Telecom’s new general manager of wholesale, Matt Crockett, the other day and I must say I’m quite heartened by our conversation.

Crockett, you may recall, was most recently Telecom’s point man when it came to broadband. Whenever anyone on TV wanted to know about broadband and how New Zealand was doing, Crockett would be wheeled out to calm the nerves, soothe the savage beast and provide a voice of reason, Telecom-style.

Needless to say I was somewhat scathing of his appointment not so long ago. Telecom’s promotion to head of wholesale of the man who had been responsible, in no small part, for defining what was and wasn’t broadband, what was and wasn’t available for ISPs to sell, seemed cynical even for Telecom.

However, I can report that Crockett has his face turned firmly to the future and is launching himself, and Telecom’s wholesale division, into the fray with something approaching gusto.

This is a very good sign indeed.

I asked Crockett about the differences between Telecom’s approach to accounting separation and BT’s far more vigorous approach. Whereas BT has set up a separate board with an oversight committee and moved the entire network/wholesale team (re-named Open Reach) out of BT HQ and into its own building, Telecom has opted for a more softly-softly approach. There will be no separate board and no new contracts for staff. This made some in the industry uncomfortable, to put it mildly. Comments made by Telecom CTO Mark Ratcliffe that Xtra isn’t an ISP and as such can’t be serviced by the wholesale division only reinforced that discomfort.

Crockett says Xtra is the trading name of Telecom’s retail arm and as such isn’t considered as a stand-alone unit within Telecom. Nevertheless, Xtra will be provisioned by wholesale and will receive exactly the same service as other ISPs — including shifting all of wholesale’s customers to the same technology. Currently Xtra receives its service via layer 3 while every other ISP uses layer 2, and pays more to do so. That will vanish, says Crockett. It’s just a matter of working out the timeline, he says.

Crockett says while BT is spending a lot of money, and a lot of time — up to five years for the total transition — setting up the parameters for wholesale of older legacy products like ATM, frame relay and ISDN, Telecom will instead concentrate its resources on DSL products in the first instance. That’s what the wholesale customers want, he says, and that’s what their customers — you and I — want as well. It means Telecom will be able to offer a wholesale service that can actually make a difference sooner rather than later. Crockett’s keen on that because his bonus is based solely on how well wholesale works in New Zealand. He’s keen to get on and realises the mammoth task of restructuring Telecom is going to hinge on one major issue: staff. If they’re not on board, no amount of prodding from the top, and no amount of wailing and gnashing from outside, is going to matter a jot. To that end, Telecom is undertaking a massive internal communications campaign to make sure its staff understand that this is all about a new market, a new dynamic and a new way of doing business.

I have high hopes that Crockett and his team can do that. Crockett sees a high level of “business logic” to the changes. Instead of Xtra selling broadband aggressively and everyone else complaining, Crockett is incentivised (horrible word) on every ISP selling broadband aggressively. He hopes it won’t stop at broadband — he can see mobile services increasingly being offered as a wholesale service and even looks sideways to other areas, like the Telecom billing solution, and says he can’t see why that couldn’t be offered to virtual ISPs should they want to buy it.

Sadly, as I write this column, details about Telecom’s submission on the proposed telco bill amendment show Telecom still has its head lodged firmly in, for want of a better phrase, the sand. Telecom is claiming it will cost as much to separate its business as it has cost BT — despite the huge difference in size between the two companies. It’s claiming the proposed fines are too high, that the Commerce Commission can’t regulate it properly and, once again, is playing the “if we don’t have certainty we won’t invest” card.

Telecom 1.0 is still alive, it would seem.

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