Telcos hit investment brakes

TelstraClear and Slingshot say they will not abandon the New Zealand market despite the telecommunications commissioner recommendation against unbundling the local loop. However, they say investment opportunities would be limited if the government followed the recommendation, echoing Telecom's argument for the status quo.

TelstraClear and Slingshot say they will not abandon the New Zealand market despite the telecommunications commissioner recommendation against unbundling the local loop.

However, they say investment opportunities would be limited if the government followed the recommendation, echoing Telecom’s argument for the status quo.

TelstraClear chief Rosemary Howard (pictured) and the co-founder of Auckland-based telco CallPlus and ISP Slingshot Annette Presley are lobbying furiously to oppose the commissioner’s recommendation to government. They started the “Call for Change” campaign to try to take their message to the people. Howard says the lack of choice is costing New Zealanders money.

“It’s the message we’re trying to deliver, boiled down to the simplest level: you pay more because there is no competition.”

Howard says the argument that voice and data are two separate issues is fast becoming pointless.

“Unbundling in an all-IP world is about voice, it is about data and it will be about video as well.”

Howard says while TelstraClear’s Australian parent, Telstra, is ready to invest further in the New Zealand market, the company will not do so unless it can see a return.

“There is no question this will make it more difficult for us to invest, not less.”

Howard says it won’t mean the investment tap will dry up completely, but it will demand a “more committed, more dexterous” approach.

“You’ll see TelstraClear building on what we’ve got today as it makes sense. We’ll only build where we know it makes sense and where we can compete on a level playing field.”

Howard says fixed wireless solutions are simply not up to the task of competing with the local loop.

“We look at it from time to time and it’s simply not ready for mass deployment. There are bandwidth issues under heavy load; that makes cell sites shrink and that creates gaps. There are issues like drop outs, rain fade, clutter. Even security is perceived to be a problem.”

Presley and business partner and husband Malcolm Dick have said they plan to step up investment in Australia, whose unbundled market gurantees them a return.

“I’d love to offer services in Kerikeri or even here in Auckland, for that matter, but there’s just no way in,” Presley says.

Presley and Dick returned to New Zealand in 1997, having sold their Australian business for a rumoured $60 million, intent on investing in the New Zealand telco market.

Presley (pictured) says even though CallPlus is the third largest phone services provider in New Zealand, it’s worth less than 1% of the market.

“Why would we compete in what is now a mature market with little room for movement when we can go to Australia where broadband uptake rates are twice that of New Zealand?”

Both women are pleased with the results of their lobbying efforts. They say their Call for Change hotline received more than 10,000 calls in its first few days, clogging the network. Both have filed submissions with communications minister Paul Swain on the telco commissioner’s final report. But as Presley says, “how can you compete with a company that has hundreds of millions of dollars at its disposal for lobbying and is supported by the likes of Woosh with [entrepreneurs] Craig Heatley and Stephen Tindall backing it?”.

  • Telecom last week released a statement rejecting the Call for Change campaign, saying “residential access is a regulated service and if competitors such as TelstraClear want to provide a residential service ... they can apply to provide services using the Telecom network”.

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