- Let's call it Shirley
- Let's call it Shirley
You've got to love the telecommunications market. I think it's a law. Possibly just a strong hint, but either way where else would you see the two largest market forces talking about working together to build a new network without having the Commerce Commission jumping all over them?
It's like being back in the fifth form. TelstraClear and Telecom are not only holding hands during class, they're sneaking off to the bike sheds at lunchtime. Qantas and Air New Zealand have nothing on these two.
And what about poor old Vodafone? Weren't Vodafone and TelstraClear getting hot and heavy at the last social? I think they were.
It's all to do with 3G, that bane of the telcos' existence. Once it seemed like a great idea. The spectrum auctions in Britain and the rest of Europe had raked in billions of pounds, euros, dollars and deutschmarks and left everyone gasping for breath. It can be said that the astounding prices put on spectrum by the players themselves led ultimately to the collapse of the telco sector.
Customers were still buying products, networks were still expanding, ARPU (average revenue per user) was still climbing ... but, suddenly, it just wasn't enough. Selling a few extra text messages a month wasn't going to cut it when you'd just plunked down GBP5 billion for some air time.
In this part of the world sanity, or at least an awareness of just what the market could be worth, prevailed. The entire 3G auction in New Zealand brought in only a few million dollars and didn't break too many banks. We even felt it prudent to put aside a chunk of 3G spectrum for the Maori Spectrum Trust, and gave it $5 million to help do something with it. Unfortunately most of that cash was given to Econet Wireless, an African telco which has since all but given up the ghost in New Zealand. There's a tale to be told in there somewhere.
Now they've got the spectrum the question is: what on earth to do with it. End users are a fickle bunch, you see. Rather than jumping on the 3G bandwagon like they're supposed to, using cellphones to make astoundingly expensive video calls (we always wanted video phones, remember?), they insist on carrying on with boring old text messaging and plain old voice calls. How mundane.
Still, if you're trying to predict what users will want in five years' time, or 10 or 15 then you're going to have to build a 3G network. Or at least, part of a 3G network.
Telecom had signed up with Hong Kong based Hutchison's Australian arm. They'd given each other money, exchanged vows and agreed to help each other build 3G networks here and across the ditch. Lovely.
Unfortunately Hutchison's network in Australia, called 3, isn't really doing so well. There are reports of emergency calls not connecting, users being told to stand absolutely still while using the phone or face drop outs and disconnections and users turning away in droves from the service.
Telecom, meanwhile, has happily rolled out what it calls a 3G network anyway. It's not - it's too slow to be considered proper 3G - but it's good. It's good enough for now - once the price comes down and users realise just how well it works the Mobile JetStream thing will take off (that sounds horribly familiar, doesn't it?). Once it takes off, customers will want more speed and that will require a new network.
But that all costs money. Telecom doesn't want to foot the bill on its own, and now it doesn't have to. TelstraClear, you see, isn't getting the goods from its deal with Vodafone and has given up negotiating directly, turning its affections on Telecom instead.
The idea is that both have spectrum, both have money, both want a network, so why don't they both build one together. Simple really.
Of course, it's all rumour and speculation at this point and given the whole regulatory question as well (prices are high and stagnant - should the commissioner get involved) it may all change yet. But it is an intriguing thought.
Telecom would gain from it - currently Telecom has to maintain what's left of its analogue user base with a network completely separate from its digital 025 network, which is completely different again from its 027 network. Building a fourth on top would mean employing another layer of engineering staff and that can't be pretty.
TelstraClear would have a network that it would be able to use the way it wants, and not have to just resell Vodafone's service as it does at present. Access to the basic network infrastructure is what TelstraClear wants - that way it can control billing, traffic, quality of service, you name it.
After all, if it's good enough for the local loop, surely it's good enough for the cellular market?