FryUp: Blood on the floor: Future on the horizon

Top Stories: - Blood on the floor at Telecom - Broadband: is it the way forward?

Top Stories:

- Blood on the floor at Telecom

- Broadband: is it the way forward?

- Blood on the floor at Telecom

How's that for a full-on week at the office?

In the space of a handful of days, Telecom has not only announced a new charging regime for new connections that could see rural users paying thousands for a new phone line, but its share price has plummeted following the discovery that "market expectation" of profits was higher than it would have liked. To top it all off the telecommunications commissioner set the interconnection rate far lower than Telecom wanted. So low, in fact, that it's forced to pay $14 million to TelstraClear for overpayments during the past few months.


Then there's the Aussie press, which is running rife with suggestions that Theresa Gattung is about to be turfed out on her ear and that perhaps Telstra will buy the Kiwi incumbent.

While the last two points seem quite extreme to me, and I'm sure the Commerce Commission would have a thing or two to say about any joint ownership of Telecom and TelstraClear, the rest bears thinking about.

One of the main reasons Telecom has in the past been left alone by successive governments is that it makes up such a huge chunk of the New Zealand Stock Exchange. If Telecom collapses, so does the market, and that's just about what's happened now. Its shares fell nearly 10% according to a New Zealand Herald story - that's around $940 million - following Telecom's announcement that its profit for the last quarter would be much lower than estimates suggested. The NZSE followed suit, although everyone's picking themselves up off the floor a bit now.

The telecommunications commissioner has set the interconnection rate, which has been running at around 2.6 cents per minute, at 1.13 cents per minute, which is lower than the bottom of the range commissioner Douglas Webb had set out in his interim statement several months ago.

Telecom has howled with outrage, as you would expect, while TelstraClear has smiled the Cheshire-cat grin of a corporation that has finally won a round after 10 years of almost punch-drunk trying.

While this is only part of the overall interconnection agreement -- it doesn't cover wholesale rates -- it does show the way the commissioner is thinking. With a decision on the rest of the interconnection agreement coming within a month, and with Telecom due to report back with its new revised costings for the Telecommunications Share Obligation (TSO), it's all looking a bit fraught for the incumbent player.

The final straw may very well be the new pricing scheme for connecting new phones to the network. Most customers will see a cost reduction in new phones (down from $61.88 to $39.99) so long as they live in a largely populated area. The price goes up the fewer people there are around you, until you reach those that are out in the backblocks who will be asked to contribute towards the total cost. Some $4000 plus parts, in cases.

The Green Party has kicked up a stink - the minister of communications has asked the Crown Law Office to see if it's legal (they always say yes it is) and the farmers' groups are generally spitting blood. Trevor Mallard rattled the sabre in parliament over the whole affair, saying Telecom runs the risk of dipping out on any government broadband money.

The TSO, says Telecom, only requires it to maintain the network at the level it was at last year when the new TSO was signed. Anything new on top of that is up to Telecom.

I was going to mention the loss of jobs at BCL and the goings on with the Ericsson-Synergy joint venture but, really, there's enough blood on the floor with this lot, let alone the rest.

Interconnection rate halved by commissioner - IDGNet

TSO, wholesale tasks still remain - IDGNet

Telecom to hand millions to TelstraClear - IDGNet

Telecom shares take a hammering - Stuff

Between the lines: Let's hope consumers benefit from telecomms regulation - NZ Herald

Keep in touch for more than $1000 - NZ Herald

Telecom plunges _ and pays up $940 million wiped off value of shares - NZ Herald

Rival $14m richer after watchdog ruling - NZ Herald

Ministers line up to put heat on Telecom prices - NZ Herald

Higher phone link costs opposed - Stuff

Profit-poor TCNZ under siege - The Australian

- Broadband: is it the way forward?

I'm generally fairly sceptical of conferences. They can degenerate into gab-fests that are entertaining to watch but don't generally produce quantifiable results. While it's nice to sit around chewing the fat with similarly-minded folk, it's not often terribly productive.

I'm hopeful, however, that the broadband conference hosted by the Telecommunications Users Association (TUANZ) held last weekend in Nelson will be the exception. If the group I was involved in is anything to go by, it will be.

I should point out that TUANZ has asked me to write a chapter for its book on the conference and, yes, they're going to pay me for it, so anything I say should be taken with that in mind. TUANZ isn't, however, dictating what I will write so there's no fear on that score.

The 250-odd delegates made up an uncommon collection. Rather than just the usual suspects - telco types, journalists, lobbyists - TUANZ had included people from government at all kinds of different levels, arty types, sporty types, teachers, doctors and I'm sure a bunch more that I didn't get to meet.

The conference was broken down into sections, each with a facilitator and a writer attached. Their findings will be reported in the TUANZ book. Health, education, government, news, tourism, farming - there were a number including mine: culture, sport and entertainment. We were very entertaining but our efforts at sport (cycling to the pub) and being cultural tended to go off beam a bit.

The aim of each group was to come up with compelling applications that would drive uptake of broadband in New Zealand. Among culture, sport and entertainment people the assumption was made that broadband was free to all, ubiquitous and all-pervasive.

I must say I was surprised by how well we did. I'd expected to end the weekend with six or seven good ideas to focus the chapter around. The final morning saw us whittle the list down from 50 to 30 ideas, ranging from the obvious next-step kind of applications through to the full-immersion "what if" kinds of applications.

On top of all that, several major themes seem to have emerged - things like privacy in an age where everyone has access to all manner of information about you. The very fabric of our urban society could be changed if we all have access to information from just about anywhere. Cities could be fighting with rural sectors to retain knowledge workers who decide to take their pay and live the lifestyle in the country.

Of course, there's a long way to go till we reach that kind of level. In the mean time there are per-megabyte user charges, a lack of competition in the consumer space and wholesale rates to be considered. Broadband could be a huge driver for any new economy we try to build, if only we let it.

TUANZ award winners look to broadband future - IDGNet

Regions hungry for broadband: Anderton - IDGNet

Conference told Probe sights too low - IDGNet

Broadband's bounties blunted by price - NBR

Join the newsletter!


Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

More about Ericsson AustraliaNZSESynergyTechnologyTelstraClearTelstra Corporation

Show Comments