Millennium madness not over yet

As we all know, not much happened in IT terms when the clock ticked past midnight on New Year's Eve. But it's difficult to survey the events of the first eight or nine weeks of the new century without feeling that the millennial momentum is building.

As we all know, not much happened in IT terms when the clock ticked past midnight on New Year's Eve. But it's difficult to survey the events of the first eight or nine weeks of the new century without feeling that the millennial momentum is building.

Changes have rung loudest in telecommunications and Internet, with Clear and Vodafone finally completing an entirely logical alliance; Telecom, Microsoft and EDS launching an innovative - and, in some eyes, unusual - "virtual JV" that aims to put an "e" in everyone's business model; Ihug seeking content opportunities in its reverse takeover of Force Corporation; and, most significantly, Telstra and Saturn merging their New Zealand operations and committing to spend $NZ1 billion building a modern national network.

It is appropriate that Telstra Saturn has arrived in advance of both the government's broad-ranging telecommunications inquiry, and the scheduled renegotiation of some key interconnection agreements, including that between Telecom and Clear.

The promise of a second major access network does not mean the telecommunications inquiry is unnecessary. A duopoly is almost as capable of managing the market to its advantage as a monopoly - remember that it wasn't Clear's arrival in the distance calling market that really dragged down prices, but the later appearance of multiple smaller contenders. But the fact that a significant competitor to Telecom has shown its hand ought to mean a better-informed inquiry.

This year's round of interconnect deals should also leave us better informed. When Telecom declared that, as a new number range, 0867 was not subject to the existing, rather onerous agreement it had with Clear, it was clear that agreement had begun to bite back.

Telecom wanted to halt the flow of per-minute payments to Clear generated when its local service customers called Clear Net numbers on the Clear network. It suggested a new deal, based on the "bill-and-keep" philosophy, whereby one carrier does not have to pay another for terminating a call in its network.

Given that the existing charges were still to apply to non-0867 traffic - meaning payments will still flow to Telecom - it's little surprise that Clear didn't bite. But when the interconnection model becomes the subject of negotiation, rather than a fait accompli, we might see bill-and-keep back on the agenda.

Apart from anything else, if Telstra Saturn keeps to its promise, Telecom will be terminating many more calls in other people's networks. It might even conceivably find itself wanting wholesale access to the new network - in which case it can hardly deny the same access to its own.

High-speed Internet has been a relatively slow starter in New Zealand, but it will become a far more interesting prospect after the Southern Cross cable comes online around October. International bandwidth will be much cheaper and more plentiful; rich content from the US more practical and affordable. And Telecom's excuse for tying its local Jetstream DSL service to its international IP service - that it is actually subsidising scarce international bandwidth to make Jetstream attractive - will no longer apply.

As the year progresses we will also find out exactly what kind of a data nation we are. Are we to be more like the US, where domestic broadband is the killer technology - or like Japan, where customer growth for NTT DoCoMo's wireless i-Mode service is sensational and likely to hit 10 million subscribers within months, compared to a total of 15 million PC-based Internet users?

In truth, we're more likely to follow the US. But both Vodafone and Telecom still have some substantial decisions to make not only on infrastructure investments (hardware vendors are in a marketing frenzy at the moment) but the actual nature of future WAP-based mobile data services.

I-Mode is being driven by a Japanese fondness for downloading pictures of PlayStation characters. That might not apply here.

One way in which we will follow Asia is that the growth in mobile services will come from the youth market. Vodafone is apparently edging out Telecom in that demographic - whose size was demonstrated at January's Big Day Out music festival, when both cellular networks collapsed under demand - but Vodafone's text messaging stayed up and had a record day. The prize in mobile data seems set to go to the funkiest contender.

Russell Brown is IDGNet's news editor.

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