TelstraClear cautions against over-enthusiasm

Measuring and marketing probable customer response to a new telecommunications service is as important as deploying the technology, says TelstraClear boss Rosemary Howard.

Measuring and marketing probable customer response to a new telecommunications service is as important as deploying the technology. There is little point in producing a new infrastructure sturdily different from that of your rivals if not enough customers can be persuaded to use it.

TelstraClear chief executive Rosemary Howard, warming to her argument, takes DSL services such as JetStream as an example.

"Telecom’s been able to roll it out widely, but the take-up is low.”

In such an environment, it makes sense to give rivals access to the network – even at the cost of “me too” offerings – so the infrastructure is more fully utilised, she says.

Howard was responding to Telecom government relations manager Bruce Parkes’ contention at hearings last month before the telecommunications commissioner that it was better to set interconnect and leasing charges relatively high, to encourage the evolution of parallel infrastructure and alternative technologies.

In Australia, she notes, Telstra sells DSL both retail and wholesale. It has proved good business for the company as well as for reselling rivals.

“I agree that we need to think about alternatives, but [the New Zealand market is] always a little bit over-enthusiastic about consumer understanding of something new and about the short-term payback for innovation.”

Telcos should not be making bad decisions for the sake of being different or because they are driven to being different by pricing distortion of the “build versus buy” decision, she says.

The high-priced interconnection approach makes sense if Telecom sees itself as a vertically integrated company, she says, but the advent of the Telecommunications Act will demand that new business structures and business models come into play. From reading the act, it is plain that the government supports wholesaling of services between suppliers, Howard says.

TelstraClear’s negotiations with Telecom over interconnection in New Zealand are taking a long time in comparison with Telstra-AAPT discussions in Australia, settled last month. There, a “commercial outcome” was reached, as distinct from a regulated outcome, Howard says, because both sides were willing to move towards each other.

“A commercial outcome needs give and take, with both parties prepared to go beyond their original ideas and positions. In Australia, that’s happened.” In New Zealand negotiations “we [TelstraClear] have made significant movement, but Telecom has not reciprocated.

“If I had [an agreement of the Telstra-AAPT kind] I’d be the happiest woman in New Zealand,” Howard says.

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