Telecom’s purchase of Ericsson Cellular’s 109,000-strong customer base signals the end for the TASP (Telecom accredited service provider) model.
Originally, there were four TASPs: Telecom, Cellnet, Motorola Cellular and Ericsson. Now, just Cellnet remains independent.
“The cellular market has changed and there is a better way of doing things,” says Telecom spokesman Angus Barclay. “Mobile and cellular have been integrating and some of the TASP agreements didn’t allow Telecom to do certain things.”
By all but removing what was essentially a dealer layer, Telecom’s natural monopoly begins to take shape again. It’s best described as a vertically integrated monopoly, from payphones through to business systems. Cellular, under the TASP model, was the odd man out.
“The TASP model has been around for 10 years, and in that time the market has changed a lot,” says Ericsson corporate marketing manager Stephen Inglis. “It’s very competitive now and between ourselves and Telecom, [we were] looking at the whole distribution strategy, what was going to work from herein.”
Ericsson has also sold to Telecom some fixed assets, including IT systems, a marketing database and credit control systems, and the lease commitment on its office space in Mt Wellington. Goodwill was paid in terms of existing supplier and distribution arrangements.
“The sale allows Ericsson to focus on its core strength as a supplier of fixed and mobile networks, mobile phones and info-com systems, Ericsson Cellular managing director Garrie Hoddinot says.
“We will work with Telecom to manage the transition as quickly as possible and to assist our staff in finding positions to help Telecom service its customer base.”
All 120 Ericsson Cellular staff are being made redundant. It’s possible Telecom will pick up 60 or 70 of them.
Customers won’t initially see any difference other than receiving their bills from Telecom. Integration of the customer base into Telecom is expected to take two to three months.
Neither party is prepared to disclose the sale price.
The main downside for users is that without the TASP model there is no transparency of costs.
TUANZ executive director Grant Forsythe wonders whether the purchase needs Commerce Commission approval because it reduces the number of players in the market.
“We used to have five suppliers, including BellSouth. Now we’ve got just three. The different TASPs should be in a position to repackage services and offer variety. This removes choice.”