The president and chief executive of telecommunications equipment giant Ciena, Gary Smith, says he is bemused by the "incredibly politicised" nature of the broadband debate in New Zealand.
"I am used to seeing that in a number of countries but not to the extent of the debate here and in Australia."
Mr Smith visited Auckland to talk to customers who include TelstraClear and the Southern Cross Cable Network.
"The perception among New Zealanders is that New Zealand is kind of behind. I have to say that I don't think New Zealand is behind. I look at the infrastructure here and what is being delivered to customers here and I would say you guys are right up there with most industrialised countries."
Ciena is valued at US$1.4 billion on Nasdaq and employs 4000 staff. In March it acquired the optical networking and carrier ethernet assets of Nortel's Metro Ethernet Networks (MEN) business for US$769m.
Mr Smith says the concern with improving broadband is "healthy" and great for companies such as Ciena. "For us, all bandwidth is good bandwidth. The only thing I would say is I am intrigued by the specificity of the dialogue."
The market should decide whether the requirement is for fibre-to-the-home, or for other technologies, he says. "I would let economics and market forces work out what is the best way of doing it. People are more focused on the delivery mechanism than what they are trying to achieve."
Mr Smith says there are a lot of conversations around the world about how to start to deliver the infrastructure envisaged by the Government's ultrafast broadband (UFB) investment initiative and Australia's Next-Generation Network (NBN).
But fibre-to-the-home is yet to kick off on a big scale in Europe, he says.
"You have got fibre-to-the-home in the United States in certain parts, the Middle East is talking about it, but I do think the more pertinent debate is what are we trying to achieve and what kind of bandwidth are we trying to get where?"
In July, Ciena completed a trial with TelstraClear of technology that would allow the carrier to transfer data at speeds of 100 gigabits per second (Gbps) over a single wavelength in a fibre-optic cable.
TelstraClear chief technologist William Lee said the data speeds were the fastest ever achieved on an intercity telecommunications network in New Zealand. "The trials prove that now we can now go up to 100Gbps and begin engineering solutions for customers based on the availability of those speeds on the core network.
"We might not need them at this stage, but the capacity is there as more customers look for ultrafast downloading or when network congestion becomes an issue due to current sustained rates of data volume growth."
The same technology could also be used to increase the capacity of the South Cross Cable, which looks set to move from 10Gbps to 40Gbps technology.
Mr Smith forecast the international submarine cable market was heading for another boom.
"What we are seeing across the globe is submarine cables are filling up. When you think about the `telco nuclear winter' as we came out of 2002, people were predicting that not in our lifetime would we ever use the capacity that was there.
"We are getting to the point where a lot of those cables are getting full and we are looking at a refresh cycle, beginning now, over the next two to three years."
Stories by Tom Pullar Strecker The Dominion Post
The president and chief executive of telecommunications equipment giant Ciena, Gary Smith, says he is bemused by the "incredibly politicised" nature of the broadband debate in New Zealand.
TelstraClear will trial a 100Mbit/s broadband service in Wellington next week and step up its efforts to persuade the Government that it would be wasting taxpayers' money overbuilding its cable networks in Wellington and Christchurch with fibre-optic cable.
Chief executive Allan Freeth said it would invite about half-a-dozen people to test the service, which will provide download speeds of 100Mbps and upload speeds of 10Mbit/s, hoping that would generate debate about the uses of ultrafast broadband.
Depending on demand, TelstraClear could launch that as a commercial service by June, he said.
The 100Mbit/s trial was intended to send a message to both the Government and Crown Fibre Holdings that their aspirations had been achieved here, he said.
It will coincide with a billboard campaign that claims Communications Minister Steven Joyce can "put his feet up" as ultrafast broadband is already coming to the capital.
The Government has proposed investing $1.35 billion in a fibre-to-the-home UFB network that would provide minimum download speeds of 100Mbit/s and upload speeds of 50Mbit/s.
Dr Freeth said overbuilding TelstraClear's HFC networks would be "an irrational economic move".
"We have a very popular triple-play service which we are continually upgrading. But people seem to develop philosophy-driven perspectives and may just believe they have to have [fibre-to-the-home] everywhere, in which case that has some pretty serious consequences for us and we will compete ferociously in the market." A Crown Fibre spokesman said Wellington and Christchurch were included in the UFB scheme. "TelstraClear's decisions or comments related to UFB are theirs to make."
TelstraClear was genuinely interested in testing demand for a 100Mbps service, Dr Freeth said. In addition to the trial, the company would invite people to join an online debate. "It truly is of interest to us and the network guys to say `just how is this going to be used out there?"'
Telecom reported a 4.5 percent fall in its bottom line full year net profit to $380 million, with revenue down 6.5 percent to $5.27 billion.
The company highlighted its earnings before interest, taxation, depreciation and amortisation (ebitda) for the year to June which edged down 0.2 percent on the previous financial year to $1.76b.
"Telecom has halted the significant earnings decline of the previous two years and achieved notable improvements in the trajectory of each of its businesses," Telecom chief executive Paul Reynolds said.
The fall in revenue mainly reflected continued competitive and price pressure in the legacy fixed line businesses, Telecom said.
"Chorus, Gen-i and AAPT have each delivered ebitda growth for the year, and the turnaround in the Retail business is on track for FY11," Dr Reynolds said today.
A unchanged fourth quarter dividend of 6c per share is to be paid.
For the three months to June net earnings fell to $42m from $78m a year earlier.
Telecom was plagued by outages to its XT network during the period.
Christchurch software company Emendo has won a $2.5 million deal to supply six Vancouver hospitals with an application that is designed to forecast how busy they will be, so they can better roster staff and plan ahead.
The software, CapPlan, takes data from patient management systems, analyses trends, and can take into account other factors, such as the weather, to generate forecasts that can be a few hours or up to five years ahead. Hospital staff can see how many patients have been admitted, how many beds are occupied and patients' predicted length of stay.
The deal with Vancouver Coastal Health authority, which serves a population of one million, follows a one-year trial at its Richmond Hospital, and comes on the heels of Emendo securing two contracts in Australia together worth between $5m and $10m over three years. Four New Zealand district health boards and Britain's Bedford Hospital also use CapPlan.
Canterbury District Health Authority business development manager Richard Hamilton estimated last year that it had saved Christchurch Hospital $2m over four years by helping it forecast workloads each Christmas. It had also cut the average length of patient stays by half a day, by making staff more aware of what was going on in the hospital, he said.
Last year Bedford Hospital won an award for innovation, sponsored by Britain's National Health Service and its Health Department.
Emendo co-founder Nick Burns said the firm had won the Vancouver contract, after a tender in which two "reputable North American" sellers also competed. "Breaking into a new export market is always a challenge, and Canada is no exception," Burns said.
"Vancouver Coastal Health is ... an important reference site for us as we focus our sales efforts in North America."
Emendo employs about 45 staff and has just hired its first recruit to try to break into the United States market. Burns said that would be a challenge, but with President Barack Obama's health reforms in full swing, this was the time to try.
Telecom's profit is expected to fall at least a 10th to between $360 million and $370m when it reports its annual results on Friday.
Analysts looking ahead to an anticipated deal between Telecom and the Government over its $1.35 billion ultrafast broadband plan and the breakup of the company, are not expecting significant fresh insights from the company.
Forsyth Barr analyst Guy Hallwright said Telecom's profit would be dragged down by a $38m tax charge caused by the removal of the ability to claim tax depreciation on buildings. "It is just an accounting construct, it doesn't mean they will ever have to pay $38m, but it will impact on the reported profit number."
There was some chance Telecom might change its earnings forecasts for next year, but this was unlikely. The result could also be affected by the timing of interest payments and tax gains.
Mr Hallwright forecast a net profit of $370m, at the upper end of expectations. "As long as it's in the ballpark I don't think anyone's going to be too worried. They are going to be focused on the future."
A Dominion Post report that Auckland lines company Vector had submitted "an alternative proposal" to Crown Fibre Holdings involving Vector's possible participation in the ultrafast broadband initiative had heightened speculation that the contract to build the network would be awarded to Telecom's network arm Chorus, with any other companies playing only a secondary role.
"The body language coming from Telecom is more and more [bullish]." There may still be room for the inclusion of other parties "but it is a question of on what terms", Mr Hallwright said.
"I still think Crown Fibre would like, if it can, to get all parties that have useful assets to contribute – and not just ducts and poles – but it is a difficult thing to engineer."
Craigs Investment Partners analyst Geoff Zame said market sentiment had shifted toward expecting Telecom to be "inside rather than outside the tent" and that could explain the rise in Telecom's share price. He forecast a net profit of $360m but did not expect the result would be a big driver for the stock.
Goldman Sachs JBWere analyst Tristan Joll did not believe Telecom had the UFB contract in the bag, however.
"If the Government wants the thing to have a certain economic future and be the best it can be, then probably having Telecom involved in some way makes sense. [But] we still think the rules governing the [UFB process] could change. I'd be surprised if the Government wasn't trying to ensure everyone who had something to offer was involved."
He forecast a $370m net profit. "Last quarter was pretty weak in terms of domestic revenues. They did okay, but it was mostly based on cost-cutting. This quarter you are going to see the same sorts of things, but probably a bit milder on both fronts."
Telecom had stopped paying compensation to customers hit by outages on its XT network but costs would have risen as it dusted off XT's marketing campaign.
Mr Hallwright hoped Telecom's annual result would show faster growth for Telecom Mobile, after "softer numbers" from rival Vodafone, but the impact of new mobile entrant 2degrees was unclear.
Sources suggested overall growth in the broadband market had slowed as it moved closer to saturation. TelstraClear chief executive Allan Freeth forecast competition for new customers would intensify in the year ahead.
That prediction appeared to be borne out with the announcement that internet provider Slingshot would launch an uncapped broadband plan on Thursday costing less than $80 a month, though it is limiting customer numbers to no more than 10,000.
Previous efforts to provide plans with unlimited data caps have faltered because of high use by few customers. Telecom has had two failed attempts, axing its uncapped Big Time plan in May.
TelstraClear turned in a respectable annual result, earning $16 million before interest and tax, but said the industry faced an "uncertain and unstable" future.
The result was down $2m on last year and revenues fell 1.4 per cent to $693m.
Chief executive Allan Freeth said consumer sales were up 8 per cent and the revenue drop reflected the winding-up of some large government and corporate contracts that the company lost a few years ago.
TelstraClear had since won more business from enterprise customers and that would start to be reflected in its accounts from the end of this year.
Dr Freeth said the earnings were pleasing given the company had spent tens of millions of dollars unbundling Telecom exchanges and upgrading its cable networks in Wellington and Christchurch.
Staff numbers had held steady at about 1400 as it transferred some administrative functions to Australian parent Telstra but bolstered its sales teams.
In the "next month or so", TelstraClear would begin offering 100Mbit/s download speeds to its 80,000 cable customers in Wellington and Christchurch, where it claimed more than half of the broadband market.
It was also almost ready to begin customer trials of T-Box, a MySky-like personal video recorder (PVR) for its cable customers, after a series of long delays and had "finally got most of the bugs out of it".
T-Box will let customers on its cable network pause and rewind television and record programmes straight to a built-in hard drive. A spokeswoman said TelstraClear was not considering offering compensation for a series of missed deadlines releasing the device.
"We do acknowledge that customers have a choice around opting to wait for our PVR and are thankful for the loyalty they continue to display with regard to this issue. T-Box is a great product and it's important that any minor bugs in its manufacture are fixed before its broader take-up in the market."
Dr Freeth said the industry faced considerable uncertainty as the Government finalised its $1.35 billion ultrafast broadband plan to connect three-quarters of the country with fibre-optic cable. But there was no economic case for anyone to overbuild TelstraClear's Wellington and Christchurch networks with fibre. "You would be an incredibly brave person."
TelstraClear would consider becoming involved in the Government initiative only "if people talked realistically about value and customer-worth".
Parent Telstra reported a 4.7 per cent drop in net profit to A$3.9b, with sales falling 2.2 per cent to A$24.8b. The result was broadly in line with expectations.
Macquarie Equities Research said Telstra had been affected by customers abandoning fixed-line phones and a dropoff in advertising in the printed Yellow Pages.
2degrees' overseas shareholders have injected another US$7.5 million (NZ$11.07m) into the mobile phone firm via a share issue, as it gears up for the launch of its 3G service.
Spokeswoman Bryony Hilless says the cash will be used for "continued investment in our infrastructure growth", including the development of its 3G service and the funding of continuing trading. "We are still in the early stages of our life so our funding is carried out by equity capital increases for growth and the needs of the business."
United States firm Trilogy International is its majority owner.
Ten million new shares were issued at US75 cents each. With just over 246m shares on issue, that implies a market worth for 2degrees of US$185m.
The equity raising further dilutes Maori Hautaki Trust's stake in the firm to just under 12 per cent.
2degrees is estimated to have lost at least $50m in its March year, on revenues of $15m to $20m, despite meeting its business plan and taking about 5 per cent of prepay mobile connections.
Last month, it accused rival Vodafone of "waxing lyrical" about its progress in order to play down the case for the regulation of mobile termination fees.
Telecom will ask for a second chance for its beleaguered XT network with an advertising blitz starting tonight after angering mobile customers.
The campaign will offer customers a "money-back guarantee" when they join the network. However, Telecom will not cut prices to match rivals, including newcomer 2degrees.
It is understood Telecom's new deal will let customers who sign up to an eligible plan return their phone within 30 days if they are not satisfied — with a refund for the machine and any calls made.
The new TV commercials will not include celebrities, unlike the adverts featuring Top Gear co-star Richard Hammond that launched XT a year ago. Instead, a senior Telecom staff member will appear in front of the camera.
Spokesman Nick Brown said its recent marketing activity had been restricted to direct communications to customers and online or retail channels. "You can expect to see more marketing coming through other media channels soon."
Telecom chief executive Paul Reynolds said last month that XT was now providing a "bloody good service" and the time was right to start marketing it again. Almost three-quarters of Telecom mobile customers remain on its CDMA network, which the company intends to switch off in 2012.
Temporary discounts offered to XT customers by Telecom in February were withdrawn last week. They were offered in the wake of four network failures that sapped customer confidence.
Industry sources estimated that up to 20,000 customers deserted Telecom for Vodafone in the months following the XT failures. District health boards, including Capital and Coast, publicly considered cancelling their contracts with Telecom.
Telecom has since spent tens of millions of dollars improving the resilience and coverage of XT by modifying software that appears to have been partially responsible for the faults.
Pressure for permanent price cuts has grown during the pit stop. Last month, Vodafone launched a new prepay plan to match 2degrees' standard 49-cent call charges.
But Telecom appears intent on trying to hold back the tide a little longer. Mr Reynolds told analysts in Sydney last week he was quite surprised by price cuts imposed by Vodafone in response to 2degrees' market entry. "There's a little bit of jitteriness — price jitteriness — in the mobile market in New Zealand that we hope will settle down."
Chief financial officer Russ Houlden said Telecom aimed to increase its share of the $2 billion mobile market — now believed to stand at 39 per cent — to 43 per cent by 2013.
Customers using XT to access the internet could expect average download speeds of 4 megabits per second, after an upgrade this year to HSPA+ technology. There were very few places in the world you could do that, Mr Reynolds said.
Fonterra will create 30 new jobs for skilled information technology workers installing SAP software at its manufacturing plants.
The new investment will see Fonterra adopt SAP to run its consumer-branded dairy business in New Zealand and Australia and to handle its warehousing and the management of its manufacturing operations.
The investment is another indication that the technology industry may be returning to normality following a hiatus caused by the economic downturn, when projects were routinely put on hold.
Fonterra mostly uses Oracle software in its 24 New Zealand and 60 overseas manufacturing plants, much of which will be replaced.
Chief information officer Chris Barendregt says most of the jobs will be created in Auckland and Hamilton, but there may be some flexibility about locations.
The co-operative said last week that farmers' payouts for milk solids could exceed $8 a kilogram next year. Mr Barendregt says it is "always good in good times" but that had not affected the decision to give the project the green light, which had been made earlier.
The company shelved a plan to move to an all-SAP environment in 2006, saying then that it had concluded it was not a priority for the business.
Fonterra had that year completed a wrenching project – estimated to have cost about $120 million – to overhaul its supply chain management systems using SAP software and ditch its mainframe systems. That saw it move to a demand-driven production model and strip out a whole layer of administration.
The goal of that initiative – Project Jedi – was to increase efficiency and slash inventories by ensuring the co-operative manufactured dairy products to order, rather than relying on its overseas sales offices to sell what the factories produced.
Fonterra also uses SAP software to handle its accounts and human resources.
Mr Barendregt says expanding SAP to the consumer-branded dairy and manufacturing areas will further simplify Fonterra's business and make the co-operative more efficient. The project would reduce the risks associated with using software that was now quite old and would provide better information for managers.
What had changed since 2006 was that Fonterra was then considering "one big wall-to-wall transformation" of its manufacturing software with a "big sticker" price, he says. It has since worked out ways of breaking up the project into stages and retaining some software that controls equipment at its plants.
"We have probably got a slightly different view of the value we can drive out of it as well. What you might consider to be good practice is continually changing." Fonterra expects the information technology project may help lure back some skilled New Zealand expats from overseas.
The Commerce Commission won't haul Telecom over the coals for saying that its XT network reached 97 per cent of the population, a claim the company withdrew after finding coverage fell short of expectations.
Telecom is adding another 55 cellsites and installing tower-mounted amplifiers — hi-tech hearing-aids — on 420 of its existing cellsites to improve the reach of the network.
A review by British firm Analysys Mason that was released this month said XT was supposed to provide coverage in at least as many places as the CDMA network that it was designed to replace, but didn't.
The commission's fair trading team looked into Telecom's 97 per cent coverage claim, but found there did not appear to be a breach of the Fair Trading Act, a commission spokeswoman said.
"The commission is not proposing to undertake a full investigation at this stage."
Plunket is preparing to take its first steps into the information age, and they are not baby ones.
The charity is searching for an information system, to be called PlunketPlus, that will let it create electronic health records for more than a quarter of a million babies and children under five that can be securely shared with doctors, social services agencies and parents.
Staff will enter information into the database using mobile devices and the system will incorporate decision support tools and automatic alerts, to help ensure required actions are taken.
National clinical adviser Brenda Hynes says Plunket nurses do 700,000 health checks each year, recording them using pen and paper. A small amount of information is scanned into computer systems, but only after a delay of six to eight weeks, and that information is not then available to staff manning PlunketLine, which last year handled 84,000 calls from parents of sick children.
Ms Hynes says the long-term vision is an information portal that will let parents log on to see their child's health records and add information about their child's development, but it doesn't expect all the "bells and whistles from day one".
Plunket first considered the investment in the 90s, she says, but the technology it needed wasn't there. Today it will issue tender documents, including a 381-page document setting out PlunketPlus' operational requirements.
Ms Hynes says Plunket is a complex organisation, "not just about weighing and cuddling children". The system will be designed to improve health outcomes, she says, increasing immunisation rates, providing healthcare summaries to GPs and faster referrals to organisations such as Child, Youth and Family, while making sure children don't "fall through the cracks".
"At the moment, nurses ask parents if they are up-to-date with immunisation", but integration with the National Immunisation Register will help nurses focus on any issues. "Being able to do a referral immediately to Child, Youth and Family in a written form, to give them all the information they need, is important.
"What we are looking at is sending GPs a summary of all our core contacts. There are a lot of people we refer to – Housing New Zealand and Work and Income to make sure people get benefits – and we need to make sure we are inter-operable across them all."
There will be no change to Plunket's policy that it will not share information about children's health records without their caregivers' permission, unless it believes their safety is at risk.
PlunketPlus will need to work nationwide and allow Plunket's 1000 staff and volunteers to enter information online and offline.
Computer Society chief executive Paul Matthews says the initiative appears ambitious, but he is confident the local IT industry is up to the challenge.
"What they are talking about is fantastic. There are some risks and challenges, predominantly around privacy and accessing information. The electronic management of health records has been one of the more difficult areas internationally and people have invested huge sums of money trying to get it right.
"But one thing that has been holding back the health system – which this is a component of – has been lack of investment in technology. If they can implement this and get it right, it will bring about significant efficiency and productivity gains."
Ms Hynes hopes Plunket will pick a supplier by the end of the year and trial PlunketPlus by next June. The system will be implemented in stages and she expects funding will come from communities, businesses and the Government.
"We will find the funding. We are determined this is going ahead."
Text messages have been delayed for several hours after a faulty Vodafone computer server hung on to messages, rather than passing them on.
Vodafone spokesman Paul Brislen said the problem, which began on Tuesday and affected texts between Vodafone, Telecom and 2degrees, caused a backlog until yesterday morning.
Vodafone would not say how many texts had been delayed. Mobile phone users send tens of millions of texts every day.
One irate customer said yesterday that a text message had been delayed nearly six hours.
2degrees spokeswoman Bryony Hilless said Vodafone notified it of the problem on Tuesday evening and it appeared to be resolved by 4.30am yesterday.
David Stone, the head of industry body the Telecommunications Carriers Forum, said texting was not as reliable as making a voice call. It was a service that came about accidentally, did not use mobile phone companies' core systems, and it was a case of "buyer beware".
Brislen said 99 per cent of texts between Vodafone customers were delivered promptly but messages could be held up for a variety of reasons, for example if either the sender or receiver was outside coverage or because of faults.
Telecom head of messaging Jason Foden said congestion was also possible at busy times such as New Year's Eve. Spokeswoman Rebecca Ingram said 97 per cent of all texts, including those to other networks, were delivered within a minute.
Brislen said people should not rely on texts in an emergency. "You can't rely on it as an emergency service. It is not rated at that level."
Telecom mobile users have been quick to provide examples of jumbled text messages after a system glitch was highlighted by The Dominion Post.
The problem came to light after Salvation Army church leader Steve Molen sent a message to wife Faye that, when received, had a new ending that appeared to disrespect Mrs Molen's mother.
Other people have now come forward, including Julie Woollett, from Waikato, who said she received corrupted text messages from her daughter on three occasions.
"The message she sent me had the remnants of another text message she sent to someone else days beforehand and the end of her original text to me was gone."
Telecom sponsorship and Mobile PR manager Rebecca Ingram said there had been 20 reports of muddled texts in the past few months.
An investigation is under way to find the cause.
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