NZ Telco in the next 5-10 years

, posted: 28-Jun-2007 15:09

Now that Paul Reynolds from BT Wholesale has been confirmed for the job; what do you guys think will happen to the Telco industry in the next 5-10 years?

Being an ex Telco analyst myself and now based overseas - I am particularly what you guys think

A few interesting things have happened this year -they include and not limited to:

- Vodafone and iHug
- Orcon being purchased by Kordia which is an SOE
- Telecom to build a long anticipated GSM/WCDMA network
- Paul Reynolds from BT Wholesale being confirmed for the role

Do you see:
- Telecom's focus turning on towards more wholesale now that the new CEO comes from a whole background
- Telecom becoming a lot more involved with Sky because of the all the buzz around convergence and if they won't I am sure other ISPs will
- Telecom's GSM network - how will they perform and market it and how will it effect the price
- Convergence of smaller ISPs, as predicted by many analysts; many smaller ISPs are suffering now due to LLU - what do u see will happen to BB market


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Comment by Grant17, on 28-Jun-2007 16:04

Well, I am gutted over how long the LLU rollout is scheduled to take. Last May, when this bombshell was dropped, we were all excited, thinking that faster/cheaper broadband might be available by Christmas, or at least by the middle of this year.

Instead, we got the fiasco that was "Unleashed". I have no idea what goes on behind the scenes to make LLU possible -- other than reprogramming a whole lot of Telecom's billing and provisioning systems. Which is no small task for sure.

However, by the time LLU is a reality, it may be mostly irrelevant because other far superior technologies may have superseded ADSL over copper in many instances.

Everybody with money to spend e.g. CallPlus, is now playing a waiting game because the price of LLU (or even Naked DSL) hasn't yet been announced. Understandably, they don't want to make investments which may be rendered uncompetitive overnight by the stroke of some bureaucrat's pen.

I fail to see why it has taken the ComCom so long to produce so many documents which still don't even set the price of nDSL or LLU. Surely this should have been one of the FIRST things done because until the Business Case is established, nobody is going to do a damn thing!

Which is the situation we are in -- and still will be in -- for who knows how long


Author's note by portege, on 28-Jun-2007 16:09

I am sure many would agree, LLU was not a surprised - certainly where I was working


Comment by Grant17, on 28-Jun-2007 16:18

The government's spinelessness in not doing LLU the first time around -- in 2003 when the opportunity first presented itself -- has been a massive opportunity lost for our country.

Around that time, there were still a lot of IT personnel looking for jobs in the aftermath of the .COM crash. Now they are scarcer than hen's teeth and can name their price.

The timing of this whole paradigm shift is years too late and all it's doing now is stalling other rollouts which could be progressing right now.


Comment by Jama, on 28-Jun-2007 16:31

hold on Grant. Callplus announced some time ago that were investing $450M in a nationwide WiMax network. This has nothing to do with LLU. TCL pulled out of their Tauranga 3G network again nothing to do with LLU.

I believe the hold ups can be blamed on Labour, they are the ones wielding the big sword to separate Telecom.


Author's note by portege, on 28-Jun-2007 16:38

Jama: that $450m includes CPE and future investments - god knows how long into the future, initial investments are not way near $450m... think that $450 can buy you a nationalwide GSM network


Comment by Grant17, on 28-Jun-2007 16:53

Posted by Jama: "Callplus announced some time ago that were investing $450M in a nationwide WiMax network. This has nothing to do with LLU."

Well, I beg to differ. I have seen it written in more than one place that CallPlus are holding off making investments until the Pricing Determination of LLU is set.

CallPlus are not only targeting rural areas with WiMax but also smaller cities where the population is smaller and it may not be economic for 3rd party ISPs to install their own equipment in Telecom's exchanges or Roadside Cabinets.

Until they know what the competing access method will be priced at, it doesn't make sense to rip in and start rolling out installations which could be priced out of the market.


Comment by maverick, on 28-Jun-2007 18:48

The problem here with expectations was people setting the wrong expectations sorry to say, LLU is a good thing but a number of front people who do more talking than actually understanding what would be involved whipped the growd into a frenzy, sorry to say we had side bets at work as to how long and hate to say it we are basically 100% right , LLU was always going to take a long time, I remember vividly having a laugh listening to a few of the front people tell everyone how fast it would happen and talking about how this was going to set wrong expectations and when the real timeframe was set what the backlash would be.


These front people set unreal expectations they had no background in this all the off shore references pointed to 2 to 3 years for this to be delivered but these people stood up and told everybody how quick we should have it, so everybody thought that LLU was going to be delivered in six months, this could never happen so I actually point the finger at the MOUTHS for disappointing people not so much Telecom


Comment by antoniosk, on 28-Jun-2007 20:20

1. Telecom will start offering wholesale/mvno type deals for their new mobile network. $300m to build a new network? Don't make me laugh - it's going to be closer to $1bn once handsets, OSS/BSS and so on are done.

So the only way to recover costs is to sell faster - and that means getting your competition to sell for you,

This will also put the pressure on Vodafone - one thing Telecom's machine does well is apply marketing and sales muscle.

2. Wholesale will set the pace for network upgrade's, meaning the copper will be electrified ADSL2+ for many years to come - Telecom's STP for LLU has already excluded VDSL2 from consideration because of 'Interference problems'.

Also because Alcatel has no viable VDSL product yet.

But the pace of deployment will pick up.

3. Backhaul will continue to be constrained for another 3 years with minor improvements in minimum speed/subscriber (moving from 32kbps to 90kbps eventually).

4. Telecom will continue to deploy more Metro Ethernet and fibre as customer leads for business customers. But now SIP technology until 2010.

5. Wimax will trickle out and continue to be a 'nice but not enough technology'


6. LLU will continue to be a damp squib - the first exchanges will be connected by April08 (probably Pakuranga and Khandallah again!), and everyone will rush in to offer residential VOIP and slightly faster Internet over ADSL2+. People will be left without phone service for hours and days etc until we all 'learn' how to serve customers again

7. TCL.... sigh...


Comment by HamishMacEwan, on 29-Jun-2007 09:20

- Telecom's focus turning on towards more wholesale now that the new CEO comes from a whole background

I didn't see much evidence of this having an impact with TCL's previous CEO, but coming from such a successful structural/operational separation as BT, and being involved with it could prompt good outcomes.

- Telecom becoming a lot more involved with Sky because of the all the buzz around convergence and if they won't I am sure other ISPs will

Perhaps, though I don't see any value in selecting winners in the content market, it will lose more than it makes as net native alternatives grow more dominant.

- Telecom's GSM network - how will they perform and market it and how will it effect the price

Same old same old, minor reduction in cost of change between operators, but already people who care have two handsets.

- Convergence of smaller ISPs, as predicted by many analysts; many smaller ISPs are suffering now due to LLU - what do u see will happen to BB market

Increasing uptake of alternative connectivities (hopefully) and concommitant reduction in prices as the Telco premium wanes in brand value. ISPs are inevitably becoming connection services with all the DNS, eMail, etc. being supplied by (sometimes ad-supported) third parties. Fortunately for some, DTS comes to mind, that's the way they started and they've resisted the ugly temptation to climb the stack and stove-pipe their margins. As their web-site observes:

> Bypass all ISP and their related issues
It's about smaller pieces loosely joined. The vetically integrated model is neither necessary nor beneficial where the infrastructure and services are not bound and the service layer moves much more rapidly than the infrastructure.


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