Real eatate prices rose significantly, not because of the usual supply and demand but because of greed. People paid inflated prices for property not based upon it's actual worth but what they could onsell that property for. People lived outside their means on cheap credit, countries borrowed significantly more than their GDP figures could withstand, companies bought debt off other companies because they were greedy and could see big profits for themselves. Much like property, oil prices rapidly rose, again not because of supply and demand but because of speculators who believed they could make money. There was no shortage of oil. There won't be for a long time.
Did anybody serious believe that this bubble wasn't going to burst? If not you should have. While there are probably economists who strongly disagree I think you can compare a free market to Darwin's theory of natural selection where the strongest will survive and the weakest will fail. A bad business model can only last for so long before it gets wiped out..
Like a big night on the town the hangover is here for the greedy people who drank too much of the free booze.
Those who were smart shouldn't have to worry too much to worry about because you're probably sitting back smiling and saying "told you so" to everybody else.
Now it's faltering with a share price that's currently trading at $2.23 which is it's lowest price since floating. It's just announced it's spending over $500 million building a new WCDMA mobile network (several hundred million over previous estimates due to a change in technology) and is currently in the middle of a multi billion dollar NGN rollout. This powerhouse is now stuck at sea with no engine waiting to be rescued. But who can rescue them?
First we need to establish who got Telecom in this mess and there is only one answer. Theresa Gattung and Rod Deane. Dean's misguided attempt at maintaining his his powerhouse monopoly and Gattung's easy does it approach along Dean's path has ruined Telecom. The assets have depreciated, the profit generating machine has gone. Even the customers are going too, unhappy with the products & services that don't deliver meet their needs. Investors stayed with Telecom for two reasons - good dividends and tax credits, unfortunately when you investors who don't care about a company following a flawed business model but are only there for their return you know you have a problem. Do I feel sorry for people who have lost money with Telecom shares? Not in the slightest. Your support of the board and executives has put Telecom in the position it's in today.
Telecom now has a CEO who knows his stuff. I know several Telecom staff who have met Paul Reynolds and love his approach to business. Not only is he a manager he also knows his stuff - BT's 21CN network was largely his baby. His biggest challange lies ahead, can he start the engine again?
So what can save Telecom? After years of no competition in the NZ marketplace Telecom are now the underdog. Vodafone controls the mobile market and far from being the good guys now control upwards of 75% of total mobile voice traffic in New Zealand. Telecom has lost out significantly to TelstraClear in Wellington, the Kapiti Coast and Christchurch with large numbers of customers moving to TCL's own HFC network. Telecom face serious competition from unbundled services in in Auckland (and soon to be nationwide) and Telecom are very slow off the mark at offering next generation products such as a consumer and small business VoIP service, a market that is currently expericing good growth.
So what would I do?
First off - Telstra invests money into Telecom for a stake in their mobile busines.
Sound far fetched? So are plenty of other things. Think about it however and it makes sence - Telecom mobile is a big hole that has a red tarpaulan over the top of it. They have been seriously hurt by Vodafone and need to change things drastically if they want to hurt Vodafone. Telstra have plenty of cash and need a presence in NZ, particularly in mobile. Telecom still holds a strategic investment in 3 Australia with Telstra so do have a working partnership with them.
Let Telstra invest their money and establish true zero rated roaming across the ditch. This has the potential to really hurt Vodafone because they in effect have always "owned" the roaming market despite Telecom's best efforts. Why should there be inbound roam forward charges between both countries? 3 have already pioneered the zero rated on network roaming concept across all their majority owned networks, it is no big deal. Roaming is still a cash cow that the EU are trying to seriously curb, the reality is high roaming rates are nothing but greed from carriers. While you're at it look at bringing the 3 brand here - a MVNO isn't ncessarily bad if it's on your network.
You have to significanty increase the value for money customers receive. Get rid of per minute billing and move back to per second after the first minute. Don't rip your customers off. They don't like it. Voice usage should be well over double what it is now, this doesn't need to be done by cutting rates but by significantly increasing the caps available to customers. Significant numbers of customers could easily be moved upwards towards the $50 per month APRU target if they feel like they are getting value for money.
Introduce flat rate plans.
Your current flat rate plan is a joke. It's obvious however it was never actually designed to get any people on it and certainly didn't hurt your business because you have bugger all high end customers anyway, they have all gone to Vodafone. You put a price point in the market which you thought could hurt Vodafone but it's had virtually no impact. Dropping this to $199 per month would. Tie customers into a $199 36 month contract and you'll hurt Vodafone badly. They will have no option but to match it, something that will seriosuly hurt their business.
Keep your customers happy.
Customer loyalty isn't hard. You need to make your customers feel welcome. Give them free airtime every so often as a bonus. Give away prizes. Make your customer feel happy to be Telecom customers.
Take data seriously.
You've attempted to so far but this can obviously be improved. Introduce casual prepaid data packages that can be added to any plan ($30 for 1GB that is valid for 6 months). Slash existing data packages. Data is now a commodity item and is no different to SMS messaging was 6 years ago where the model for usage has now changed significantly and you're past the stage of simply ripping off the early adopters. Now mobile data is mainstream. Vodafone's $1 a day offering was a start but can be easily improved upon - why when the effective rate for the first 10MB is 10c per MB should there then be a 1000% increase to $1 per MB for additional data? That's just making customers feel like they are ripped off and is actually discouraging data usage.
And last but not least. Don't tie customers to plans. Sure - if a customer wants a free phone then do this. Infact give them an incentive to sign a term contract. But don' don't don't force all your customers to enter a term contract. This is plain stupid and simply stops potentnail customers from signing up.
If you offer the best value and keep your customers happy then they won't want to leave. It's not rocket science.
Good luck Telecom. You're going to need it.
From February 2009 section 92a of the act will take effect. It will force ISP's to disconnect your service if there is reason to believe you are breaking the law by trading in copyrighted material. There is no burden of proof - if somebody you dislike complains to your ISP that you downloaded a song illegal you will get cut off. You are guilty. There is no jury.
A meeting took place yesterday between Judith Tizard (the minister responsible for the introduction of the law) and other parties who strongly object to this law. Tizard as always showed in the past that she has absolutely no understanding of reality and lives on another planet. Judging from comments made by her in yesteday's meeting it's obvious that she still fails to understand anything.
It's a real shame that some washed up minister who won't be around in the next Parliament has the power to introduce such a law that in all reality will have innocent vistims being unable to have an internet connection and ISP's breaking the law for failing to provent people from downloading copyrighted material (exactly how they are supposed to do this is anybody's guess).
Judith Tizard and section 92a really do = fail. Big fail.
More on yesterday's meeting is here on Colin Jackson's blog
Make sure you contact Judith Tizard and make your feelings heard.
Also contact your local MP or candidates. Turn section 92a into an election issue. It has far reaching consequences and yet will take effect early next year.
Visit your local coffee shop these days and you're bound to get a loyalty card. Buy 10 coffee's and get 1 free. Visit Subway and you'll get credit that goes towards buying a sandwich. Fly with an Airline and you'll get frequent flyer points. Buy your groceries at New World or buy your petrol at Shell and you'll get Fly Buys points. I don't need to list any more - I'm sure you get my drift.
Most of these companies all exist in competive marketplaces where customers have many choices when it comes to spending their hear earned money. These companies realise that keeping their customers happy is not just something you pay sparse attention to, it's part of your core business.
Now lets look at the mobile market in NZ. Stastistics tell is that 100% of NZers own a mobile phone so I'll ask a question that everybody should be able to answer. Exactly what are Vodafone or Telecom doing for you to keep you as a happy loyal customer? Do you feel that your mobile carrier really wants your business or are you simply treated as a number? Do you think they really care if you moved away to another carrier?
This poses the question - do these companies care about customer loyalty? Both feature business models based around locking you into long into term contracts and giving you small discounts off overpriced handsets. Imagine if you wanted to buy petrol but could only do this if you entered into a 24 month exclusive contract with the fuel outlet of your choice, a contract that you couldn't break without paying a penalty. In return they would sell you a 1.5l bottle of Coke dicscounted to $3.00 - more than you would pay for this product if you shopped at a supermarket. Would you feel like you were a happy, content loyal customer or would you feel like you were just a number?
New Zealand now has a greater choice when it comes to mobile with TelstraClear launching a virtual mobile network using Telecom's CDMA network and Black+White are about to launch a similair virtual network using Vodafone's network. B+W won't be offering term contracts and instead believe they can compete by offering a package that makes their customers feel like they are receiving value for money which in turn will drive customer loyalty.
So I'll now ask the question - having been a Bellsouth & now Vodafone customer for 13 years do you really value my business? What have you done recently that should make me feel happy about being a customer of yours? How have you rewarded me for my loyalty over the years? You give me significantly less airtime for my $ spend than virtually any other Vodafone Group network. You've put up roaming rates so I now have to pay more to make calls when I visit Australia 3-4 times per year and also charge all incoming roam forward calls by the minute rather than per second. This annoyed me greatly. What else have you done? Nothing. What would I like you to do? Offer me a plan that feels like I'm receiving value for money. Don't lock me into a term contract. Don't make me laugh me by offering me $50 off a $1000 handset that's selling for $200 more than it's true market value. Quite simply don't insult me. I'm happy to pay good money each month for a plan that meets my needs.
Do you really value my business or not? If you do what are you going to do for me?
Once all the idiots have sold out the better things will be for Telecom. Telecom is not the company it was 4 years ago. It is a lean mean telco run by a very smart CEO that will continute to dominate the NZ landscape for many many many years to come.
Lets hope the investors bailing out at present are the idiots who only invested in the company for their dividend - greedy people who were only ever in it for a quick return. Those same people who pushed for Telecom to make big profits and caused the problems that are now the stumbling block the company is having to deal with.
Those buying shares now are the smart ones who realise that a bargain they are getting...
The TVNZ 7 Internet Debate, in association with InternetNZ involves four politicians quizzed on major areas of ICT policy with questions coming from you through the online chat, a studio audience, and experienced journalists.
The politicians are Labour’s Minister of Communications Hon David Cunliffe, National ICT Spokesperson Hon Maurice Williamson, ACT Leader Rodney Hide and Greens ICT Spokesperson Metiria Turei.
Broadcaster Sean Plunket will moderate the debate, with questions posed by experienced journalists Fran O’Sullivan and Russell Brown.
Mauricio has already mentioned this debate numerous times on Geekzone and from the lack of comments in the forums set up for this thread it seems that people don't seem interested in what is happening in the internet scene in NZ which is rather ironic because the second xxx ISP has poor speeds of xxx telco has a problem suddenly out of the woodwork come hundreds of people all lining up to complain!
This is YOUR chance to have YOUR questions answered by these four MP's, any of whom could be key players in the telecommunications sector in New Zealand after this years election.
Ask your Broadband questions here
Ask your cybersafety questions here
Ask your digital divide questions here
Ask your copyright questions here
Ask your convergence questions here
The debate screens live on TVNZ7 at 9pm on Tuesday 23rd September. It will also be streamed live in the TVNZ website.
Upgraded Telecom Lower Hutt site in the foreground and Woosh + NZ Comms gear on the back building. This Telecom site was one of the first in Wellington to be upgraded for GSM 850 + UMTS 2100. The Woosh site has been in existance for several years now but the panels for NZ Comms have been in place for a couple of months now but are not live.
GSM is still live today on Telecom's site even though the GSM network has now been canned, obviously those sites that did have GSM gear fitted will still be live until it's removed and replaced with the UMTS 850 cards. I guess we'll be seeing some cheap 850MHz GSM equipment on Trademe soon! :-)
Main Vodafone site in Lower Hutt. 900 GSM + 2100 UMTS + 1800 GSM panels.
This site = M3gA Fa1L and should be used as a textbook example of how not to deploy a cellsite.
When the 2100 gear was added the sectorisation of this site was changed and neither of the 3 sectors now face the Westfield Queensgate mall right opposite. As a result inbuilding coverage in the mall is absolutely terrible with no coverage in large parts of the mall. Microwave links exist to several other sites including Petone, Ava and Mt Fitzherbert.
Waterloo Railway Stn site with both Telecom and Vodafone sites. Telecom panels are in the front left with the grey one on the left being a trial CDMA panel installed on several sites (Waterloo, Hutt CBD and Hutt VIC Corner) several years ago that can automatically pan & tilt to optimise the network depending on traffic load. Vodafone 900 & 2100 panels are in within the cream cylinderical enclosures at the other end.
This particular site has featured in the Hutt News this week as NZ Comms have applied for council permission to mount their gear there and some of the anti-cellsite people have jumped onto the bandwagon. Some of these anti-cellsite campaigners really should do their homework before they make idiots of themselves talking to the media when equipment for both Vodafone & Telecom as well as numerous council links for the smartlinx3 network already operate.
From the Hutt News 2/9/08
Some residents in the Knights Road area are concerned that they haven't been consulted over a proposal to erect a telecommunications microwave tower and related equipment on top of the Waterloo Interchange building.
One resident believes the Hutt City Council has only sent information to a select few properties right opposite, including Omega Wigs at 214 Knights Road, Take Five and the dairy adjacent.
"This seems totally wrong and several homeowners/residents in the area who have learned of the application are concerned at the implications for them, their families and their property values if that application is approved and the towers and other equipment pods proceed."
Another concern is for the many pregnant women and children who regularly use the railway/bus station. They want to be assured this equipment is safe.
New NZ Comms site at Avalon
A closeup of the panels. NZ Comms don't appear to be painting any of their panels (special paint has to be used so it doesn't affect the RF properties) so this site stands out like a sore thumb. The mast has been painted green to fit in with the surroundings. Looking at the cables still coiled up below I'm guessing a microwave horn is still to be fitted for backhaul.
Vodafone site right next to the NZ Comms one. Bit hard to see detail due to the sun but it has 2100 UMTS panels on top and 900 GSM panels in the middle. Site and panels are all green but the microwave horn is still white (links to Avalon studios site).
Closeup of existing Vodafone 2100 UTMS panel (left) and new NZ Comms 900 GSM panel on the top of the Avalon TV studios tower block.
Upgraded Wingate Telecom site. One of only a handful of sites around Wellington still using omni aerials. This site was one of the last in the Hutt Valley to be upgraded before the Telecom rollout seems to have been temporarily halted. Also one of the only upgraded sites that never had a live 850 GSM signal - maybe this was only going to be a 2100Mhz site.
Closeup of the panels - this site is one of the original Telecom Mobile designs and dates back to ~1990. Note the south facing UMTS panel is a lot smaller since it's facing directly into a hillside that you can see in the picture above.
New Telecom CDMA + GSM 850 + UMTS 2100 site at Naenae. This site replaces the one below that used to be in Naenae Primary School.
"All these TV's are showing a high definition 720p picture" - funny how they were all showing the Olympics on TVNZ Sport Extra which is only a 576i SD channel.
Come on - it's no wonder the general public are confused about TV's and technology when you have idiots like this working for your company.
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For those who don't know what Keynesian Economics is it's an economic theory devised by one of the greatest economists of the 20th century - John Maynard Keynes. What the National Party want to introduce is proven basic economic principals - why are Labour so scared?
Good news is on the way however, NZ Communications have applied to the Lower Hutt City Council for permission to put a cellsite at the top of Honeysuckle Grove (near the water tower) which would deliver great coverage. I'm not sure if this will be a standalone mast or panels mounted on the existing water tower which already houses radio gear for several organisations including Smartlinx3 who have equipment for their wireless broadband product.
If NZ Comms can do this why can't Vodafone or Telecom?