True to form - and good on him for this action - Matt Crockett has been quoted on stuff today. I say good on him, because the perception has been laid by the Minister and loads of commentators that broadband was going to get faster and cheaper, not more expensive and take longer to get (in the medium term). The reality - again - is that going faster and doing more means buying new equipment, spending more money developing products, training people and so on and so on ad nauseum. The sort of stuff people get bored hearing of, but which service providers get savaged if they can't deliver on day one.
Telecom Wholesale head Matt Crockett is bracing himself for a backlash from Internet service providers and consumers who expect they may be able to save as much as $43.60 a month once they are able to avoid renting a Telecom phone line in September.
Mr Crockett says Telecom will begin wholesaling a service that will let customers buy broadband-only phone connections that do not connect to Telecom's public switched telephone network (PSTN) from September 28. Telecom will reveal the price for the service in two to four weeks' time and Mr Crockett says he is nervous some people will be disappointed. "We want to put forward what we believe is a reasonable price, but there is always an incentive for customers to want it to be lower. There could be 'noise' and we will have to wait and see what happens."
The service - known as Naked DSL - is expected to appeal to people who want to use Vodafone or Telecom mobile phones or low-cost Internet services such as Skype to make all their phone calls. Orcon, CallPlus, WorldxChange and Telecom itself are among those expected to retail it. Mr Crockett says that since Naked DSL will still require a copper line to the home, Telecom Wholesale will have to pay Telecom's network services arm a fee for using its local loop. Because of this, he says it is not realistic to expect Naked DSL to be priced the same as Telecom's wholesale broadband service, which costs ISPs from $26.35 a month plus gst. "If we did that we could end up in a situation where Telecom Wholesale was losing money."
Instead, the price of Naked DSL is likely to be somewhere between the cost of a broadband plan, and that figure plus a line rental. If it is in the middle of this band, households prepared to do without a connection to the PSTN might save about $20 a month. Broker ABN Amro is understood to have suggested this as a viable compromise. Internet Service Providers Association president and ihug regulatory manager David Diprose says he has not formed a view, but he also believes a premium for Naked DSL that was set at half the line rental charge might be reasonable.
"Part of what we are thinking through in the way we price this is that we, in the new environment, will be facing the local loop input cost," Mr Crockett says. "Obviously we need to take that into consideration and on top of that we need to work out what are all the other relevant costs that are incurred to provide broadband and what is a fair market price."
Mr Crockett says that, at first, Telecom Wholesale will be able to provide Naked DSL only to customers who do not already have broadband. It will not be offered to people who have broadband till the end of the year.
He says this is "not ideal" and would disappoint ISPs, but customers' phone lines are currently identified by their connection to the PSTN and the services are hard to unpick. "There are quite complicated system changes required to deprovision a home line without deprovisioning a broadband line at the same time."
Telecom will offer the "commercial" Naked DSL wholesale service voluntarily, but will be obliged to offer Naked DSL on terms and conditions set by the Commerce Commission by the end of next year. The commission, not Telecom, will set the price of the regulated service, which will guarantee households a minimum "committed" broadband connection speed and a dedicated voice circuit that will ensure the quality of Internet phone calls.
Naked DSL will make broadband more affordable and increase uptake, Mr Crockett says.
"Calling revenues could be impacted, but that depends on the way Internet voice services are priced on the new platform, and we are going to lose some network revenue when people go on to Naked DSL - it will be cheaper than a PSDN line plus broadband - but this new technology lets us lower our costs as well.
"Our challenge is to meet customer expectations while using the opportunity to take cost out and maintain profitability. It is pretty hard to see exactly how we are going to pull that off. There are challenges to Telecom around that, but we do not intend to stand in the way of it."
Naked DSL will soon become the only type of household connection offered by Telecom, as it is scrapping its PSTN and will in future route all voice calls over the Internet. Consumers are unlikely to notice the change, except for the fact they will need new phones or a gateway device in their homes that should provide a raft of new services over time.
Customers are likely to be offered multiple phones numbers for each phone, each of which could be used by a different family member and could be separately programmed to forward calls or put them through to voicemail.
Today NZPA are reporting that things have changed somewhat:
CallPlus WiMax plans delayed
NZPA | Friday, 13 July 2007
CallPlus is blaming the scheduling of a spectrum auction for December as the cause of delays in the rollout of a nationwide wireless broadband network using WiMax technology.
The National Business Review reported today that Japanese bank Marubeni had verbally withdrawn a $450 million financing package that was to fund the CallPlus rollout. It quoted a source who said the technology the expansion was based on had run into difficulty, although it could probably be fixed.
"The original deal is off," the source said.
CallPlus chief executive Martin Wylie said today the technology did work.
Deployment delays were principally tied in with the Government's announcement six weeks ago that it would be holding a spectrum auction in December, he said. Last September CallPlus said it was preparing for a national roll-out of its WiMax service, which uses radio frequency rather than conventional wires for voice and broadband, this year. Mr Wylie announced the $US450 million ($NZ581.7 million) finance package in January, saying only that it was from a major Japanese trading house.
Today he said that due to delays CallPlus had not drawn down on the funding. He was subject to confidentiality requirements and not prepared to say more. Asked if the funding was still available, he said: "We're not drawing down on it today, potentially the funding will be reinstated and we've got other sources.
"It's more a case of delay and therefore we're not drawing down on the funding at the moment."
With the announcement that more spectrum was to be come available, CallPlus could need to reconsider which spectrum band to deploy equipment in, Mr Wylie said. If the company changed from the spectrum it was using now, it would need to acquire a new set of equipment and then trial it.
Hmmmm. I don't like ragging or running down people who are willing to give things a go and invest in the country, but I feel cynical about this announcement and how it came about. I recall some specific wording at the time that basically changed the premise of their announcement - we're spending money - to the reality - we're threatening to spend money unless Telecom and the commission move faster on LLU and Naked DSL.
A pessimist's view? Basic UBA, the forerunner for Naked DSL, has been specified and the industry is waiting on the regulated price. All things being equal, spending $5m on the change project and going to market with a slightly-better-than-what-you've-got-now-but-it-has-low-grade-voip in September is a darn sight easier than the real hard graft of spending a shedload of cash, building and running a network while being under pressure to connect customers, make money and payback the big boys.
I guess the hard work is best left to the difficult folk at Telecom, Vodafone and TelstraClear.
So Vodafone announced that it was taking over the direct management of TCL mobile customers from the agency agreement, and was making contact with each of them.
This press item appears to have received much less attention, but casts quite a different light on the above assumption:
TelstraClear says it is still managing its 30,000 mobile customers, despite the expiry of an agreement with Vodafone, and may consider entering an agreement with Telecom.
Vodafone said it was taking over management of TelstraClear's mobile phone customers following the end of a seven-year old agreement in June. Customers will keep their existing phone number and operate their phones as normal, but will receive a separate bill from Vodafone.
However, TelstraClear spokesman Matthew Bolland said that TelstraClear would continue to act as the first point of contact for the customers, including billing.
Both Vodafone and TelstraClear said customers would not be affected by what Mr Bolland called a commercial dispute.
The agency agreement has expired amid an increasingly strained relationship between the two telcos, with TelstraClear blaming the failure of its $50 million mobile/broadband pilot in Tauranga in April on Vodafone.
"Last week, Vodafone wrote to us asking us to continue to manage those customers indefinitely, so the idea that they will assume control is an interesting one because those customers will continue to be served by TelstraClear," Mr Bolland said.
"We can now actively go out and look for another provider to provide mobile services to those customers."
Many of those affected were business customers.
"We've spoken to them (customers) and we're communicating with them again today about the fact that things don't change," he said.
It would be some weeks before the company made its decision.
"We're still in discussions with Vodafone about what we could do now . . . now we're in a situation where we can talk to two parties."
Perhaps this isn't news. Certainly it doesn't say much, and it's a shame only Stuff seems to have dwelled on it.
There can't be that many other provider's out there, can there?
Reynolds is currently CEO of BT Wholesale, the wholesale business of UK-based telecommunications and IT company BT Group.
He joined BT in 1983 after completing a doctorate in geology at the University of London. Since then he has had a distinguished career, encompassing senior leadership roles in sales and marketing, strategy, information systems, broadband, and guiding BT's wholesale business through the complex process of operational separation, when Openreach was created. He has served on BT's Board of Directors since 2001.
Reynolds will succeed Theresa Gattung, who leaves Telecom on Friday after twelve years at the company, the past eight as the company's CEO.
Simon Moutter has been appointed as acting CEO until Paul Reynolds formally takes up his role. Simon has held a variety of roles at Telecom, including that of Chief Operating Officer, and has a deep understanding of the business.
Chairman Wayne Boyd said he and the Telecom Board were delighted, after a global recruitment process, to have secured the appointment of Paul Reynolds.
"Globally there are few leaders in the telecommunications industry with Paul's combination of skills, knowledge and experience," Mr Boyd said.
Reynolds said he and his family were looking forward to coming to live in New Zealand. "I'm passionate about the telecommunications industry and its power to transform the way people interact, live, work and play.
"I've been a keen observer of the New Zealand experience, and am now looking forward to leading a company that will help to shape the country's future."
Reynolds will be based in Auckland and commence his new role at Telecom in late-September. His appointment is subject to the conditions set out in his summary of employment terms, below. His career summary is also below.
He will commence on a base of NZD $1.75m with annual performance incentives targeted at another NZD $1.75m.
Dr PAUL REYNOLDS: CAREER SUMMARY AND DETAILS
2000-Present Chief Executive, BT Wholesale
2001-Present Board Member, BT Board
2004-Present Board Member of E-Access (Japan)
1998-2000 Managing Director, BT Network & Information Services
1998 Director, BT UK Effectiveness
1997-1998 Director, Strategy
1994-1997 General Manager, Scotland
1993-1994 Programme Director, Information, Communications & Entertainment
1991-1993 Director, Office of the Chairman
1988-1991 Senior Manager, International Voice Products
1983-1988 Roles in product management, marketing, new business development & strategy in the UK & international markets
Reynolds has a PhD in geology from Bedford College, University of London
6 months on (thereabouts), how is the industry getting on.
Well, as we found out today, Kordia (formerly Broadcast Communications Ltd) announced it was buying Orcon Internet for $24.3m. Juha broke the story last week http://www.geekzone.co.nz/juha/3094. BCL were never really into providing service, Kordia on the other hand seem a bit more aggressive. A combo name from someone at work: Orkordion, which I quite like (bit like Vodahug).
Telecom has announced one of the biggest open secret's in the industry, and that's their move to UMTS/HSPA/GSM. But of course they'll keep CDMA going for at least 5 years.... or until it's cheaper to migrate everyone. The closure of 025 is nicely timed, although one might think that the sudden availability of 850Mhz spectrum would be too tempting for the redistribution government, causing it to be taken off them. Well, at least NZ will see some muscle in the mobile business - and Vodafone will really start to lose corporate business as Telecom wraps up whole of business deals with handsets not made by Sanyo....
Vodafone is completing Project SAM, their billing system upgrade, by slipping all their wholesale billing agreements until October and causing bill grief for customers. Billing system migration is never easy, but still....
Tuanz was a bit of a bust this year, with not that much coming out compared to the 2006 event (which was fun). Local Number Portability finally hit in April, with all providers having a service of a fashion. The cleanup is ongoing, but it does feel a little anticlimactic.
The 2.3Ghz auction due for May was deferred until December, ultimately a good thing as it was put together as a way of introducing cheaper 'mobile' networks when the technology is nowhere near ready (and one questions the value given there will now be 2 GSM networks in NZ).
And of course let's not forget the apparent Tauranga farce, where TelstraClear abruptly withdraw it's mobile network, laying the blame squarely at Vodafone for unworkable changes to a national roaming agreement....
The next 6 months:
Telecom has deployed ADSL2+ at a few key exchanges, and rumour is a few users are suddenly getting faster speed. That timetable is fast, and more will go out sooner.
UBA, slightly better bandwidth for broadband and the first step to Naked DSL, should go out later this year. It will make VOIP more plausible, but the heavily congested backhauls will.... remain heavily congested.
A bit more consolidation to come? will Callplus survive as a standalone in this market? can Compass continue to exploit it's niche or will they become CallPass? Let's not forget Whoosh, which might become Wheeze...
And as for the ozzie outfit... well.... who knows. I couldn't possibly comment