Where is the money going?! $2,054,794.52 dollars per day is what Telecom spend!

Forums › New Zealand Broadband › Where is the money going?! $2,054,794.52 dollars per day is what Telecom spend!

DonGould

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Topic # 7727 5-May-2006 12:41

Telecom's CEO expressed on TV3 last night that her company spends $750,000,000.00 on capx each year.

That is $187.50 for every New Zealander in the country per year.

In my house that's $375 .00 pa. We spend $~1,800 on telecommunications annually at present. So TG's saying she'd be putting 20% of our expenditure back into capx if we were spending our money with her company.

TG then went on to draw our attention to the fact that her competitors are proposing spending a mere $5 per person (that's 2.6% of her current annual capx per person - for those who are having trouble keeping up with the math here :)

Experience in AU shows that it takes time but there are now a large number of major players offering broadband speeds that are ten times faster than the average Telecom offering. It shouldn't take a fraction of the time to deliver the same in NZ because the technology was very new when they started in AU.

The point is that Telecom's competitors will deliver a far more satisfactory broadband experience in NZ by only spending 2.6% per person of what Telecom are currently spending on capx.

What exactly is TG spending this money on and is she getting value for her shareholder money which is, as she pointed out last night on TV3, mainly New Zealanders’ money.

Is Telecom anything more than a money go round?

Did someone in government wake up earlier in the week and decide this is in fact the case and that it's time to change it?

John Campbell pointed out that NZ is 21 out of 30 in the OECD for broadband.

TG pointed out in response that NZ is 22 out of 30 in the OECD for GDP.

Is $5 per person really all it's going to take to launch us (Kiwis) from 21 to something higher? (The answer to that is a resounding YES - TG told us in a round about way her self!)

Will our GDP rating follow our BB access rating in the OECD?

Has the government hailed an end to the Telecom money go round? Another 7.1% off the share price so far today seems to suggest that the stock market think so.

If 1.3 cents per person per day is all that it's going to take Telecoms competitors to kick start our broadband experience then why are we 21 out of 30?

Cheers Don

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Reply # 34975 5-May-2006 12:59

6,500 staff and dividends that shareholders expect are where a great deal of the money goes.

I guess you would also be comparing Telecom to Labour then? Afterall the government takes a significant whack off me each week and I struggle to see where is goes. The Labour money merry-go-round is to take money off me to distribute back to other tax payers under the guise of Working for Families.

Don't think Slingshot are going to be your friend they are after your dollar as much as Telecom.

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DonGould

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Reply # 34979 5-May-2006 13:34

Jama: 6,500 staff and dividends that shareholders expect are where a great deal of the money goes.

Oh come on - That would be a FUD response if ever I read one!

1. Not all 6k5 staff are involved in the capx projects. I'd be surprised if 10% of them are.

2. Telecom shareholder dividends aren't paid out of the capx budget.

Jama: I guess you would also be comparing Telecom to Labour then?

Oh for heavens sakes, is this response anything other than a troll?

I made no political comparison at all.

Jama: Afterall the government takes a significant whack off me each week and I struggle to see where is goes.

Couldn't be more off topic if we tried. Do you care where the money goes? If you do then I suggest you switch off your computer and head down to the public library to read a copy of the last budget.

Jama: The Labour money merry-go-round is to take money off me to distribute back to other tax payers under the guise of Working for Families.

Clearly you are bitter about the Labour government, I get the point, thou it is completely off topic. However thank you for sharing your view with the community this afternoon.

Jama: Don't think Slingshot are going to be your friend they are after your dollar as much as Telecom.

FINALLY - A comment that is a little closer to being on topic even if it does seem to be completely left field.

1. I'm not sure why the reference to SlingShot. Is this the competitor that TG was referring to last night? Why is the stock market this shaken up over the impact that a woman who hands out free bread is going to have on the company?

2. Slingshot are after my dollar, of that you are quite correct and they make no bones of the fact. I see their MD on the TV night after night telling me that if I give her a fraction of the dollar I spend with Telecom then she will give me the same product, and more, than I would get from Telecom.

I am not clear as to how this wouldn't make Slingshot my friend.

I'm not asking for a free lunch here, I'm asking where Telecom is spending the $750,000,000.00 capx budget each year while Telecom tell us that their competitors could deliver a better broadband experience for 2.6% of what Telecom is currently spending.

Cheers Don

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sbiddle

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Reply # 34985 5-May-2006 13:59

Jaffa: Remember we know where slingshots money goes into Annettes pockets at least telecom employ and operate fully in NZ. Plus the cost of NGN is billions of dollars plus the mobile network's are constantly being upgraded and new cell sites going up. Unless you have seen the costs to build and matain these networks you wont understand the reason for current pricing.

Telecom *need* their NGN. If they don't their existing products & services will simply be left behind by those that competitors could potentially introduce to the market.

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Reply # 34989 5-May-2006 14:08

Jaffa: Remember we know where slingshots money goes into Annettes pockets at least telecom employ and operate fully in NZ.

1. Telecom don't operate fully in NZ. AAPT is a huge business in Australia.

2. Do we know what Annette does with the money some of you give her? While off topic, I suggest that she spends a fair amount of it back in New Zealand or does she live off shore? I do know, from you people, that she is spending a chunk on improving telecommunications and employment in India. This is a good thing for New Zealand’s future.

Jaffa: Plus the cost of NGN is billions of dollars

What do you base that statement on? Over the past 3 years Telecom haven't even spent $3 billion on capx if we believe what TG was saying on TV3 news last night.

Jaffa: plus the mobile network's are constantly being upgraded and new cell sites going up. Unless you have seen the costs to build and matain these networks you wont understand the reason for current pricing.

I'm not questioning current pricing.

I am questioning what value Telecom is getting while spending three quarters of a billion dollars when they know its competitors can deliver better results by only spending 2.6%.

2.6%

It's no wonder that the stock market has taken almost 20% of the value out of the stock price in the past 2 days!

Cheers Don

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Reply # 35002 5-May-2006 15:01

Jaffa:
Maybe Annette could pick up some adsl2+ gear on ebay for 2.6%..... Mate NGN is a massive investment its not like were putting more ram in the servers and ta-da everyone has internet, tv, video calling. 2.6% will give you one crappy network. Im not going to get into a huge debate on here, I understand the costs of NGN and the work that has to go into the project. Because I work for telecom and im involved in NGN I probally ony see one side of the story so im going to leave this issue for other people to comment on. I just hope you take on board what I have said.

Cheers

J

The NGN is one of the reasons Telecom shouldn't be as worried as they are about ULL. At the end of the day if their NGN product is as great as it is hyped up to be (and I am sure it will be as both you and other people have mentioned) then Telecom will have a headstart over anything the competition can offer. Essentially everything in Telecom's network except for the last mile of copper and existing fibre backbones are going to be obsolete within a few years with the launch of the NGN.

Any company who wants to compete head on with Telecom is going to be rolling out the same services which is where the likes of Annette and Slingshot are poised to take Telecom. They already have a data and VoIP network that already exists and many would argue that Slingshot having direct access to Telecom copper immediately would be offering the exact same features that the NGN will offer with the exception of IP video.

DonGould

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Reply # 35003 5-May-2006 15:02

Jaffa: Maybe Annette could pick up some adsl2+ gear on ebay for 2.6%.....

If that's all it's going to take to get NZ a superior broadband experience that doesn't leave Ministers and the Prime Minister embarrassed then I suggest that Telecom has some very very serious issues to address.

It should be remembered that it was your boss, TG, that publicly told the world, in a round about way, last night that 2.6% is all it will take her competitors to deliver such an experience.

It was not Annette telling the world that 2.6% is all it will take.

It was not Orcon telling the world that 2.6% is all it will take.

It was not Woosh telling the world that 2.6% is all it will take.

It was not iHug telling the world that 2.6% is all it will take.

It was your boss.

Jaffa: Mate NGN is a massive investment its not like were putting more ram in the servers and ta-da everyone has internet, tv, video calling.

Ok, we're getting off topic here again, but...

Is NGN actually going to deliver us triple play?
Does our community actually want triple play anyway?
Telstra Clear invested $100,000,000.00 in Christchurch to give us triple play and people are pulling it out in favour of services from more than one provider because Telstra Clear simply aren't delivering what the customers want. How is NGN going to be any better?

Telecom have the ability to deliver a whole range of services on their network that people simply aren't buying because they don't represent value.

Sure you as the builder are making a wage from this process, but are New Zealanders going to be serviced?

Let's remember that we have a fantastic telephone network with features that could be useful, but aren't being used. In some causes Telecom has built systems to turn off features so that they can then charge customers to turn back on.

Jaffa: 2.6% will give you one crappy network.

What your boss is saying is that 2.6% spent on the current ULL system by her competitors will deliver something that is a serious business threat to her business.

To me at least, this suggests that she accepts her current network is really crap but New Zealanders should be made to put up with this in favour of allowing anyone else to have a go.

While I accept 100% that you feel that 2.6% will only give us a crap network, your boss doesn't. Your boss sees 2.6% as a threat. What's more, the New Zealand and Australian stock markets seem to agree with her to the tune of 20% of the market value of her company.

Jaffa: Im not going to get into a huge debate on here, I understand the costs of NGN and the work that has to go into the project. Because I work for telecom and im involved in NGN I probally ony see one side of the story so im going to leave this issue for other people to comment on. I just hope you take on board what I have said.

Yes. I do take on board what you've said. Thank you for taking the time to share your thoughts with us all.

What seems clear thou, is that you and your boss are at odds with each other.

If you and your boss were in agreement then she would have been on TV years ago saying 'sure, let the competition spend 2.6% on a few up grades, it's not of any consequence to us".

Personally I understand you not debating defence of the NGN project with me or any of us. It's your boss that you should be worried about and the public claims she's making to the globe.

Cheers Don

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Jama

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Reply # 35006 5-May-2006 15:20

Don you really don't understand what is required to deliver ULL from Telecom's perspective and what is required from the ISP's perspective do you? Because if you did you would realise how silly a number of your comments really are. An ISP will be hosted in a Telecom owned and maintained building delivering services over a Telecom owned and maintained infrastructure. An ISP does not drive to your house to fix your phone line nor do they pay for the extra infrastructure required to support a number of additional DSLAMS.

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JonC

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Reply # 35010 5-May-2006 16:24

I'm curious about this NGN, too. Is there anything you can disclose about it, Jaffa?

In theory it should allow easy VoIP phone calls via your regular handset and so allow cheap international calls - like at the rate Skype does - free to computer (or other NGN handset in another country), small charge to regular telephone handset. Question is, will they sort out the delay problem that Skype sometimes has?

In theory, also, broadband speeds should be better.

Other fancy call services as well?

Can it do anything that Telstra Clear can't do with their cable networks in ChCh and Wellington?

Is there any source where I can read about Telecom's NGN or NGNs in general?

mikman

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Reply # 35012 5-May-2006 16:55

DonGould:
Telecom's CEO expressed on TV3 last night that her company spends $750,000,000.00 on capx each year.

That is $187.50 for every New Zealander in the country per year.

In my house that's $375 .00 pa. We spend $~1,800 on telecommunications annually at present. So TG's saying she'd be putting 20% of our expenditure back into capx if we were spending our money with her company.

TG then went on to draw our attention to the fact that her competitors are proposing spending a mere $5 per person (that's 2.6% of her current annual capx per person - for those who are having trouble keeping up with the math here :)

Experience in AU shows that it takes time but there are now a large number of major players offering broadband speeds that are ten times faster than the average Telecom offering. It shouldn't take a fraction of the time to deliver the same in NZ because the technology was very new when they started in AU.

The point is that Telecom's competitors will deliver a far more satisfactory broadband experience in NZ by only spending 2.6% per person of what Telecom are currently spending on capx.

What exactly is TG spending this money on and is she getting value for her shareholder money which is, as she pointed out last night on TV3, mainly New Zealanders’ money.

Is Telecom anything more than a money go round?

Did someone in government wake up earlier in the week and decide this is in fact the case and that it's time to change it?

John Campbell pointed out that NZ is 21 out of 30 in the OECD for broadband.

TG pointed out in response that NZ is 22 out of 30 in the OECD for GDP.

Is $5 per person really all it's going to take to launch us (Kiwis) from 21 to something higher? (The answer to that is a resounding YES - TG told us in a round about way her self!)

Will our GDP rating follow our BB access rating in the OECD?

Has the government hailed an end to the Telecom money go round? Another 7.1% off the share price so far today seems to suggest that the stock market think so.

If 1.3 cents per person per day is all that it's going to take Telecoms competitors to kick start our broadband experience then why are we 21 out of 30?

Cheers Don

I'm wondering if there is a gap in the logic here? Can't see how TG was saying that the $5 per person from the other parties will make a difference - i thought she was saying it was so small it will make no difference?

In terms of a direct comparison my understanding was that Telecom is working on a nationwide NGN - the Ocons, Slingshots etc will be working on a non-nationwide service. What that means is that they are addressing less of the population (eg ihug talk about an addressable market of 100k customers - about 2.5 % of the population). Given OECD measure are for a percentage of population take-up then I can't see how the lower level of investment (ie the $5 per person) will drive increased penetration above the OECD average (which is the first target).

If we had lots of high-density cities like the UK, Europe and Korea I could see how it could happen but not in NZ.

The only way it could do that would be if Telecom lowered prices across the board in the face of competition - but they might only compete in geographical locations.

As for the $750 m - annual report probably explains that - I might just go and have a look...

As an aside there was an interesting article on TVone news last night with a guy who lived near AK airport who could only get dial-up - can't see how this will improve this guy's position at all -f he's toof ar from an exchange now to get broadband, unbundling won't fix that.

mikman

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Reply # 35016 5-May-2006 17:12

While looking for the annual report I did find this quote in the Herald from Annette Presley...

Number four ISP CallPlus said it had committed between $200 million and $300 million for investment. Most of that had been earmarked for the rollout of a wireless broadband network but that plan may change, said Annette Presley, chief executive of the company's Slingshot internet division.

"Whether that [investment is] in WiMax or in unbundling, we do not know because the landscape is changing. Until we get some details, we don't know. What we do know is that because this has occurred, we are a serious player in New Zealand."

Looks like the first indication that some of the investment propositions from the smaller players may be diluted somewhat - Malcolm Dick of CallPlus was unequivocal on Wednesday (post announcement) that WiMAx would be going ahead - i would say now that they are saying - if we can access someone else's infrastructure why would we need to ?Might be less than $5 per person now...

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Reply # 35020 5-May-2006 17:52

Jama: Don you really don't understand what is required to deliver ULL from Telecom's perspective

(I assume that was a statement)

Yes Jama, you are 100% correct. Telecom's perspective is something I know nothing about first hand. I've never sat down with yourself, your manager, the operations manager or TG to talk about this.

Jama: and what is required from the ISP's perspective do you?

(I assume that was a question)

I know a little about requirements from an ISP's perspective due to my background.

Jama: Because if you did you would realise how silly a number of your comments really are.

Which comments you found "silly" is perhaps a little off topic.

Jama: An ISP will be hosted in a Telecom owned and maintained building delivering services over a Telecom owned and maintained infrastructure. An ISP does not drive to your house to fix your phone line nor do they pay for the extra infrastructure required to support a number of additional DSLAMS.

Again an off topic statement.

What has that statement got to do with anything that I was or have sense addressed?

Addressing your general tone...

It seems to me that you are at odds with your boss and the stock market about the viability of a 2.6% spend being something that would have any impact on the company.

Mine is to neither agree nor disagree.

However I would like to know why your boss is so concerned about something that you as a technical wizard seem to feel is of little consequence. I would also like to know why the market is so shaken.

$750,000,000.00 is a lot of share holder funds. To be told by your boss that 2.6% of those funds (and a swipe of a pen) would so improve service delivery, to New Zealanders as to compromise the position of New Zealand’s biggest company, is of concern to us all.

Cheers Don

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DonGould

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Reply # 35028 5-May-2006 18:48

mikman: I'm wondering if there is a gap in the logic here? Can't see how TG was saying that the $5 per person from the other parties will make a difference - i thought she was saying it was so small it will make no difference?

What TG was expressing was that T spend 750 capx while other providers were talking about spending 20. I think the point she was trying to draw us to is the worth of UBL for a mere 2.6% of what T are already spending.

Yes she was trying to point out that she feels that 2.6% will have next to no impact.

However the market clearly don't agree with her.

I also question if she agrees with her self or if she's simply parroting she agreed to say to TV3 news.

I am also wondering where the logic is.

If it's true that such a little spend will make no difference then why express any disappointment about UBS, why challenge it at all.

mikman: As an aside there was an interesting article on TVone news last night with a guy who lived near AK airport who could only get dial-up - can't see how this will improve this guy's position at all -f he's toof ar from an exchange now to get broadband, unbundling won't fix that.

Of course UBL will fix it.

If Telecom won't put a DSLAM closer to his home then someone else will.

Telecom could fix his problem today but they just aren't.

Give someone else the right to do it if they won't. That's exactly what UBS is about.

Cheers Don

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DonGould

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Reply # 35030 5-May-2006 18:57

mikman: Might be less than $5 per person now...

I have to confess I am a little confused about where you were going with all of that.

I think you highlighted the point I've been throwing about in my own head...

"What is going on in NZ if all it's going to take is $5 per person to give us all better internet access."

Reality check here... we don't need truckloads of fibre to the curb to deliver triple play to every home in 95% of NZ. We simply need some comon sense, community and kiwi know how. It doesn't need to take $750,000,000.00 it could be done for $5 each and a swipe of the pen.

Cheers Don

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Reply # 35031 5-May-2006 19:05

One thing is sure: 2 and a half million goes into TG's pocket every year.
That's her yearly salary and I found this a little bit ridicuolus.

You can imagine the salary of the rest of the board. Way too high I think.

I is a kollege stoodent. Bee nice.

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Reply # 35035 5-May-2006 19:19

DonGould:Reality check here... we don't need truckloads of fibre to the curb to deliver triple play to every home in 95% of NZ. We simply need some comon sense, community and kiwi know how. It doesn't need to take $750,000,000.00 it could be done for $5 each and a swipe of the pen.

I have been in the telecommunications industry on the IT provider's side. I can tell you it would cost more than $5/person in New Zealand to bring triple play into the picture.

The infrastructure the ULL is providing is one thing, but then there's billing, charging, help desk, sales, licensing, multimedia delivery platform (IPTV, VoIP servers), and this costs more than you think.

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