The telco week that was

Its been a pretty interesting week for Telecommunications in NZ and the world in general actually. Remarkably there has been some fairly reasonable commentary about Telecom’s proposed separation plan.  Personally i think this is a good move by Telecom, it

a) removes a point of leverage that the government was putting on them

b) it will provide a more realistic and manageable timeframe for actual separation

c) it will remove the burden of investment off them alone (to who i wonder again)

d) it will mean that they MUST absolutely deliver on their ICT strategy and remove the foot in both camps that they suffer from and

e) make it easier on their staff (i think that makes 4 severe re-orgs in 2.5 years!!! Spare a thought for them)

I particularly like the line in Fran’s piece where she says

  "Trouble is the Government may be too wedded to its own offensive strategy to see reason in return.”

I’d actually extend that bit to “the government and Telecom’s competitors” are too wedded to their strategies and in my opinion are going to miss an outstanding opportunity.  

I think that the government will miss the opportunity (despite the efforts of people like Rod Drury), i think they are far more interested in rhetoric and political posturing than actually making things better for that average NZer. The other issue is, if they controlled the network, then they’d be on the hook for our current OECD standings, which will in turn make it abundantly clear that having a decent broadband network is only a small part of a picture. Personal and company tax rates, compliance, electricity and other core infrastructures as well as a student debt scheme that drives grads away in their droves once we’ve educated them all need to be addressed.

I also think that most of Telecom’s competitors will miss the boat as well. Firstly that are so attached to being a victim that they don’t have the DNA to actually be proactive.  They will also have to put up some cash to actually differentiate themselves or even get ready to sell the network assets of the new netco. Finally, with the exception of a few of the ISP community, most of them are focused on the consumer market, (which is actually pretty much already on a trajectory) and miss the greater opportunity of offering services to business.

I think the big mover this year will be the Vodafone Ihug story. Already they are making some moves. But this is a network, access and calling game. To be honest this is Vodafone’s DNA coming through. At the end of the day they are what Telecom was 7 years ago, a network and calling company, full stop, end of story. Their track history in building and deploying value added services isn’t flash. Added to this is their ambition (which i have heard from a source) to have one of their divisions being the number 1 telco (and that can only be NZ) and i think they’ve got it wrong.  Another factor that they should be considering is market saturation in the core business and things aren’t going to be that rosey.

Be and interesting couple of years

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