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Telecom New Zealand
Telecom New Zealand ( ) is a Wellington, New Zealand-based telephone company and, through its subdivision Xtra, an internet service provider. It has been run as a publicly-traded private company since 1990. It is also New Zealand's second largest mobile operator. Telecom is the largest company by value on the New Zealand Exchange (NZX) and movements in its share price have a great influence on the index of movements in the top 50 companies. Further, it is the 39th largest telecommunications company in the OECD[1]. Telecom was formed in 1987 from a division of the New Zealand Post Office and privatised in 1990. The selling price is still considered by many to be extremely low, given that Telecom had a monopoly of all phone lines in New Zealand at the time. Some consider that the decision to privatise Telecom was a mistake & that it would have been better to keep Telecom as a government entity. Others consider that the capital requirements to modernise the network were better provided by private enterprise than the government. On 31 March 2008, Telecom was operationally separated into three divisions under local loop unbundling initiatives by central government - Telecom Retail; Telecom Wholesale; and Chorus, the network infrastructure division.
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A van with the Chorus livery.
XtraTelecom MobileTelecom Mobile is New Zealand's second-largest mobile operator, with about 49% http://www.vodafone.co.nz/aboutus/12.1.1_facts_figures.jsp?item=facts market-share, slightly behind Vodafone. Telecom used to operate AMPS, Digital D-AMPS/TDMA and currently operates CDMA. AMPS and D-AMPS service was sold under the 025 brand and CDMA services are sold under the 027 brand. Telecom turned off the 025 network on 31 March 2007 http://www.telecom.co.nz/content/0,8748,205317-201933,00.html?nv=tpd. Most of its customers had migrated to the 027 network. The 027 CDMA EV-DO network is marketed as T3G, a 2 MB third-generation mobile system. On the 8 June 2007, Telecom announced a plan to build a hybrid W-CDMA/UMTS-CDMA network http://www.telecom-media.co.nz/releases_detail.asp?id=3455&page=1&pagesize=10&filtertext=UMTS&m1=1&y1=1996&m2=4&y2=2008&filter=filter, based on the WCDMA HSPA technology, to replace its current CDMA EV-DO network. The network is planned to go online in November 2008 http://www.gsmworld.com/roaming/gsminfo/net_nzte.shtml running at 850 MHz instead of the usual 3G 2100 MHz. Telstra's Next G (in Australia) and AT&T Wireless also have networks running on 850Mhz, which can cover greater geographic distances and penetrate buildings more effectively than higher frequencies. Current CDMA phones are guaranteed by Telecom to work until at least June 2012. Customer numbers and market shareThe following shows customer numbers and market share information for Telecom Mobile, including both the now-shut-down 025 network and current 027 network customers (these refer to Telecom Mobile's numbers starting with 025 and 027). Since Vodafone New Zealand took over BellSouth in the late 1990s Telecom's market share has dropped every year. In 2005 Telecom launched New Zealand's first 3G network, using the brand name T3G. Being first into the 3G market, along with aggressive marketing and a $10 a month text message package, has allowed Telecom to claw back some market share from Vodafone. In November 2005 Telecom reported 72,000 new mobile phone customers, compared to 27,000 for Vodafone. Telecom also has the advantage over Vodafone in phone number availability. Telecom Mobile's 027 network has 10 million numbers available, while Vodafone has only 3.4 million available.
CriticismWhile there are now many competitors in the cellular, toll-call and internet markets, Telecom continues to be criticised for using its status as a former general monopoly to charge high prices whilst providing, in some people's opinion, poor service; On XTRA Broadband it used to cost over $1200 to download 100GB of data in a month, plus monthly access fees (at residential rates, business was more expensive). Prices have since dropped as competition in the broadband market becomes stronger (for example, residential and business can now have an unlimited data plan for $44.40). The unlimited plans have since been removed as Telecom found it was unable to deliver the speeds promised. Traffic management was meant to be applied over Peer-to-Peer and related traffic, but was instead implemented over all traffic. It has proved difficult for other companies to establish residential services due to Telecom?s control of local loop services. Telecom has also leveraged its control of residential services to establish the country?s largest ISP, Xtra Competitors have alleged that Telecom engages in unfair practices to prevent them from gaining ground, for example by reselling broadband capacity to Xtra at lower prices than to other ISPs. In July 2005, two dozen Internet service providers formally complained to New Zealand's Commerce Commission via a letter. http://computerworld.co.nz/news.nsf/UNID/232444CFFD9ADC6ECC25703F0009B334?OpenDocument&pub=Computerworld Notably absent from the list of signatories were Telecom?s ISP, Xtra, and several ISPs owned by its main competitor, TelstraClear. On February 1 2007 the Consumers' Institute gave its "supreme ass award" for bad products to Telecom for its Xtra broadband service, Consumers Institute executive director David Russell claimed that since Telecom "unleashed" its broadband speeds, the institute had been "inundated with complaints of slower speeds and frustrating cutouts".[8] Effects of monopolyThe New Zealand Treasury once estimated the economic loss from Telecom's (now former) monopoly to be in the region of $50–$250 million a year. Another study commissioned in 1998 by competitor Clear (now TelstraClear) estimated that the loss was $400 million a year. At a retail level Telecom now faces competition in all areas - cellular, internet, toll-calls and, subject to ongoing developments, in local calling. At a network level these retail services often resell Telecom wholesale products. Telecom?s responseIn an article published on 25 October 2005, Telecom claimed one reason for poor broadband uptake in New Zealand was because of the fact New Zealand residential subscribers enjoy free local calling. Telecom stated ?customers have the option of moving to faster broadband services, but free local calling creates a disincentive by allowing them to use dial-up for as long they want? (i.e. they do not have to pay a per-minute call charge while using dial-up, unlike many other countries where local calls are charged for). However, some internet experts and competitors disagreed and even the secretary of the OECD took a shot at Telecom. Calls for changeTelecom failed to reach their self imposed goal of around 83,333 wholesale broadband customers by the end of 2005. During her opening address to parliament, Prime Minister Helen Clark criticised the state of the internet in New Zealand [9]. This was followed by extensive criticism in the media such as in two high profile television programmes, in two episodes of Campbell Live (whose major sponsor is Telecom), during which CEO Theresa Gattung was challenged by host John Campbell, and an episode of the New Zealand edition of Sunday. Critical articles had been published by various magazines and newspapers, including the largest newspaper, the New Zealand Herald. Of significance, many of these were lengthy and high profile articles compared to many previous articles critical of Telecom ? among the most noticeable of these was published by the National Business Review, in which it was stated that ?Far from being ?Xtraordinary?, as its multimillion dollar advertising would have you believe, Telecom is strangling the nation?s advancement.". While in Wellington for an ICANN meeting, Vint Cerf was reported to have made a personal visit to David Cunliffe, the telecommunications minister where it is believed he recommended that Telecom be unbundled [10] [11]. The New Zealand Government investigated whether it needed to force Telecom to unbundle the network, thereby allowing other companies access and improving broadband service for consumers. Local loop unbundlingIn a decision by the New Zealand Government on May 3 2006, Telecom was forced to unbundle the local loop. This will allow competitors (such as TelstraClear, Orcon and Ihug) to offer broadband and other communications services throughout New Zealand by installing their own equipment in the exchanges. [12] [13] The announcement of this decision was rushed ahead of schedule, as the documents were leaked to Telecom who advised the government of the leak. It was widely reported that the government had intended to make the announcement during the 2006 Budget. Most of Telecom's competitors and many independent commentators such as InternetNZ and Paul Budde have applauded the decision. Legislation has been introduced to enable the regulatory changes. Three other political parties, New Zealand First [14], the Green Party [15] and United Future [16] all supported the decision which would give the government at least 66 votes if there were no votes against the party line. The main opposition National Party initially opposed the unbundling decision, but later voted in favour of it after a select committee hearing. This left the ACT Party alone in opposing the decision. Following the events of May 2006 the company was hit by a series of other decisions. Firstly, the Commerce Commission announced that it would rule on the contentious issue of mobile telephone termination charges. Then, in early-June, the Commission announced that calls between a landline and a mobile phone within a geographically defined boundary could be connected free of termination charges. The ruling allows Vodafone to establish a mobile phone product which can also provide free local calling, in direct competition with a product for which Telecom has long had a monopoly (The government, when it sold Telecom, enshrined free residential local calling as something it must continue with). Then, the Commerce Commission granted two of Telecom's competitors, CallPlus and ihug, access to an unrestricted, Unbundled Bitstream Service, which would allow them to provide competitive broadband services. Finally, the company announced the voluntary separation of its business into two separate entities - Wholesale and Retail [17] The Government introduced the Telecommunications Amendment Bill in November 2006 to force Telecom to open its network to competitors. The bill officially split Telecom into three business units from 31 March 2008, with network access separated from the wholesale and retail units. [2] ReferencesExternal links
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