TelCon10: TelstraClear boss slams crown fibre
Speaking at the 10th annual Telecommunications and ICT conference (TelCon10) in Auckland, TelstraClear chief executive Allan Freeth said his company would consider bidding for business in one or of the government’s proposed 25 local fibre companies - should the regional model go ahead.
But Dr Freeth devoted most of his speech to a series of broadsides against Crown fibre.
To illustrate what he says is crown fibre’s potential to replicate infrastructure, waste taxpayer money and dampen private investment, Dr Freeth pointed to the Christchurch City Council-owned Enable Networks.
Recently, Enabled said it would spend another $36 million on fibre, and would chase up to $500 million from the government’s $1.5 billion Crown fibre fund.
Dr Freeth said Enable was using ratepayer money to chase taxpayer funds to overbuild TelstraClear’s existing fibre – wasting money, and in the process removing his company’s incentive to upgrade its network.
The same kind of folly could be repeated nationwide under the crown fibre initiatives, said Dr Freeth.
"We strongly object to taxpayer money being used in competition against us."
The TelstraClear boss also harked back to the controversial Castalia report.
Dr Freeth stressed that he thought there would be demand for fibre-born services in the meantime, but that, for now, he shared Castalia’s conclusion that demand wasn’t there:
“There’s no question that demand for fibre will grow but at the moment demand is not there and people won’t pay for it.”
In the meantime, "rather than worrying about fibre to the home across the country, lets look at wireless, let’s look at what copper can do, let’s look at fibre to the node," said Dr Freeth.
Earlier in the morning, communications and IT minister Steven Joyce said he'd seen nothing in the past six months to dissuade him of the view that fibre was the key technology for delivering faster broadband.
Something’s got to give
Dr Freeth quoted an IDC figure that the whole New Zealand telecommunications market is worth $5.3 billion, and said with the recession it would stay flat for three or four years.
Into this static market, TelstraClear, Telecom, Two Degrees and Vodafone are investing around $3 billion.
“We’re investing $3 billion, in a market that’s not growing. You do the maths. Something’s got to give. Exactly what it will be and who it will be is the question, said Dr Freeth.
“We will work hard to grab market share and get a return on our investments and we’ll be ruthless about that on behalf of our shareholder [Telstra].
“That will not be the aim of [the local fibre companies] whose return expectation ranges from ‘don’t be silly’ to six times the hurdle rate set by my shareholder, Telstra.”
Dr Freeth also said that many newcomers considering becoming one of the 25 local fibre companies did not realise that “building a network is the easy part. Running it is hard.”
The TelstraClear boss pointed to his company’s partnership with NorthPower as both an example of investment already underway, selling fibre plans to Whangerei businesses, and as an illustration of the hard road ahead.
“We thought it would be easy putting voice over IP and that you can simply connect networks in the middle and expect them to run seamlessly. We did overcome it and continue to sign customers but it’s not without pain.”
Claiming to be quoting Telecom boss Paul Reynolds, Dr Freeth said "Snow looks nice as it falls to the ground, but it soon turns to mush".
The Regional Fibre Group, an alliance of regional power companies, lines companies and fibre players that strongly backs the govenment's mooted regional model, has retained Ericsson and Cisco has technical advisors to prevent technological fragmentation and ease deployements.
"Where were you guys?"
Dr Freeth also took a moment to return to s92, asking the telecommunications industry audience “Where were you guys?”
TelstraClear caused a stir by walking out on the Telecommunications Carriers Forum’s effort to create a Code of Practice for ISPs, effectively derailing attempts to patch up the controversial copyright clause.
Other companies’ silence was politically astute, but “poor form”, said Dr Freeth.
S92 - currently on hold and being reviewed by the MED – would have "introduced an ineffective, unfair and frankly stupid process" said Dr Freeth which, beneath its various arguments, was simply about tranferring the cost of enforcement to carriers.
After his speech, Dr Freeth told NBR his disillusionment with his peers over S92 had nothing to do with TelstraClear’s decision not to join the new Telecommunications Industry Group.
“We just like to be independent,” said Dr Freeth.
TelstraClear 3G some time, some how
The chief executive said TelstraClear - which resells Telecom’s mobile service but is barred from its new XT network - would offer a 3G mobile in the future, but refused to take questions on when or how.