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Adams out of her depth – Pacific Fibre's Sam Morgan

After diplomatic comments on Wednesday as Pacific Fibre folded, co-founder Sam Morgan seems to have lost patience with ICT Minister Amy Adams.

This afternoon, the Rich Lister tweeted:

"Ministers just keep talking how there is plenty of capacity and a single monopoly provider is not a problem. IT minister out of her depth."

More jabs followed as the Pacific Fibre chairman worked his way through an Adams press release on UFB progress, which the minister says is ahead of schedule.

"UFB hits 1200 customers. $1.25m per connection so far, but should trend down," the Fairfax director tweeted, following up with: "1.6% of households with access to UFB have signed up already."

The government has always maintained it would prioritise health, education, business and government for the UFB, seeing the sectors as having the highest return on investment. Many households would have to wait five or six years or later through the 10-year project. (Telecom, which holds a majority of the retail market, will not even offer service until next year.) But state-owned Orcon has succeeded in switching attention to the pace of the residential roll-out.

Morgan finished his Twitter flurry with, "I'm a big supporter of UFB - I just wish we'd succeeded at Pacific Fibre and given it the best possible chance of success. It's a bummer."

The Trade Me founder isn't the only Pacific Fibre backer to take a swing at the government.

Earlier, Rod Drury questioned two political moves: the decision not to have an international rate card for the $1.35 billion Ultrafast Broadband (UFB) roll out, which would have allowed Pacific Fibre to bid for local fibre companies' international capacity requirements.

And the decision to leave the 50% Southern Cross Cable share inside the otherwise retail-focused Telecom rather than the wholesale/network spin-off Chorus (NBR ONLINE would add the government should have required Telecom to sell its Southern Cross stake as a condition of participating in the domestic fibre rollout).

On Wednesday, Ms Adams told NBR, "While a second international cable is seen as beneficial for New Zealand into the future, the success of the UFB programme is not in any way reliant on a second cable."

 "Our assessments show the Southern cross cable has sufficient capacity in the medium term. In addition, UFB is likely to use significant amounts of locally cached content reducing its reliance on international bandwidth.

"Planned upgrades of the Southern cross cable will further enhance existing capacity."

Adams noted that the government had supported Pacific Fibre indirectly through government-owned tertiary broadband network operator Reannz, which had committed to a $91 million, multi-year contract with Pacific Fibre.

The dynamics of the market meant it was likely another cable contender would emerge, the minister said.

No private operator will follow - Drury
On Thursday, msDrury told NBR that no private contender would attempt to follow in Pacific Fibre's footsteps.

Retail internet service providers Vodafone, iiNet and CallPlus had signed on as anchor customers, but would be loath to do so again, Drury said.

Southern Cross Cable responds 
"Southern Cross has no intention of increasing price," the 50% Telecom-owned, Bermuda-incorporated company's marketing manager Ross Pfeffer told NBR today.

"Our prices in NZ are the same as our Australian prices which are established in a highly competitive market where three international cable systems compete out of Sydney.

"Southern Cross consistently reduced prices prior to the advent of Pacific Fibre and will continue reduce price to support UFB and NBN as capacity upgrades allow and Australian competition demands."

The company has cut prices at more than 21% annually on average since 2000, Mr Pfeffer said.

ISPs have been split in their reaction.

CallPlus CEO Mark Callander told NBR there would have been big price reductions had Pacific Fibre's cable had gone ahead.

Snap chief executive Mark Petrie had faith Pacific Fibre would continue to cut prices.

Orcon boss Scott Bartlett said it would be "political suicide" for Southern Cross to raise prices in the meantime, but was concerned about possible future price rises.

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Comments and questions
41

I think the young Mr Morgan needs to show a little more respect....

'Respect' and 'politician' should never be used in the same sentence.

Adams should start to do her own thinking.

Morgan should cut his whinging and put his money where his mouth is - rather than expecting the tax payer to fund his business, fund it himself. He once complained that he was not taxed capital gains on his fortune (after the fact) - maybe he should contribute the equivalent back into his "good cause"!

Good to see a few well deserved serves to the incompetents that drop into portfolios. Bit of a wake up call to a party used to the business world cringing sychophants playing suck up.

Told you these ".................... " were wanting to rape and pillage the public purse didn't I?
Thank goodness for a National Gov., as these "................." would've sucked in the lefty loonies hook line and sinker.

Thanks for saying it so well!

Paul Reynolds found dealing with National a lot easier than dealing with Cunliffe.....
Natz have the business acumen of small town shop-keepers. Running a country needs a very different skill set. And intellect. And values. And vision. Hapless Amy is no better or worse than her predecessor Joyce: neither has a consumer focus.

"Running a country needs a very different skill set. And intellect. And values. And vision."
care to edify/elucidate? If you a can, it would be appreciated.

Morgan should find decent PR advice - he's not going to win friends and is flogging a dead horse
If it would have provided decent returns, it would have been funded. Simple as that. Morgan and Co. were too greedy...
Will be interesting if the Chinese and Australians can pick this up - probably passing NZ completely...

Sounds a bit like his "I should pay more tax" comment i.e. he blames his inability to do things on the government when he has the means to just do it anyway.

Watch Southern Cross keep the price the same for the next two years - that will amount to a 50% price increase.

I wish i owned a monopoly.

#International expert
the government is selling the Hydro Dams...as good as owning a monopoly. As oil prices rise all you need is RAIN to make your fortune from the Hydro Dams!

wait...we already own them...cancel that sale

Not entirely true.

While your SRMC may be zero, your LRMC is substantial.
Hence why wind generation is alot more expensive than OCGT or CCGT generation over the long run.

"Out of her depth"

Why don't you look in the mirror, mate?

has anyone asked just how much Sam Morgan and co had publicly committed to investing in PF? beyond that of seed money?

Perhaps the media should ask such a direct question

I think Sam is right but you do have to wonder what he thinks he will acheive with his comments. The sign up rates to UFB is pitiful - they should be prioritising areas where this is demand. The fact Telecom doesn't even have retail plans available is shocking

It would be interesting to know what additional funds the founders had committed to the project. Also what % they were claiming for their seed money?

Rather than selling our assets this Government should be creating more. Another cable would have delivered real value to the citizens of New Zealand and its demise must be considered a setback to the growth of our economy. John and Bill are so busy stealing the silverware they havent time to stop and feed at the trough. Who are their masters whom they run to with the loot? Thank god for the Maori party they've stopped the heist. " and I was gonna get away with it too... if it wasn't for you meddling kids".

Having failed to prove his rhetoric had a plausible business plan, Sam appears to be slowly learning that lightning doesn't strike twice. Copying eBay worked, copying Southern Cross didn't

Exactly how I feel.

Trade Me is just a ripped off copy of the eBay model. Being a happy eBay user for many many years, Trade Me is no where close to being as open as eBay.

I mean, why you would need to be address verified if you wanna buy some second hand used stuff. With eBay, I can contact ANY seller and ask any questions that I want. You can practically buy anything in the world within 4 minutes of setting up a new account. Plus, it has PayPal's iron clad protection.

I'm still amazed Trade You sold for NZD700 million.

"With eBay, ...... You can practically buy anything in the world within 4 minutes of setting up a new account"
Yeah right...unless the seller is a yank, then they won't ship outside of the US 'cos they're too scared of the big outside world.

Ever heard of parcel redirection service using a US address?

Get in touch with the 21st century.

Data transfer speeds here are just shockingly slow. I have been told I won't get USB for 5 years. I may have to move offices to a place that will get it sooner.
You try sending large pics, video and audio files around, just so damn slow!
For large files it is actually quicker to pop files on a USB memory stick and post it.

Ummm Jamie, I think that's a local loop issue, not the Southern Cross Cable giving you grief. HEY! idea... - ask sam to get into local loop duplication (of course he'll need to toss in a few coins but then surely he'll market the concept and get some supportes on board and maybe even public money too )......oh he just tried that didn't he. Never mind.

You may be right, but sending video files to the US over the net is a non starter.
Creatives in NZ are on the back foot doing creative video work for clients abroad. We have the skills but not the infrastructure.

Why not try approaching any of the major broadband providers in NZ if you want to send lots of files to the US, Jamie. I believe all operators have lots more usage in the US to NZ direction than vice versa, so they may be able to offer you a great price for carrying stuff in the opposite direction in all that spare space.

Suggestion for Sam, Rod and Stephen.

Liquidate some of your luxury assets and put the money in yourselves.

There is still demand for Hawaiain apartments and Swiss chalets I am sure.

Amy the issue is not about capacity. It is about the price a monopoly-holder can and will charge for its use. Surely there are some intelligent people in government who can advise you about the realities of business.

So where was the IPO or bond issue?

Or was the project so unviable that a prospectus and/or set of financial statements including sales to date would have exposed this project as a failure from the get go?

These guys are venture capitalists - they specialise in startups and with Xero, have done very well launching an unprofitable business that's focused on growth. So why couldn't they do it again?

Sam Morgan deserves his success from TradeMe. But I doubt he and his consortium will be treated with any credibility from this current government now that he is blaming the minister for not giving them a handout.

Who'd want to do a prospectus in NZ after the latest round of case law. Are you nuts?

I think he was criticising a dumb comment about southern cross cable not government decision not to fund pacific fibre.

Maybe the cable did not go ahead because of the risk to capital of the venture. I dont think you just get a piece of cable and drop it in the sea. Maybe Mr Morgan should ask his father about the basic economics of high risk returning low profits. Certainly I would not care to see NZ Super Fund being involved in such ventures

Whilst Sam Morgan is a bit arrogant, i do agree with him that M's Adams is out of her depth , as so many of the ministers are with their portfolio's. The experience most MP's have for their various repsonsibilities falls far short of what would be required were they to seek jobs in the relevant private sector. But beggars can't be choosers as far as the public go, as such a poor group put their names forward to be politicians . Most ministers are full of bravado and huge egos and they are technically the puppets and mouthpieces of their bureaucratic department wallies.

So far I have never once heard the Pacific Fibre folks admit to even the slightest chance their plans had any holes in it. This despite they had plenty of time promoting it in all kinds of investment markets. Everyone but them seems risk averse, short sighted, and out of their depth.

What a brilliant opportunity NZ Maori have passed up, by not investing heavily in Pacific Fibre, and taking a lead in the development of a major utility project for the benefit of all Kiwis. Best part was they wouldn't have had to wait for any asset sales.

Huge admiration for Sam, Rod and Stephen for getting it off the ground, to all the armchair critics, did you try........ Thought not. Agree Amy Adams needs a wake up call, better still, a new portfolio, Aged care perhaps.

To the ones saying trade me is an Ebay copy, have you ever used Ebay?, its atrocious. If TradeMe exports/duplicated itself overseas, it will be a huge wakeup for Ebay, so slow, so difficult in comparison.

What a suckup.

Adams is a blithering idiot. Simple. Morgan has a proven track record of success and Adams is a no one who got promoted well and truly above her abilities.

UFB is a train wreck and the telco sector is in ruins. Congratulations NZ Governement

Bloggers need to realise, when slagging off MP's that these MP's are advised by a whole department of staff, who are supposed to be competent in their roles.
That the Minister may not expain detail in words of one sylllable, is a reflection upon the calibre of the...usually socialist.. staff; who are not dedicated to the role of the department. It is just a job for many of them.
a complete re staffing of government departments etc after each election would go a long way to improving the quality of the advice given.

I also forgot to add that Adams pays me to comment on here

Jeez - Please don't suggest that the Pacific Fiber team are anything than incapable. If the proposition was right, they would have been inundated with investors. If the PF team thought they were on to a winner, they should have funded it themselves. It's commercial sense, nothing to do with Government. However, if PF did work, it would only be the PF team who would have directly benefited from an IPO or sale.

I agree with #38's comments. Thankfully Government did not invest in this. The Pacific Fiber team have enough wealth to manage without state handout. Does everyone else if the investment fails. The Government has been looking after my future. Thanks Amy..

are all of you stupid ? Whats the point of having a motorway system all around our country but only cesnas flying in and out of the airport. The issue IS capacity! read some books !