Simon Moutter interview part 1: Telecom operating at speed of life

We live in a world of realtime connection and blurred boundaries between the workplace and home. Telecom needs to operate in the same world says Simon Moutter.

Telecom’s chief executive has been in the role for a year. He was previously the company’s chief operating officer, leaving in 2008 to head Auckland International Airport.

The four years he was away saw a profound transformation within Telecom, not just because it devolved its network services to the new and separate Chorus.

Network, connectivity

“It is all now about the network and connectivity,” says Moutter. “We’re now business-centric to all data networks, whether that’s cellular, fibre, bitstream or anything else. Our job’s to provide ubiquitous access to an all data world.”

The internet-of-things is the major change Moutter’s noticed.

When he left in 2008 the world of connectivity was based on minutes; time talking on a telephone.

Now connectivity is around gigabytes, he says.

Quickening pace

The pace of telecommunications change is only going to get quicker. While there are currently seven billion connected cellular devices, “we suspect that in five years there will be 50 billion connected devices,” says Moutter.

This will be in everything from fridges, to health to education.

“We haven’t scratched the surface,” he says.

From Telecom’s point of view, “this means we will have to keep pace with the changes, lead where we can, respond where we miscue,” he says. “It is hard to make every decision you make the right one.”

Being in a position to refocus if a business decision is found to be wrong is almost as important as making a correct decision says Moutter.

Telecom’s obligation

Telecom also feels a deep sense of obligation to New Zealand as one of its largest corporations; which compared to other telecoms providers is only operating in this single market.

“Our business will ultimately do well if New Zealanders are doing well,” he says. “If we’re delivering services that New Zealand businesses need, and they’re successful, we’ll be successful too. That is part of the shared journey that we’re on.”

Moutter says technological change is stress the old business models of every business, and some aspects of the information revolution stresses people and companies.

Within this environment, a strong Telecom will have the money to reinvest in capability, and the whole country will be better off he says.

Part of Telecom’s journey has been to adjust, “and learn to operate at the speed of life,” he says.

In part 2 of Alastair Thompson’s interview, Simon Moutter talks about Telecom’s attitude to the government’s GCSB legislation. .  

High-end UFB fibre plans – April 2013

New Zealand’s government is spending $1.5 billion rolling out a high-speed fibre to cities and towns. The UFB network promises blisteringly fast speeds and competitive prices.

I’ve found ten companies selling UFB services to home users. More are coming online all the time. Here I list each company’s most expensive residential plan. This shows what more demanding home users can expect from their service provider.

table notes:

a) Lightwire has soft caps, if you habitually run over you’ll be asked to move to a higher plan
b) Snap sells addition blocks of 100GB for $15.

Three providers don’t offer the top UFB speed of 100 Mpbs down and 50 Mbps up. That’s interesting. Presumably these companies are not chasing every type of customer. If you don’t need the full speed – say you need UFB mainly for small business purposes – you may get a better quality of service from these providers.

The survey shows a range of prices, from the $134 for Orcon’s all-you-can-eat service to the expensive-looking $200 for 200GB deal at Xnet.

Bundled add-ons account for some of the price variation. Service providers offer voice over IP add-ons at different prices, while Telecom expects its customers to keep their copper phone lines. Typically you get a better deal if one provider supplies all your telecommunications needs.

You’ll also find not all service providers cover all areas of the country. Some are regional specialists.

At the moment Telecom – and some other fibre service providers – are not metering traffic, so the data caps and the cost of running over the caps don’t apply. This will change with time.

While Orcon’s unlimited plan looks the most attractive, there are fair use limits and the company pools available data. Read that as “if you’re a huge user you may run up against the limits of unlimited”.

Don’t expect NZ digital spectrum windfall

AucklandBritain’s 4G spectrum auction raised a third less than expected. UK telecommunications companies paid £2.3 billion to snap up the extra bandwidth needed to run next generation mobile data networks, that’s £1.2 billion less than the amount penciled-in by the government.

What does this mean for New Zealand’s spectrum sale which will probably take place later this year?

Previously there’s been speculation an open auction of the 700MHz band could raise $200 million. That figure  may look ambitious now.  

Vodafone and Telecom NZ are both experimenting with 4G services and are likely to bid for the new spectrum. 2Degrees could also take part and smaller players have bid for spectrum in earlier auctions.

The 700Mhz band is a sweet spot for mobile broadband – at those frequencies mobile signals do a better job of reaching through buildings in densely populated areas like central business districts.

As a rule of thumb, the lower the frequency, the higher the value of spectrum to carriers.

There’s also a Māori claim for spectrum which many expect could be used by iwi as a bargaining counter to wrest back some control of 2degrees – although that is not the only course of action open to Māori.

You could argue New Zealand’s carriers paid too much for 3G spectrum in 2001, it’ll be interesting to see how they act this time. While no-one wants to be locked out of 4G, the carriers will be just as wary of  overbidding.

 

 

Telecom, Vodafone promise Auckland-Sydney cable

Tasman Global Access

How the Tasman Global Access fits into the bigger picture

Telecom NZ, Vodafone and Telstra plan to build a new submarine cable linking New Zealand to the east coast of Australia. When completed in mid to late 2014, it will be the second major broadband link between New Zealand and the rest of the world.

The companies say the project will cost less than US$60 million and will include three fibre pairs for a total capacity of 30TBps – that’s around 300 times the current data demand.

Telecom NZ is 50% owner of the rival Southern Cross Cable network, so there are question marks over whether the new cable will do much to increase competition. Nevertheless, bringing Vodafone and Telstra into the ownership ensures Telecom NZ doesn’t have monopoly control over New Zealand’s international data links.

Comment: It was clear from the moment Pacific Fibre closed down last August that someone would move to fill the submarine cable void. This joint venture from Telecom NZ, Vodafone and Telstra effectively sees off any other projects which may or may not have been planned. Building a new submarine cable is a smart move on their part: taking control of their own future and not waiting for someone else to control it.

Although some argue New Zealand needs a direct trans-Pacific link to the west coast of the USA, that falls into the category of a nice-to-have luxury and not essential. Investors weren’t convinced of Pacific Fibre’s $400 million business case.

Building a link to Australia was always the most cost-effective option. About 40% of NZ traffic goes across the Tasman and the relative rise of Asian economies compared to the USA means the route to our west will eventually be more important than the route to the east.

The lower latency promised by Pacific Fibre’s direct link between NZ and the USA is far less important than having a second network. And anyway, much of the data used by New Zealanders is cached in Sydney so arguably a second Tasman will mean as much of a speed boost for most users.

It’ll be interesting to see how the joint venture partners go about selling access on the new cable and how they’ll treat New Zealand’s smaller ISPs and data users. There’s unlikely to be any regulatory oversight – which makes some commentators uneasy. The joint venture structure, together with the structure of Southern Cross Cable Network should deliver some competition.

One last thought – and a question for informed readers – is where does this leave Chorus? You might expect the largest network company to want a role in one or more of the international networks. And with Telecom effectively sitting upstream and downstream, does this leave the company in a difficult strategic position?

Does Telecom NZ even need Yahoo?

Telecom NZ’s Chris Quin says the company could walk away from its outsourcing deal which sees Yahoo look after mail accounts on the xtra.co.nz domain.

That’s a possible response to the security breach at Yahoo. The Internet company seems unable or unwilling to deal with the problem.

It is hard to see what value Yahoo gives Telecom NZ in 2013.

When Telecom NZ outsourced its mail service to Yahoo in 2007. It needed a way to manage the 800,000 or so Xtra mail accounts.

In those days ISP customers expected to get email accounts as part of their Internet services. Today’s ISPs sell data pipes with a little support and little else.

Many Xtra customers already have webmail accounts with services like Gmail and Outlook.com.

A YahooXtra account is almost unnecessary.

I say almost unnecessary because there are two reasons Telecom can’t immediately dump them altogether.

First, history – what technology people might call ‘legacy issues’. Some of my email still comes via Xtra even though it is routed through Gmail. Figuring out which contacts have my old address and getting them to update my details isn’t straightforward.

Second, webmail address are second class citizens online. Some services don’t allow customers to sign up with Gmail, Hotmail or Outlook.com addresses. Not every Telecom NZ customer wants to buy their own domain for a mail address, so keeping the Xtra domain as an option would be a good move.

Telecom NZ can walk customers through the process of setting up webmail accounts on alternative services – not a difficult job. And I’m sure Google and Microsoft would be only too happy to help sign up new business.