Archive for the ‘Telco News’ Category

Telco Separation Models Costly

Friday, August 21st, 2009

As Telstra is clearly in the sights of the Australian Federal Government ot force separation of its retail and wholesale operations, the company is predicting high costs should such a move become a reality. In its recent 2009 earnings presentation, the telco’s CFO, John Stanhope claimed the value of the company could fall by more than $1.2 billion if the Government followed through on its threat of functional separation.

On the other side of the equation, dozens of submissisions received by The Communications Minister, Stephen Conroy, in support of the separation claim the increased competition is essential before building of the national broadband network.

The next question is what type of separation model is likely to satisfy the Government. Most of Telstra’s competitors are in support of the more stringent structural separation, whilst the Government [at this point] has indicated it favours the less rigourous functional separation. Still a significant change and financial burden. 

Claims by Mr Stanhope indicate that operational separation will likely cost $120 million and take six months, whilst functional separation [as adopted by British Telecom] could cost more than $1.2 billion – and take five years. That represents 10c per share based on current shareholding.

Following shortly thereafter, the the wake of their recent forced separation based on the British Telecom model, Telecom NZ Ltd reported a 43.9 per decline in Net Profit for the year to June 30th 2009, driven largely by Telecom Retail and AAPT. Another indication of the high cost of divorce?

NZ Telco Gap Widening According to Telco Analyst

Saturday, November 15th, 2008

Telco analyst Paul Budde has predicted the financial crisis will result in a drop in Telco consumer demand, putting additional pressure on telco service prices next year. According to Buddle New Zealand’s telco sector will fare better than that of Australia due to the existance of the framework for rolling out its national telco infrastructure aimed at leveling the playing field for seccond tier telcos.

Budde predicts a growth rate of between to 2% to 3% for the telco services market in 2009, depending on the severity of the local economic downturn.

With Vodafone gaining a solid foothold in the fixed line market, Telecom is under increasing pressure in both fixed line calling and broadband and predicted to overtake TelstraClear as Telecoms main rival.

Vodafone has historically held an edge over Telecom in mobile services and Budde predicts the gap will continue to widen. However, Telecoms more competitive 850MHz 3G HSPA network, due for rollout by mid 2009, will help to slow the gain. As more small competitors secure more attractive wholesale agreements, further pressure on prices will be inevitable.

However, outside of the pricing issue one can reasonably expect a further consolidation in the market, especially among smaller fixed-line telcos and ISPs.

TelstraClear has failed to gain any significant gain in market and with investment dollars now under scrutiny, we can expect Telstra to be tight with funds for the New Zealand subsidiary.

Telecom NZ Ends Cellnet Mobile Distribution Contract

Thursday, April 24th, 2008

The reportedly $A150 ($NZ180 million) a year exclusive distribution contract between Cellnet, a listed Australian mobile phone company and Telecom NZ will end September 30 2008.

Cellnet Group distributes mobile phones and accessories for Telecom, but the agreement will terminate in advance of Telecom NZ’s new WCDMA/GSM network rollout, due in November.

The Cellnet and Telecom NZ distribution contract was signed in 2002, with Telecom NZ becoming the distributor’s single largest customer. The impact on Cellnet,s revenues [$A528.2 million last year] is significant.

Telecom NZ’s Long Term Strategy On Solid Ground

Thursday, April 10th, 2008

Telecom is declaring it is in control with a 2 year loss containment plan underpinning a long term growth strategy, and fronted by its IP platform strategy. Telecoms CEO, Dr Paul Reynolds announced the long term plans for Telecom at its annual management briefing in Sydney.

Key points:

  • Core earnings will moderate during the next two years, followed by a return to growth.
  • “Investing for long term health and to drive bottom line growth.
  • Containment of near-term decline in EBITA to 4-6 percent - FY June 2009 and 0-2 percent FY June 2010.
  • Growth of 4-6 percent a year FY 2011 to FY2013.
  • FY2008 Forecast Net Profit $700 million to $730 million.
  • NZ EBITA – declining 7-8 percent
  • Australian EBITA – $A70m ($NZ82.4m) to $A80m
  • Group ebitda guidance – $1.88 billion to $1.9 billion.
  • Capital expenditure – $975m.
  • Capex FY2009 $1 billion to $1.1 billion
  • New management team – including new CFO Russ Houlden to drive a customer-focused culture
  • An all-internet protocol (IP) platform for efficiency and innovation
  • Moving to a lower cost operating model – more competitive

The Communications and Technology Minister David Cunliffe last week approved the plan to broke Telecom up into three separate divisions:  Network access [Chorus], Wholesale and Retail operations

Telecom NZ Separation Plan Approved For Implementation

Monday, March 31st, 2008

Telecom NZ’s revised separation plan has finally be accepted by Telecommunications and ICT minister David Cunliffe, clearing the way for full implementation of operational separation. In spite of some outstanding issues, including reporting lines for Telecom’s retail unit head, the last version by Telecom met with approval. Performance indicators and milestones included:

  • Group-based incentives for wholesale division managers must not exceed 30% of total income
  • Milestones for next generation network (NGN) rollout
  • Telecommunications Service Obligations
  • Broadband pathway
  • Digital Strategy

Most notable are:

30 June 2010 – more than 1,500 distribution cabinets will be installed or equipped with ADSL2+ or equivalent DSL capability (for example, VDSL capability) in Telecom’s Zones 1,2 and 3 with DSLAMs installed and operational

31 December 2010 – more than 2,200 distribution cabinets will be installed or equipped with ADSL2+ or equivalent in Telecom’s Zones 1,2, and 3 with DSLAMs installed and operational

31 December 2011 – 99% of lines in Telecom’s Zones 1, 2 & 3 (which equates to 80% of existing PSTN lines) will be engineered to have a maximum line loss of 60db measured at 1024kbit/s at the external termination point

2012 - No less than 84% of lines will receive at least 10Mbit/s broadband

The implementation will be monitored under the watchful eye of the Commerce Commission.

Telecom NZ Admits The Bubble has Burst!

Monday, March 31st, 2008

Many telecom Xtramail users can attest to the frustration of being trapped by Telecoms disastrous YahooXtra “Bubble” outsourcing exercise.
The Bubble, floated last August as a joint venture between Yahoo Australia and Telecom, failed to deliver the ’suite of premium services’ offerred, and instead has left both consumer and SME customers looking for answers.

Yahoo!Xtra Bubble aimed to be a “compelling differentiator”, and it certainly achieved that, but unfortunately for Telecom, it was not quite in the direction it hoped for the 600,000 Telecom internet subscribers moved from the Xtra email platform to a Yahoo hosted service.

It is always grafitfying when a large company such as Telecom is big enough to admit its mistake at aiming the new service at small business users. And even better when it comes up with a solution. That solution can be expected some time in the next two months.

With broadband and ISP services key to future growth, I rather suspect Telecom will think twice before outsourcing such a strategic service in the future. Sadly, such experiences do not bode well for the technology industry as a whole, as SaaS services are once again attempting to gain a foothold on the market. In this case, Telecom was the customer, and the vendor Yahoo let them down badly – Xtra has had no control over its email service. I can only hope that for both Telecom and its customers, the next provider has a more robust offering.

Australias NGN Takes Another Step Forward

Wednesday, March 12th, 2008

Australian Communications minister, Stephen Conroy, has named six experts to assist in drawing up an RFP for its $4.7b next generation network and to assist in evaluating RFPs.

  • Chair – Patricia Scott – Secretary of the Department Of Broadband, Communications and the Digital Economy (BCDE)
  • John Wylie – Lazard Carnegie Wylie CEO
  • Tony Mitchell – Allphones chairman
  • Laureate Professor Rod Tucker – University of Melbourne
  • Reg Coutts – Professor emeritus of communications, University of Adelaide
  • Tony Shaw – former Australian Communications Authority chairman
  • Dr Ken Henry – Treasury secretary.

Indications of a very aggressive timetable include:

  1. Panel will receive submissions from industry and the public to assist in the development of the RFP documentation by 30 March 2008.
  2. Production of the RFP
  3. Receipt of responses
  4. Eight weeks to prepare a report making recommendations on its preferred proposals
  5. Construction of the network to be started before the end of 2008

The Panel will be supported by BCDE and other key departments and specialist advisors on regulation and technical, legal and financial and commercial issues.

One key promise by the initiative is that “The government will … ensure that people who may not have access to the new fibre network will have access to the best new fixed line, wireless or satellite technology.” With an additional $95 million in funding for the Australian Broadband Guarantee program in 2008-09, to improve access to affordable broadband in these remote areas into the future.”

Telecom ADSL2+ DSLAMs Now Reach 300,000 End Users

Saturday, March 8th, 2008

Telecom Wholesale has now installed ADSL2+ DSLAMs ([ISLAMs] into 102 exchanges, connecting over 300,000 end-users to Internet speeds of up to 20Mbps. Users living within 1.5km to 2.0km from these exchange can now obtain peak speeds  regardless of the ISP they subscribe to.

Other factors impacting the speed to the end-user’s modem include:

  • ISP allocated international capacity and backhaul
  • Time of of day 
  • House-wiring
  • Modem compatability

For those living beyond 2kms from an exchange, Telecom’s  cabinetisation programme will position the ISLAM nearer to these users, acting like interim exchanges. In the meantime, depending on distance from the exchange, users may experience slight improvements.

A broadband customer who received speeds of 20Mbps is better positioned to utlise:

  • VoIP 
  • Movies, video on demand and IPTV – some way off yet.
  • Much faster download speeds – especially for application upgrades and service packs, which can be around 80MB
  • Improved video streaming from sites such as YouTube

2007 Market Facts:

  • Uptake of broadband in New Zealand is currently at approximately 38%. 
  • Online retail is at only 0.5% of total retail spend [7% in the UK and US].   

Ericsson To Upgrade Vodafone Australias 3G Network

Friday, March 7th, 2008

Ericsson has won the contract for Vodafone Australias 3G network upgrade, covering regional and rural Australia. And future upgrades to 28.8Mbps are on the roadmap.

The hardware and software upgrade will boost Vodafones 900MHz and 2100MHz networks to deliver a 14.4Mbps [maximum theoretical downlink]. The limits of handsets and mobile cards restricts the theoretical speed, however the increased network capacity will allow more efficient traffic management.

Urban 3G users can expect their theoretical maximum download speed to rise from 3.6Mbps to 7.2Mbps.

Work is expected to commence within weeks, with teams upgrading the network in all states simultaneously. The upgrade will allow new services that demand a higher speed network. Vodafone is currently conducting European HSPA+ trials for the 28.8Mbps throughput. Whilst Vodafone is striving for 7.2Mbps, rival operator Telstra has firm plans to increase its NGN speeds to 21Mbps this year and 42Mbps in 2009.

Australian Government Demands Telstra and Optus Provide Network Data to FTTN Rivals

Wednesday, March 5th, 2008

The Australian government has demanded that major network provider, Telstra and other carriers provide physical details of their networks, to allow competitors to prepare submissions for the government’s proposed fibre-to-the-node network. This includes the length and location of cables.

Although under threat, Telstra has agreed to the demand, but claims the detail required could potentially be a threat to national security and law enforcement.

Compare this with the FTTN tender process currently underway in Singapore; SingTel is not being asked to divulge commercially sensitive information or law enforcement-related information to either the government or to competitors.

The Government maintains that sensitive data will not be distributed in an uncontrolled manner, and will be treated with utmost confidentiality. Small comfort in a world of commonly government leaked documents.

Optus also received a similar request. Optus is leading a rival G9 consortium also intending to tender for the FTTN network.