Great news (and about time).

While I am a big fan of XT, I am not a fan of the way Telecom have acted in general over the last 10 years.  IMHO, they have squeezed every last bit out of their monopoly on landlines (the network part), and duopoly on mobile, for years.  They have danced around the whole split thing, and teased us promising reform that never happened.

Finally it’s been announced that Telecom will split. Well kinda, the have announced the shareholders will vote on it.  Anyway about time, well done (if not a bit forced), but Telecom will likely split (as pointed out by KiwiBlog).  And this is ALL about Telecom being able to participate in the Government’s ultrafast broadband (UFB) investment initiative. While I don’t think it was every the intention of the Government to have this effect on Telecom (their policy was all about speeding up the building of UFB infrastructure in NZ), Telecom finally realised that if they don’t take part, the new UFB backbone will actually be a direct competitor to Telecom’s monopoly on land-line infrastructure in NZ.  Yep, the UFB infrastructure could allow Telecom competitors to simply use Voice over IP (VOIP) technology (and other tech) to directly compete with Telecom.  If they don’t play in the new UFB game, they could be just another me-too offering, bye-bye Telecom as we know it.

Ironically when I did a Google search for news on this I found this article on the Telecom Split, which was all well and good except this story was from 2007!   Yep, it’s been that long since they have been talking about it.  Originally it was proposed that there were three divisions of Telecom – Network (Chorus), Wholesale (Telecom wholesale), and Retail (includes Gen-i and retailers like Leading Edge etc).  I have to say I never got the whole 3 Divisions thing.  In my view there is a Network (ie all the cables, infrastructure etc) and then there is the companies than bundles this and sells it (for want of a better word I will call this Retail).  Whether they sell it wholesale or retail is irrelevant in my view.  I actually don’t think wholesale exists – coz Vodafone et al should be buying from Chorus (ie Network) not any Telecom wholesale division.  But then again that’s just my view, and what would I know?

One thing I do know is that XT was (well still is) a RETAIL product, and managed by Telecom retail.  Now most people might not think this is a big deal, but I think this is messed up.  XT is an an infrastructure product.  It should sit with Chorus.  In fact as has been pointed out many times, Chorus will make a good infrastructure investment (just like any utility) with relativity steady, but low(ish) returns.   Chorus in turn would made prudent, well researched, but long term decisions.  The other retail company can do what it wants and be risky, edgy, whatever.  XT should have always been part of the former (ie Chorus), and maybe we would have never had the XT issues, since Chorus is all about sure and steady decisions – but I guess we will never know.

I also think it was a MAJOR mistake for Labour not to force Telecom to split earlier, and to allow Telecom try the farce of operational separation. The same mistake was made with not regulating termination fees on mobiles, but I think at least that might get fixed VERY soon if the new Ministers (Joyce) view is anything to go by. I am not a fan of regulation in most instances, but where there is a natural monopoly (and remember Telecom was created by Government originally), sometimes action needs to be taken.  In fact NZ monopoly law is one of those that doesn’t act once a Monopoly is formed (in the US monopoly laws forced the major Telco to split in the 90s).  The law in NZ is more about if you are a dominant player, you cant do certain things. Anyway, that’s an issue for another day.

In case you are wondering, I chose the image of Brad and Ange  coz as you know (or maybe yo haven’t been to the hairdresser recently and red the latest Woman’s Day) Brad and Ange are breaking up. No wait, they are not.  Hold on, they are breaking up again.  Some parallels?  Anyway .. time will tell with Telecom (like Brad and Ange), but I do really hope it happens.  Not just so that they can take part in the Government in its $1.35 billion ultrafast broadband (UFB) investment initiative, but so that there will be real competition at the retail end of things for landlines, and if the Minister so decides to regulate, in mobiles too!

Black and White Version: Yet another announcement that Telecom (might) split.  Hope this one is right.

PS: No Brad and Ange haven’t split, it was just an analogy.  I dont wanna get sued like this guy.

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