It’s not often I hear a statement as absolutely and fundamentally true as the one made by Woosh’s chief financial officer, Gary Neil, last week.
“Everything in the industry is for sale. It’s all up for grabs.” And he’s absolutely right.
Telecom, TelstraClear, Vodafone, Ihug, Orcon, Slingshot, CallPlus, Maxnet and Iconz. Even the familiar behind-the-scenes names — Juniper, Cisco, Alcatel, Lucent and Ericsson — are up in the air at the moment.
Rarely has the telecommunications environment been so completely exposed for all to see. The three arms of the industry — technology, business and regulation — usually pull in opposite directions but, for now, here in New Zealand, they all seem to have flung their arms up in the air, as if in exasperation.
A year from now we could be looking at a completely different market, where the people who run the companies, the companies themselves, and even the partnerships we’ve seen built up over the years, could all be completely different.
Ihug is literally up for sale, but so are all the other companies in different ways. Vodafone faces regulatory intervention, Telecom faces being broken up and the various ISPs are looking at consolidation like never before. Dial-up customers are moving rapidly over to broadband and the ISPs selling the service are moving from making profit to reporting losses as a result.
Woosh, which went out on a limb when it moved to a wireless business model, and has paid the price for this in terms of both media and public perception (not to mention the stock market’s view), is now buying an ISP. This is, presumably, so it can have the best of both worlds. It’s also talking about moving from “portability” to true mobility, so expect to see new voice products (we used to call them cellphones, but I don’t know if that’s appropriate any more) appearing in the months ahead.
Vodafone is dallying with the whole “fixed-mobile convergence” trend, but doesn’t have a fixed partner to speak of. Vodafone says it isn’t interested in buying Ihug, but that seems short-sighted to me — Ihug has something that Vodafone wants and the two would be a good fit given their branding and the market’s perception of them.
TelstraClear is finally spending some money in NZ, with its $50 million network build in Tauranga. I’m also sure that one day real soon we’ll see something on offer from Econet. Any day now.
Telecom is currently trying to cosy up to the government with its talk of wholesale openness and genuine willingness to work with the industry. We’ll see how that pans out — so far, it’s scored one point for offering unconstrained bitstream in both directions by October, but lost a point for saying it won’t be offering naked DSL at the same time. It’s scored a point for discussing its wholesale plan with the media, but lost a point for appointing Matt Crockett as head of wholesale. Crockett is the chap who used to stand up and tell us all there’s nothing wrong with the state of broadband in New Zealand.
Telecom loses lots of points for not realising that perception is the name of the game when it comes to Xtra. Calling Xtra a brand and not a separate business isn’t helping here, regardless of what goes on internally, and provisioning Xtra in a different way to the competition is not on.
Orcon recently sent out a gushing press release saying it would love to buy Ihug, then sent another out an hour later saying it wasn’t actually in discussions with Ihug at this time.
Buying Ihug would be a bad move for Orcon. Sure, it would has plenty of customers, but that money would be better spent buying some unbundled access to Telecom’s network. Buy some DSLAMs and open up the lines instead.
The regulatory environment is also all at sea. The Telecommunications Bill is before Parliament, but the review of the mobile sector is still in the pipeline. The current Telecommunications Commissioner has announced his retirement but no replacement has yet been appointed. The Ministry of Economic Development is making noises about recalling all its 2.3GHz spectrum licences, so as to re-issue them to better suit the WiMax model for wireless operators. But the country’s leading wireless operator, Woosh, is crying foul, saying it needs certainty or it won’t roll out anything at all.
All told, it’s a busy time for the telecommunications market — and the poor journalists who cover it. But there is good news on the horizon. Great news, in fact. It’s a fantastic time to be a customer, whether you’re a large corporate or a small worker-from-home with plenty of enthusiasm and a great idea but no cash, you can call up your telco account manager and say “what am I worth today?”
Nothing is set in stone, everything’s up for grabs. We truly do live in interesting times.