COMMENT:
Spark customer director Jolie Hodson will have to jump into several major initiatives, some of which are mid-stream, when she takes leadership of the company from Simon Moutter on July 1. Here are five of the toughest:
Changing of the guard: The top five challenges for new Spark boss Jolie Hodson
Spark customer director Jolie Hodson, who will take over from Simon Moutter as chief executive on July 1. Photo / File
Opinion by Chris Keall
Chris Keall is the technology editor and a senior business writer for the NZ Herald.
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Hodson - who says she's committed to making the new service a success - will have to work through the technical glitches but, more, articulate a clear plan for how Spark will educate hundreds of thousands of All Blacks plans who will want to watch the RWC on a regular telly but don't know Airplay from their elbow.
Then there's the trickier problem of how to cater for around 40,000 homes in rural New Zealand who won't have good enough broadband to stream the World Cup (according to a Crown Infrastructure Partners briefing to MPs last month) and more than 600,000 in urban areas who won't have UFB fibre by kick-off.
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• Spark chief executive Simon Moutter resigned, replaced in same evening
Plus, there's the need to safeguard customers against the network overloading that bedevils copper networks (Chorus recently said it can connect around 90,000 to UFB fibre before September; there are around 700,000 premises that have fibre rolled passed their curb that have yet to be hooked up).
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Spark has yet to say how many games will also been shown live on free-to-air partner TVNZ, but it has also made it clear that Spark Sport will be the only way to watch every match as-it-happens.
It's a high-stakes gamble. If it all come together, then the Rugby World Cup will be a springboard for Spark to grab other A-list sports. If it fails - as the FIFA World Cup did last year for Optus across the Tasman - it will be a commercial and PR disaster, and attract a lot of political heat.
And after the dust settles, there'll the question of whether Hodson will have the same ambition as Moutter to bid for more top-flight sports, even if the RWC all goes to plan.
There's already a new complication: new Sky TV boss Martin Stewart, who says he doesn't want to lose any more sport. Cue expensive bidding wars if Spark does want to stay in the fray. Keep an eye on the barney over the Boxing Day test.
2. 5G upgrade timing
Moutter has been notably impatient for Spark upgrade his company's mobile network from 4G (fourth-generation) to 5G, saying he wants its first 5G service launched by July 1 next year.
His opposition is in less of a hurry. Vodafone NZ boss Jason Paris has said the industry has to be wary of investing ahead of demand, while 2degrees chief executive Stewart Sherriff has warned against "drinking the 5G Kool Aid." And just days ago, Credit Suisse warned 5G was "overhyped," saying telcos were too much of a rush to upgrade where there was no "killer app," as video was for 4G.
With Spark's preferred mobile technology partner Huawei still sidelined by the GCSB, and Treaty claim complications delaying the required spectrum auction, Hodson might want to reconsider if it's worth rushing headlong to meet that self-imposed July 1, 2020 deadline.
Hodson will do will to steer Spark away from touting the need for 5G for the America's Cup and self-driving cars, and find themes more relatable to investors (such as 5G's potential to expand Spark's fixed-wireless business, which uses its mobile network to beam broadband into homes - replacing a landline and cutting Chorus out of the loop) and customers (such as 5G's potential for supporting true unlimited data plans).
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Moutter was passionate about Huawei. Some in government might be hoping Hodson will be open to more politically palatable alternatives.
3. The submarine cable war
For years, Spark's profits have been propped up by fat dividends from its 50 per cent stake in the Southern Cross Cable that connects Australia, NZ and the US.
Analysts had expected a lower contribution from Southern Cross at Spark's recent interim earnings announcement, given the trans-Pacific cable has recently lost its monopoly with the launch of the Hawaiki Cable, backed by Rich Listers Malcolm Dick and Sir Eion Edgar, plus the new Tasman Global Access cable (a joint venture between Telstra, Vodafone and Spark).
But in the event, the dividend dropped to zero as the options are weighed for funding a new "Southern Cross Next" cable.
Spark had forecast a $10m-$20m Southern Cross dividend for 2019 against $50m, $61m and $66m in the three prior years.
Hodson will have to navigate a way forward in the suddenly-crowded international cable market. The bright side is that demand for data is growing exponentially, and much of it is hosted offshore.
4. Finishing Spark's 'agile' restructure
Spark is nine months into a restructure that involves most of its staff being organised into small, cross-functional teams - or "tribes" the jargon of trendy new "agile" management thinking.
The hard decisions have already been made here around a parallel initiative to reduce headcount, but Hodson will have to prove the new company structure and culture can work.
5. Navigating the post-2020 landscape
New legislation kicks in on January 1 next year that re-writes the rules of the telecommunications industry.
Among other things, it forces wholesaler Chorus to unbundle its fibre network, or allow retail ISPs like Spark to attach their own electronics - giving them more control over what services they can offer and at what price.
Vodafone and Vocus (the owner of Orcon and Slingshot) have gone to war with Chorus over its initial pricing proposal for unbundled fibre, which they've called "cynical" and "ridiculous" but Spark has yet to take an active position in favour of unbundling.
Analysts say Hodson is well regarded and has been groomed for the role. Moutter is a hard act to follow though.
