Richard Inder: Hold out your hand, Telecom

When Roderick Deane took the reins of Telecom in the spring of 1992, the chairman at the time, Peter Shirtcliffe, set out a bold vision for his new managing director.

Deane's main job would be to create for the public a "love affair" with the telecommunications company, he told the Herald.

If this were Deane's main objective, his tenure should be judged a failure. But as Shirtcliffe and Deane knew, his first goal was to streamline the business, delivering in the first instance for shareholders.

It should not be forgotten that for the early part of his tenure, at least, Deane achieved this goal in spades. Shareholders delighted in his dramatic reorganisation of the company - even to the extent of applauding him at annual meetings.

No, the significance of the comment is that Shirtcliffe made a promise that now rings as hollow as incumbent chief Theresa Gattung's speech to the Telecom Users Association in Wellington this week.

Gattung's comments were just as bold. Here is a selection:

* "I am here to tell you in no uncertain terms, we get it."

* "We are not going to be obstructive."

* "We are not going to fight old regulatory battles."

* "We are totally committed to a level playing field for our customers ... this is not window dressing."

* "We will play by the new rules, we will be open, we will be true to our word. This is the start of a new way of life."

Shirtcliffe's comments alone more than justify taking the speech with a grain of salt. But there is a legion of other reasons.

The tone was pleading. It illustrated the extent of the damage wrought by Gattung's admission to investors in March that Telecom had used confusion as a marketing tool.

Telecom is facing the biggest shakeup in its history since privatisation. It has been given only the broad principles of a radically different regulatory framework that is unlikely to be fully implemented until the middle of next year.

In a matter of weeks, the company looks set to get a new chairman. Deane is due to step aside in favour of Wayne Boyd or Rob McLeod, fellow Telecom directors. He is likely to remain on the board until the annual meeting in October.

But until the formal handover is made, and even for awhile afterwards, all is up for grabs. The company may yet take the Government's less-than-subtle hint and agree to structural separation of its business into a network operation and a retail operation.

Gattung's job is also on the line. She and the rest of the board were patently blind-sided by the Government's determination to regulate. And, in an echo of Deane's alleged failure, she admitted to investors in March she had not engaged the public's hearts and minds.

"We have to, ultimately, win the debate at that level, and if there's anything that I think I have really not done as well as I really wanted to do in the past five years, it would be that," she said.

In this context, her speech to TUANZ appears presumptuous or a signal that she is determined to hold on. And it suggests a state of flux at the top of Telecom.

How else to take: "Throughout Telecom, we are 100 per cent committed to making the new rules work. Along with me that comes from people such as ... " She then went on to highlight four executives who, with the exception of new wholesale chief Mark Ratcliffe, are a step removed from the centre of power. She made no mention of figures such as chief financial officer Marko Bogoievski and business operations head Simon Moutter.

Telecom's main task is now the very one Gattung outlined this week and Shirtcliffe outlined all those years ago: To regain the trust of its customers and the Government.

It must not only offer value for money, it must be seen to be offering value for money. It must offer fair and open access and it must be seen to be doing the same.

The consequences of failure are more significant than they were when Deane took over. Telecom then had only one real competitor and it could stall without the threat of losing customers. This time, with popular sentiment so against the company, customers will leave in droves.

One more echo of Deane's arrival at Telecom can be heard at his parting. The Herald reporter on the day recorded little of Deane's vision for the business, rather his relief to be quit of his former employer - the state-owned energy giant Electricorp.

Deane's beef was the Government's intrusion in the company's affairs.

"I think the interface [between political and commercial aspects] has become more complicated and that is part of the fabric one judges one's position in life. But it's a Government-run business and it is for them to run as they see fit."

Less than a fortnight ago, he told the Herald: "It's no coincidence that the two main boards I'm retiring from [ANZ National Bank and Telecom] are ones that are subject to considerable regulatory intrusion. That's not an environment that I find as interesting as more regular commercial environments."

Deane, to his credit, recognises his time is passing.