Adam Gifford: Question time for the Telecom chiefs

I received an email a couple of weeks ago from Telecom's public affairs and government relations manager, John Goulter, about a swipe I gave the company in a column on the IT sector.

"What's that line about Telecom not delivering 'real' broadband? The 1Mbps and 3Mbps plans available for residential customers seem pretty real to me, and for business customers there are a range of full-speed plans - which currently is 2Mbps to 8Mbps, with an up-speed of about 600kbps," Goulter wrote.

Sorry, John, but if the plans are real, why is there so much dissatisfaction about the quality of service offered by Telecom?

Why do residential plans have strictures that are at odds with how families want to use high-speed connections? Why are business plans so much more expensive than residential plans?

Why does everyone with enough technical know-how to measure their speeds say they're not getting what they pay for?

Sure, there is a migration from dial-up to high-speed. According to Telecom's third-quarter results released on Friday, there were 47,132 connections in the three months to March 31.

But that is because being able to use the phone while online is a compelling argument.

"We are no longer a phone company," chief executive Theresa Gattung said last year. True, and Telecom's third-quarter accounts confirm the shift towards IT and other services. But Telecom is still a monopoly - or close to one - and it is doing what it can to ensure its traditional sources of revenue are protected for as long as it can.

It boosted its services capacity by buying Computerland and Gen-i.

In the March quarter, those firms brought in $52 million in revenue and cost $52 million to run. Telecom still has to prove it can run non-monopoly businesses.

Tellingly, Telecom's press release trumpets that 23 per cent of the broadband connections were done through "competitors" - the internet service providers who are attempting to eke a thin margin out of the unbundled bitstream service and wholesale high-speed Telecom has made available.

Rather than being considered competitors, these companies should be considered partners, pushed into a shotgun wedding by their lack of market clout.

The competition would come from TelstraClear, which refused to play along with the charade and asked the Commerce Commission for a determination - so far without success.

Government ministers still claim it was a line call not to unbundle the local loop - to allow competitors to treat Telecom's copper network as if it were their own.

That position becomes more untenable by the month as New Zealand's ranking on all the global indices slips back.

According to the Commerce Commission's monitoring, by the end of the quarter Telecom had 152,004 residential retail broadband customers and 17,933 wholesale customers.

At current acquisition rates, that puts it on track to meet the commission's target of 250,000 connections by the end of the year, but well short of the requirement that a third of those be wholesale.

"We need TelstraClear to come into the market on our wholesale service to see those numbers exceeded," says chief operations officer Simon Moutter. How's that for chutzpah?

He says the 37,000 connections Telecom itself made in the quarter stretched its delivery capability in the field.

It was also constrained by a lack of network capability, and the help desks were also challenged.

Maybe that is because help desk staff are tied up going through scripts that assume the customer is in some way to blame for their lack of connection, rather than anything on Telecom's side - or is it only my friends who report that (as they switch to Paradise or Woosh)?

If we had true competition, like other countries, companies would be falling over themselves to offer service, and Telecom would have to shape up or ship out.

As it is, Telecom is no longer talking about a next-generation network.

Good thing too, for what it is building is just a normal and prudent replacement, after 15 years of neglecting its infrastructure in favour of shipping dividends off to its foreign owners.

The problem with the targets set for high-speed acceptance is they are out of date. Why are we still talking about kilobytes per second?

This is not a race where the tortoise is going to beat the hare. Ever.

High-speed internet access is an issue of national economic development. Something is needed to stimulate the adoption of this technology, and Telecom is not delivering.

Communications Minister David Cunliffe last week promised more involvement from the "video ref". Bring it on.

* Further to last week's column, Microsoft chief executive Steve Ballmer on Friday told employees the company was wrong to drop support for a bill going through the Washington state senate that would have barred workplace discrimination against homosexuals.

He said Microsoft's public policy activities must focus on issues that most directly affect its business, such as internet safety, intellectual property rights, free trade, digital inclusion and a healthy business climate.

"After looking at the question from all sides, I've concluded that diversity in the workplace is such an important issue for our business that it should be included in our legislative agenda," Ballmer said. (Thanks americablog.org)