Telcon10 conference runs hot and cold

The telcos were castigated for their churlish response to the Government's offer. Photo / Supplied

For those wondering when they can expect true high-speed broadband, cheaper mobile phone service and the economic and social transformation telecommunications boosters have been promising, last week's Telcon10 conference in Auckland was a mixed story.

Communications Minister Steven Joyce kicked off with a declaration that in urban areas fixed broadband will eventually come through fibre to the home.

"Any questions are around the path there, not the destination," he told the 100 or so industry heavyweights at the Hyatt's conference centre.

What he couldn't tell them was how the Government intends spending the $1.5 billion it promised for rolling out ultra-fast broadband to 75 per cent of the population over the next decade.

The 104 submissions made about the original plan have raised issues of such complexity, he's taking another couple of months to think them through.

That could be a sign the plan is in trouble, but Australia-based telecommunications analyst Paul Budde sees it in a positive light.

Budde has met the minister three times and Joyce "gets it".

The delay means more time to pick apart the flaws in the original plan, such as creating up to 25 separate fibre companies around the country.

That's silly, says Budde, and flies against the stated policy of generating equal co-investment from the private sector. "You can't do it without Telecom, but you must not do it in a monopolistic way."

Budde says the business case for fibre to the home doesn't stack up if it's only seen in terms of high-speed internet, so it needs to be seen as an investment in education and health, in energy saving and climate change,

The economic crisis is creating the business case to overhaul the nation's infrastructure, with ideas like smart metering and smart grids to the fore - ideas that won't work without the sort of trans-sector thinking which is starting to take root in Australian Government circles.

Budde's optimism was in contrast to the pessimism shown by some of the major telecommunications vendors, who talked up the millions they were spending to do things they wanted to do while claiming there was no business case to do what others want them to do, such as running a fibre pipe into your living room.

Telecommunications Users Association chief executive Ernie Newman castigated the companies for their churlish responses to the Government's offer to co-invest in the next generation of infrastructure.

Newman said telecommunications was the most dynamic industry on the planet, it was profitable, it was an essential service with customers wanting more and more and better and better services, "so why the despondency?"

He told the telcos if they were concerned about the payback time for investment in fibre, they may be the wrong sector to be doing the job, especially as lines companies are also showing interest.

He asked what the telco executives would have said if Henry Ford had come looking for funding to build his first cars. "They would have said: 'there is no point doing it until we have paved all the roads and put a resort at the end of each one; it's a great idea but let's not invest until the last horse has dropped dead; people will only use it to go to the beach - we don't want to be part of that; and some people might use it to do something immoral in the back seat."'

Newman also slated companies such as Telecom and Vodafone for the amount they billed freephone customers for calls from mobiles, which is leading some banks and government agencies to stop accepting mobile calls.

Tuanz also wants to see an overhaul of the Kiwi share and the TSO (Telecommunications Service Obligation), which it sees as anachronistic, and working against the people it was supposed to serve.

Newman said mobile termination rates were still too high, and served as a barrier to entry - perhaps the reason Telecom did not complain about the $73 million it paid Vodafone last year to terminate calls on its network. The Commerce Commission flagged to the conference that it was keen to make progress on the issue, as New Zealand was missing out on the lower prices and uptake of mobile data services starting to be enjoyed by other countries.

Its deliberations might be informed by some of the complex equations presented by Oxford-based economist David Harbord, which boiled down to consensus among economists that mobile to mobile termination rates were anti-competitive, because they penalise smaller operators.

The time-consuming process of regulators guessing costs and fixing rates also benefited the incumbents.

Harbord said as both the caller and the called benefit, the appropriate termination rate was zero, and New Zealand should shift to a bill and keep regime, where each network operator carries their own costs.

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