Telecom New Zealand
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Telecom Corporation of New Zealand Limited
(NYSE:NZT)
(New Zealand:TEL)
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Telecom House, 68 Jervois Quay Wellington 6011, New Zealand Tel. +64-4-801-9000 Fax +64-4-473-2613 |
Type: Public
On the web:
http://www.telecom.co.nz
Employees:
8,279
Employee growth: (8.2%)
New Zealand's incumbent telecom carrier really is lord of the rings. Telecom Corporation of New Zealand (TCNZ) provides fixed-line phone services to more than 1.1 million residential and business customers in New Zealand, about a quarter of the estimated population. The wholesale division provides network services to other carriers in New Zealand. Its wireless service reaches more than 2 million subscribers. The Gen-i division offers communications and IT services to about 3,000 business customers in New Zealand and Australia. TCNZ's main Australian subsidiary is top-tier enterprise network service provider AAPT. In 2011 TCNZ spun off its local access network business, Chorus.
Key numbers for fiscal year ending June, 2011:
Sales: $4,186.2M
One year growth: 14.1%
Net income: $134.0M
Income growth: (49.3%)
Officers:
Chairman: Wayne Boyd
CEO and Director: Paul Reynolds
CFO: Nick Olson
Competitors:
BT
TelstraClear
Vodafone
Gale Directory of Company Histories:
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Telecom Corporation of New Zealand Limited
Incorporated: 1987
NAIC: 517110 Wired Telecommunications Carriers; 517212 Cellular and Other Wireless Telecommunications
Telecom Corporation of New Zealand Limited is that country's dominant telecommunications company, providing fixed line and mobile telephony, Internet, data network, and wireless network services. The company also publishes telephone directories and operates Xtra, the country's leading Internet access provider. Telecom New Zealand is also that country's largest company, with sales of more than NZ$5.53 billion, and the country's dominant publicly listed company, worth approximately one-third of the entire share value of the New Zealand stock exchange. The company is also listed on the New York and Australian stock exchanges. Formed through the privatization of the former government-owned telephony monopoly, a part of the New Zealand Post Office, Telecom New Zealand has been striking out into international waters at the beginning of the 21st century, buying up Australia's number three telecommunications provider, AAPT. The company also owns 50 percent of the Southern Cross undersea cable project, which laid a fiber optic cable to connect New Zealand and Australia directly to the United States. Facing increasing competition at home and government pressure to reduce its third-party rates, Telecom New Zealand has targeted the Australian market for future growth, where it operates mobile telephone and Internet access subsidiaries through AAPT, as well as other markets, such as Fiji and the Cook Islands, in the Australasian region. The company is headed by Chairman Roderick S. Deane and CEO Teresa Gattung.
Telecom Corporation of New Zealand was created in 1987, when the New Zealand government spun off the telecommunication operations of the New Zealand Post Office as a separate state-owned enterprise. The following year, the government entirely deregulated the New Zealand telecommunications market, making it the first country in the world to do so. In 1990, Telecom New Zealand was privatized. By then, the company had been providing telecommunications services to the New Zealand islands for more than 125 years.
New Zealand entered the modern age of communications in 1862 when the first telegraph line was constructed by the country's military between the towns of Christchurch and Lyttleton, following the South Island's railroad. Additional telegraph networks soon appeared, covering much of the South Island; telegraph services were only later introduced to the North Island.
In 1865, the New Zealand government moved to place the country's growing telegraph networks under centralized control, establishing the Electric Telegraph Department. In that year, also, the country saw the opening of its first telegraph station in Christchurch.
New Zealand's telegraph network initially served only the domestic market. In 1876, however, the telegraph department laid the first submarine cable linking New Zealand and Australia, which also gave the country a direct link-up with Europe. By then, the telegraph was on its way toward obsolescence as a popular communications device as news of the invention of the telephone reached New Zealand. By 1877, the first telephone line had been installed in the country, linking Kaiaipoi and Addington. The following year saw the emergence of the first commercial telephone service, using a privately built line in Christchurch.
In 1881, the New Zealand government merged the Electric Telegraph Department into the national post office, creating the New Zealand Post & Telegraph Department, which later became the New Zealand Post Office (NZPO). The NZPO was granted the authority to construct the country's telephone exchange system, opening the first exchange in Christchurch in 1881. The NZPO soon extended its network throughout the country, opening a series of bureau stations, which combined telegraphic services with public telephones. The NZPO was quickly granted a monopoly on the New Zealand telephone market to prevent foreign telephone companies from setting up rival networks.
By the dawn of the 20th century, telephone use was on the rise, covering much of the country. In 1912, the government passed a new Country Telecommunications Act, which, among other provisions, enabled people in rural areas to build their own telephone networks and link into the public network. That year also saw the installation of the first automatic exchanges, which enabled the NZPO to increase its traffic volume.
By the end of the 1920s, nearly all of the country had been connected to the telephone network through private automatic branch exchanges, as the telephone became a common feature in people's homes. The NZPO then counted some 125,000 subscribers. In 1930, the NZPO debuted its first international toll call, linking New Zealand's phone network to that of Australia. By 1931, international toll calls had been extended to Great Britain as well.
The NZPO continued to build up its subscriber base over the following decades, numbering some 450,000 customers in the 1950s, and nearing 700,000 by the end of the 1960s. NZPO kept up with the many technological advances being made in the telecommunications industry, switching over the New Zealand market to subscriber toll dialing. In 1970, the NZPO began providing data transmission over its telephone lines. The following year, with its subscriber base topping one million phone lines, the NZPO launched its first satellite station, at Warkworth.
By the 1980s, the New Zealand government began planning the deregulation of the country's telephone market. To achieve this, the NZPO began restructuring its telephone unit as an autonomous business. In 1987, that business was spun off as a separate company, Telecom Corporation of New Zealand. Initially given the status of "state-owned enterprise," that is, a government-owned business operated on a commercial, for-profit basis, Telecom New Zealand began preparing for the next stage, that of becoming a fully privatized company.
In 1988, New Zealand made history when it became the first country to deregulate its telecommunications market, ending Telecom New Zealand's monopoly by opening the market to competition. By 1989, the deregulation process was completed, and Telecom New Zealand braced itself for the arrival of its first competitors. The first of these came in 1990, when the Alternative Telephone Company, which later became Clear Communications, set up business in New Zealand.
In that year, however, the New Zealand government privatized Telecom New Zealand by selling it to partners Ameritech and Bell Atlantic for NZ$4.25 billion. As part of the sale agreement, both parties agreed to reduce their initial positions to below 50 percent, a process begun in 1991 when some 30 percent of Telecom New Zealand's shares was listed on the New Zealand, Australian, and New York stock exchanges. Both Ameritech and Bell Atlantic continued to reduce their holdings, as per the purchase agreement, with each holding less than 25 percent by 1994. While Ameritech sold out its shares in Telecom New Zealand in 1997, Bell Atlantic, later acquired by Verizon, held on to its stake until 2002.
Telecom New Zealand had begun to offer mobile telephone services in the late 1980s. That market brought the company its next major competitor, when BellSouth entered the New Zealand market in 1993 and established its own mobile network. By the mid-1990s, competition for the New Zealand telecommunications market had heated up, with no less than 26 companies entering the market. Although Telecom New Zealand maintained a strong hold on its home market--controlling 82 percent of the domestic market--it nonetheless faced increasingly tight pricing pressures, forcing it to lower its own rates to respond to its competitors.
In response, Telecom New Zealand began exploring new markets. In 1996, the company launched its own Internet access service, Xtra, which quickly became the country's largest. In that year, also, the company began constructing a new hybrid fiber optic-coaxial cable-based network between Auckland and Wellington, in preparation for the launch of the company's First Media pay television service. In late 1997, however, the company abandoned that project after investing some NZ$100 million. By then, the company had faced another setback, after it was forced to withdraw from an attempt to enter the Australian telecommunications market through a joint venture. More successful was the rollout of high-speed Internet services, which began in 1998. In that year, the company joined the Southern Cross Cable consortium, which began laying a fiber optic cable to link Australia and New Zealand directly to the United States. Telecom New Zealand eventually acquired a 50 percent stake in the Southern Cross Cable project.
A deep recession in the New Zealand market, coupled with continued pricing pressures, forced Telecom New Zealand to look again at international expansion at the end of the 1990s. The company acquired a stake in Fiji Telecom, and set up a subsidiary in the Cook Islands, before turning to its larger neighbor in Australia. Leading the company's new strategy was Teresa Gattung, who took over the CEO spot in 1999 at the age of 37, becoming New Zealand's highest paid executive.
In 1999, Telecom New Zealand surprised the Australian market by bidding for that country's AAPT, then facing a takeover bid from rival Cable & Wireless Motus. By the end of that year, Telecom New Zealand had succeeded in winning over AAPT's management and shareholders, stepping up its holding to 78 percent. Initially, Telecom New Zealand had no intention of acquiring AAPT entirely; the relationship between the two companies' management proved strong, however, and by the end of 2000, Telecom New Zealand had acquired 100 percent of AAPT.
Back at home, Telecom New Zealand moved to consolidate its position in the fast-growing mobile telephone sector, buying up most of its mobile telephone network resellers. The company also began establishing partnerships with other companies, notably Microsoft, which invested more than NZ$200 million in Telecom New Zealand. In 1999, the company signed an outsourcing agreement with EDS Corp., worth some NZ$1.5 billion, which turned over Telecom New Zealand's information systems management and billing to the U.S. company.
After launching its Jetstream ADSL Internet access service at the end of 1999, the company celebrated the completion of the Southern Cross Cable project, which was switched on in 2000. In that year, the company's mobile telephone customer base swelled to one million; meanwhile, the company's Xtra Internet service had attracted some 300,000 customers.
In 2001, Telecom New Zealand spent NZ$38 million laying a new high-speed cable linking the North and South Islands. At the same time, the company rolled out its new-generation CDMA (code division multiple access) wireless network, which offered coverage of more than 98 percent of New Zealand's populated areas. That network grew quickly, building up a customer base of more than 200,000 subscribers by 2002.
Yet Telecom New Zealand faced new difficulties as the new decade progressed, particularly at its AAPT subsidiary, which was struggling to hold on to a slipping subscriber base. By the end of 2002, after posting losses for its 2002 year, the company was forced to abandon its plans to impose itself as the major telecommunications group in Australia, lowering its ambitions to focus instead on that country's business sector. Adding to the company's troubles was a decision by the New Zealand telecommunications regulator to require the company to lower its interconnection rates for its competitors, a move that suggested the possibility of increased government-led rate pressures in the future.
By the beginning of 2003--the halfway mark in the company's fiscal year--Telecom New Zealand appeared to be back on the profit track. If its international ambitions had been curtailed somewhat, the company nonetheless continued to enjoy a dominant position in its home market, and a commitment to remaining a major player in the Australasian region for the new century.
Principal Subsidiaries
Telecom New Zealand Limited; Telecom Mobile Limited; Xtra Limited New Zealand; Boost Mobile New Zealand Limited; Telecom Retail Holdings Limited; Telecom Cook Islands Limited (60%); TCNZ (UK) Investments Limited; TCNZ (United Kingdom) Securities Limited; TCNZ Finance Limited; Telecom Investments Limited; Telecom New Zealand Finance Limited; TCNZ Financial Services Limited; Telecom Enterprises Limited; Telecom Wellington Investments Limited; Telecom Pacific Limited; TCNZ Australia Investments Pty Limited; Telecom Southern Cross Limited; TCNZ (Bermuda) Limited; Telecom Southern Cross Finance Limited; Telecom New Zealand Australia Pty Limited; TCNZ Australia Pty Limited (95%); Telecom New Zealand Japan; Telecom New Zealand UK Limited; Telecom New Zealand (UK) Licences Limited; Telecom New Zealand USA Limited; AAPT Limited (Australia); Cellular One Communications Limited (Australia); Connect Internet Solutions Pty Limited (Australia); Commerce Solutions Limited (Australia); Associate Companies; Pacific Carriage Holdings Limited (Bermuda; 50%); Southern Cross Cables Holdings Limited (Bermuda; 50%).
Principal Competitors
Nippon Telegraph and Telephone Corporation; Verizon Communications Inc.; SBC Communications Inc.; Vivendi Universal S.A.; France Telecom SA; Tokyo Electric Power Company Inc.; AT&T Corp.; WorldCom Inc.; Vodafone Group Plc; Bce Inc.; British Telecommunications plc; Telefonica SA; Telecom Italia SpA; Nokia Group; TRACTEBEL SA; Sprint Communications Company, L.P.; KDDI Corporation; BellSouth Corporation; Bouygues SA; Ericsson LM Telephone Co.; Qwest Communications International Inc.; MCI Group; Bell Canada; GST Telecom Inc.; Cingular Wireless; Royal KPN NV; Cable and Wireless Ireland Ltd.; Lucent Technologies Inc.; Carso Global Telecom S.A. de CV; PacifiCorp.; Telus Communications Inc.; Citizens Communications Co.; Scottish Power PLC; Cable and Wireless PLC; KT Corporation.
Further Reading
"Aussie Worries Hurt NZ Telecom," Australian, February 5, 2003, p. 31.
Colquhoun, Lachlan, "Mopping-up Operation," Telecom Asia, September 2000, p. 20.
Hall, Terry, "Expansion Moves Will Broaden Its Horizons," Financial Times, October 8, 1999, p. 47.
------, "Telecom NZ Hopes for Better Days Ahead," Financial Times, November 13, 2002, p. 30.
Marsh, Virginia, "Telecom NZ Arm Cashflow Positive," Financial Times, February 5, 2003, p. 28.
— M.L. Cohen
Wikipedia on Answers.com:
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Telecom New Zealand
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| Type | Public |
|---|---|
| Industry | Telecommunications |
| Predecessor(s) | New Zealand Post Office |
| Founded | 1987 |
| Headquarters | Wellington, New Zealand Auckland, New Zealand[1] |
| Area served | New Zealand, Australia |
| Key people | Wayne Boyd, Chairman[2] Dr Paul Reynolds, CEO Mark Ratcliffe, CEO Chorus[3] (vacant — Nick Clarke acting), CEO Telecom Wholesale[4] Nick Olson, CFO |
| Products | Telecom landline Telecom Mobile XT Network Xtra |
| Services | Fixed Telephony Mobile Telephony Internet Access Leased Lines Data Transmission ICT Solutions |
| Revenue |  NZ$5,112,000,000 (2011)[5] |
| Operating income | NZ$277,000,000 (2011)[5] |
| Profit | NZ$166,000,000 (2011)[5] |
| Total assets | NZ$6,392,000,000 (2011)[5] |
| Total equity | NZ$2,311,000,000 (2011)[5] |
| Employees | ~7,100(New Zealand)[5] ~1,000 (Australia)[5] |
| Divisions | Telecom Retail Telecom Wholesale AAPT Consumer owned by iiNet Gen-i Chorus (until 30 November 2011) |
| Website | telecom.co.nz |
Telecom New Zealand (NZX: TEL, ASX: TEL, NYSE: NZT) is a New Zealand-wide communications service provider (CSP), providing fixed line telephone services, a mobile network, an internet service provider (through its subsidiary Xtra), and a major ICT provider to NZ businesses (through its Gen-i division). It has operated as a publicly traded company since 1990.
Telecom is one of the largest companies by value on the New Zealand Exchange (NZX). Further, it is the 39th largest telecommunications company in the OECD.[6]
Telecom was formed in 1987 from a division of the New Zealand Post Office and privatised in 1990. The selling price was considered by some to be extremely low, given that Telecom had a monopoly of all phone lines in New Zealand at the time.[citation needed] There has been debate as to whether privatisation was in the best interests of the country's telecommunications infrastructure, although others consider that the capital requirements to modernise the network were better provided by private enterprise than the government.[citation needed]
On 31 March 2008, Telecom was operationally separated into three divisions under local loop unbundling initiatives by central government – Telecom Retail; Telecom Wholesale; and Chorus, the network infrastructure division. This separation effectively ended any remnants of monopoly that Telecom Retail once had in the market. On 30 November 2011 the demerger process was complete, with Telecom and Chorus becoming separate listed companies.[7]
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Contents
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History
In 1987 the New Zealand Post Office divested itself of the newly created Telecom, which was created as a state-owned enterprise (SOE) on 31 March. The Government-owned Telecom Corporation was to have a commercial focus. It purchased telecommunications assets from the Post Office for NZ$3.2 billion and work began on improving the services and network. Telecom launched its 025 mobile network and TDMA mobile data network. Beginning in 1987, the New Zealand telecommunications market was progressively deregulated.
1990s
In 1990 Telecom was sold to two United States-based telecommunications companies, Bell Atlantic and Ameritech, for NZ$4.25 billion.[8] Around the same time, the Kiwi Share[9] agreement was drawn up, which included a provision that the company retained free local calling for residential customers. Also in 1990, Clear Communications (now TelstraClear) entered the New Zealand telecommunications market and so was the first network to compete with Telecom.
In 1991 Telecom listed on the New Zealand, Australian and New York stock exchanges. The following year Telecom implemented a NZ$200 million dollar fibre-optic cable connection between Australia and New Zealand. Also in this year, Roderick Deane was appointed CEO of the company. Then in 1993 Ameritech and Bell Atlantic reduced their share in Telecom to a combined 49.6%, and BellSouth (now Vodafone) set up the first mobile network to compete with Telecom.
Clear Communications reached an agreement with Telecom in 1995 on local service interconnection. Also in 1995 Telecom created First Media Ltd to develop a cable television network across Auckland and Wellington, called First TV. In 1996 Telecom established a telephone exchange in the United States for international traffic, and launched Xtra, which is New Zealand's largest internet service provider today.
1997 saw Telecom buy back NZ$1 million of its shares. The following year, Ameritech sold down its 24.8% shareholding in an international public offering, and Bell Atlantic issued exchangeable notes that were convertible into the Telecom shares that it owned. Also in 1998, Telecom celebrated 500,000 mobile customers connected to its mobile network, Southern Cross Cables Limited (half owned by Telecom) announced plans to build a fibre-optic cable linking New Zealand with Australia and North America, and Vodafone New Zealand bought BellSouth and started a campaign to attract Telecom customers to its network.
In 1999, Telecom established a presence in Australia, buying 78% of AAPT, Australia's third-largest telecommunications company. Telecom upgraded its nationwide payphone network to smart card technology. Telecom's broadband Internet service based on ADSL technology, called JetStream, was launched and rolled-out progressively in local exchanges. Also at this time, Telecom began charging customers who connected to the Internet using a local dial up number, forcing all ISPs in New Zealand to change to an 0867 dial up number. This resulted in complaints that this was in breach of Telecom's Kiwishare Agreement where residential customers are allowed free local calling. The decade was rounded off with Theresa Gattung being appointed new CEO of Telecom, with Rod Deane moving to the position of chairman.
2000s
- 2000
- Xtra signs up its 300,000th customer.
- Telecom Mobile, the mobile division of Telecom, celebrates 1,000,000 customers connected to its mobile network.
- The New Zealand Government conducts a comprehensive review of the regulatory regime.
- Telecom raises its AAPT shareholding to 100%.
- Telstra merges New Zealand operations with Saturn to form TelstraSaturn Limited.
- 2001
- The Government passes the Telecommunications Act, setting up a Telecommunications Commissioner.
- Telstra buys Clear Communications to form TelstraClear.
- 2004
- Telecom purchases Gen-i Ltd (May).
- Telecom purchases Computerland Ltd (September).
- Telecom won the Roger Award for The Worst Transnational Corporation operating in New Zealand.
- 2005
- Telecom introduces Bitstream, a 256 kbit ADSL service sold at wholesale prices (at approximately 10% below the retail price) to other ISPs.
- Telecom's mobile customers find out that their privacy and security is not safe on the Telecom network, when a phreaker named ^god releases an exploit to the media allowing access to almost anyone's voicemail.
- Telecom posts a profit of NZ$916 million.
- Telecom's online retail store Ferrit launches with about 150 retailers.[10]
- 2006
- 3 May: The New Zealand Government announces that it will require Telecom to unbundle the local loop to provide "access to fast, competitively priced broadband internet".[11]
- 4 May: NZ$1.1 billion of its market capitalisation was wiped off following the announcement.[12]
- 9 May: An audio clip recorded on 2 March was released involving Telecom CEO Theresa Gattung admitting the use of confusion as a chief marketing tool in the industry. The March recording also dismissed the New Zealand Government as "too smart to do anything dumb" with regards to regulation.[13]
- 19 May: A video titled "Telecon" incorporating the 9 May audio clip and a dubbed Telecom ad was released. Telecom got it removed from YouTube but it is still available at other locations.[14][15]
- Late May: Roderick Deane resigns as chairman, and is replaced by Wayne Boyd the following month.
- 27 June: Telecom announces it will voluntarily separate its business into two operating business units — Wholesale and Retail.[16]
- July: Matt Crockett is appointed CEO of Telecom's Wholesale division.[17]
- 28 November: The Telecommunications Amendment Bill is introduced to split Telecom into three business units, with network access separated from the wholesale and retail units.[18]
- 2007
- 16 January: The Librarians Association of New Zealand put in a complaint about a Telecom advertisement where 3 young school children state that, "Only dumb kids read books, brainy kids have broadband." Originally Telecom stated that is the views of the young children and not Telecom and the advertisement was unscripted, later that week Telecom choose to edit the advertisement to remove the comments made by the children.[citation needed]
- 19 January: It is reported that Paritai Drive, Orakei, one of the richest streets in Auckland, is still not capable of receiving a broadband DSL service and there are many other well populated areas around New Zealand still not capable of receiving broadband. Opposition Woosh Wireless immediately tested their service in the area and gave residents the opportunity to join their wireless broadband service.[19][20]
- 2 February: Telecom announces Director and CEO Theresa Gattung will be stepping down effective 30 June 2007 and a search for a new CEO will begin immediately.[21]
- 5 February: Telecom announces that from March 2007 they will begin rolling out ADSL2+, more than a year after originally stated for roll out.
- 31 March: The 025 D-AMPS cellular network is closed down.[22]
- 1 April: All New Zealand telecommunications providers including Telecom introduce number portability.
- May 2007: British Telecom have been in discussion with the New Zealand government regarding Telecom's monopoly control of the NZ broadband network. Three to four years previously, British Telecom were in a similar position to that which NZ Telecom are now in; the British broadband network has since been broken up and the NZ government are keen to learn and possibly copy the development/regulatory/investment model used by the British firm.
- The Auckland Chamber of Commerce has publicly stated that if Telecom do not invest in a next-generation high-speed network, comparable with that of other Western nations, they will fund a private fibre-optic based service in the 100 megabit speed range. The proposed coverage of this would be within 200m of a path running south from Auckland CBD (situated to allow as many businesses as possible to connect). Any company or private individual within this range would be offered a connection.
- 8 June: Telecom Mobile announces a plan to build a hybrid W-CDMA/UMTS-CDMA network,[23] based on the WCDMA HSPA technology, to eventually replace its current CDMA EV-DO network. This network will go online by the end of 2008.
- 28 June: Telecom announces that Dr Paul Reynolds, CEO of BT Wholesale, has been selected as the new CEO, to commence on 27 September.[24] Simon Moutter was appointed as acting CEO in the interim.[25]
- 30 June: Theresa Gattung steps down with a reported leaving payment of $5.125 million in cash and 12 weeks annual leave owing.[26]
- 27 September: Dr Paul Reynolds commences as CEO of Telecom.
- 21 November: Mark Ratcliffe, Chief Operating Officer for Technology, is appointed CEO of Telecom's soon-to-be spun off network division.
- 2008
- 16 January: Telecom announces the formation of Chorus, its new network infrastructure division.[27][28]
- 31 March: Telecom officially separates into three divisions (Chorus, Telecom Wholesale, Telecom Retail)
- 1 April: Russ Houlden, a colleague of Reynolds at BT, is appointed Chief Financial Officer. He replaces Marko Bogoievski, who joined Infratil.
- 2009
- 12 January: Telecom announces the closure of its online retail store Ferrit.[10]
- 29 May: Telecom launches its UMTS 850 MHz network, branded as XT, to the public.[29]
- August: An industrial dispute emerges between Chorus and the Engineering, Printing and Manufacturing Union after servicing contracts in the Auckland & Northland regions are awarded to Australian company Visionstream, which has planned to change technicians' employment contracts to a dependent contractor model.[30][31]
- 16 October: New logo announced
- December: Telecoms new mobile phone network XT Mobile Network from Taupo south fails the first in a series of failures due to a Radio Network Controller failure in Christchurch
2010s
- 2010
- February: Second major network outage for Telecoms XT Mobile Network caused by failing Radio Network Controller in Christchurch.
- 27 April: Telecom releases first Android (operating system) handset on the XT Mobile Network the LG GW620
- November: Telecom moves into its newly built world HQ on Victoria St in the Auckland CBD. Costing the developer $280 million it will consist of 2700 staff and be the largest corporate move in NZ history.
- 2011
- 14 February: Fairfax Media's Dominion Post reports that Telecom is under investigation by the Department of Internal Affairs' (DIA) anti-spam unit, following complaints about text messages sent to customers. The messages in question failed to feature the require 'opt-out' (unsubscribe) information. Telecom argued that such information was no longer required, having sent a text in late November, telling recipients that unless they objected then, Telecom would deem they had agreed future text messages from the company need no longer include an opt-out message. Victoria University of Wellington law student, Hamish McConnochie, brought the text messages to the attention of media, citing Telecom's messages as not meeting the threshold for an arrangement under the Act.[32] McConnochie later appeared on the TVNZ 7 show, Back Benches to discuss the matter.[33]
- 24 May: Crown Fibre Holdings announce that Telecom has been successful in partnering with the Government to build a fibre network.
- 9 June: The National Business Review reveals that in OIA documents, sought by Victoria student Hamish McConnochie, the DIA considered at least one text message sent by Telecom to be in breach of the Unsolicited Electronic Messages Act 2007.[34]
- 1 July: Telecom announce a shutdown date of 31 July 2012 for their CDMA Cellular network.[35]
- 1 December: Telecom divests itself of Chorus, the Network Infrastructure division, in a one for five share deal, with Chorus becoming a separately listed company.
Xtra
Main article: Xtra (ISP)
"Xtra" is New Zealand's largest Internet Service Provider. It is a wholly owned subsidiary of Telecom.
Telecom Mobile
Main article: XT Mobile Network
Telecom Mobile is New Zealand's second-largest mobile operator by market-share, slightly behind Vodafone.[36] Telecom primary mobile network is called "XT", and operates at 850 MHz nationwide (with some 2100 MHz overlay in urban areas), and delivers 3G data connectivity wherever there is coverage.
Telecom originally operated a TDMA (AMPS, Digital D-AMPS/TDMA) mobile network; this was superseded by its CDMA network. The TDMA network was turned off on 31 March 2007, and most of its customers migrated to CDMA. The CDMA EV-DO network was marketed as T3G, a 2 MB third-generation mobile system. Telecom announced on 8 June 2007 the intention to build a W-CDMA/UMTS network,[23] to be called XT Mobile Network, based on WCDMA HSPA technology, to replace its current CDMA EV-DO network. The network was launched on 29 May 2009. The specifications of XT were chosen to bring it into line with a number of other networks in overseas territories, such as Telstra's Next G (in Australia); furthermore, 850 MHz services can cover greater geographic distances and penetrate buildings more effectively than higher frequencies. The CDMA network is currently running in parallel with XT, but is scheduled to be shut down on 31 July 2012. The TDMA network used the 025 mobile prefix; this was changed to 027 with CDMA, and 027 has continued with XT.
The following shows customer numbers and market share information for Telecom Mobile, including both the now-shut-down TDMA network and current CDMA and XT network customers. Since Vodafone New Zealand took over BellSouth in the late 1990s Telecom's market share has dropped every year.
In 2005 Telecom launched New Zealand's first 3G network, using the brand name T3G. Being first into the 3G market, along with aggressive marketing and a $10 a month text message package, has allowed Telecom to claw back some market share from Vodafone. In November 2005 Telecom reported 72,000 new mobile phone customers, compared to 27,000 for Vodafone.
In 2009 the mobile share was further decreased with newcomer 2degrees entering the market; both Vodafone and Telecom lost customers (25,000 and 19,000 respectively), some of which Telecom lost due to its unreliable image after its outages. In response to this, Telecom increased its marketing and improved its plan offerings.
| Quarter | No of customers | Market share % |
|---|---|---|
| December 1999 | 858,000 | 68.37% |
| December 2000 | 1,150,000 | 60.43% |
| December 2001 | 1,379,000 | 56.94% |
| December 2002 | 1,229,000 | 50.18% |
| December 2003 | 1,298,000 | 49.95% |
| March 2005 | 1,520,000 (approx) | 44.6% |
| November 2005 | 1,600,000 | 46% |
| March 2007 | 1,900,000 | 49% |
| February 2010 | 2,152,000 | 44.4% |
Criticism
While there are now many competitors in the cellular, toll-call and internet markets, Telecom continues to be criticised for using its status as a former general monopoly to charge high prices whilst providing, in some people's opinion, poor service. Prices have dropped as competition in the broadband market has increased. Despite Local-loop unbundling, it has proved difficult for other companies to establish residential services due to Telecom’s former control of local loop services. Telecom has also leveraged its control of residential services to establish the country’s largest ISP, Xtra.
Competitors have alleged that Telecom engages in unfair practices to prevent them from gaining ground, for example by reselling broadband capacity to Xtra at lower prices than to other ISPs.
In July 2005, two dozen Internet service providers formally complained to New Zealand's Commerce Commission via a letter.[37] Notably absent from the list of signatories were Telecom's ISP, Xtra, and several ISPs owned by its main competitor, TelstraClear.
On 1 February 2007 the Consumers' Institute gave its "supreme ass award" for bad products to Telecom for its Xtra broadband service, Consumers Institute executive director David Russell claimed that since Telecom "unleashed" its broadband speeds, the institute had been "inundated with complaints of slower speeds and frustrating cutouts".[38]
Telecom has been given the Roger Award more than once, in 2004 and 2007 - and only the second company awarded as such, with the defunct TranzRail being the first.[39]
Effects of monopoly
The New Zealand Treasury once estimated the economic loss from Telecom's (now former) monopoly to be in the region of $50–$250 million a year. Another study commissioned in 1998 by competitor Clear (now TelstraClear) estimated that the loss was $400 million a year. At a retail level Telecom now faces competition in all areas — cellular, internet, toll-calls and, subject to ongoing developments, in local calling. At a network level these retail services often resell Telecom wholesale products.
Telecom’s response
Telecom claimed[40] one reason for poor broadband uptake in New Zealand was because of the fact New Zealand residential subscribers enjoy free local calling. Telecom stated “customers have the option of moving to faster broadband services, but free local calling creates a disincentive by allowing them to use dial-up for as long they want” (i.e. they do not have to pay a per-minute call charge while using dial-up, unlike many other countries where local calls are charged for). However, some experts and competitors disagreed — including the secretary of the OECD.[41]
Calls for change
Telecom failed to reach their self imposed goal of around 83,333 wholesale broadband customers by the end of 2005. During her opening address to parliament, Prime Minister Helen Clark criticised the state of the internet in New Zealand.[42] This was followed by extensive criticism in the media such as in two high profile television programmes, in two episodes of Campbell Live (whose past major sponsors include Telecom), during which CEO Theresa Gattung was challenged by host John Campbell, and an episode of the New Zealand edition of Sunday. Critical articles had been published by various magazines and newspapers, including the largest newspaper, the New Zealand Herald. Of significance, many of these were lengthy and high profile articles compared to many previous articles critical of Telecom — among the most noticeable of these was published by the National Business Review, in which it was stated that "Far from being 'Xtraordinary', as its multimillion dollar advertising would have you believe, Telecom is strangling the nation’s advancement." While in Wellington for an ICANN meeting, Vint Cerf was reported to have made a personal visit to David Cunliffe, the telecommunications minister where it is believed he recommended that Telecom be unbundled.[43][44] The New Zealand Government investigated whether it needed to force Telecom to unbundle the network, thereby allowing other companies access and improving broadband service for consumers.
XT Network Outage
Telecom's new XT network faced two major, high profile outages in the consecutive months of December 2009[45] to February 2010.[46][47] As a result of the loss of service Telecom offered a five million dollar compensation package for its customers.[48]
Local loop unbundling
In a decision by the New Zealand Government on 3 May 2006, Telecom was forced to unbundle the local loop. This allowed competitors (such as TelstraClear, Orcon and Ihug) to offer broadband and other communications services throughout New Zealand by installing their own equipment in exchanges.[49][50] The announcement of this decision was rushed ahead of schedule, as the documents were leaked to Telecom who advised the government of the leak. It was widely reported that the government had intended to make the announcement during the 2006 Budget. Most of Telecom's competitors and many independent commentators such as InternetNZ and Paul Budde applauded the decision, with opposition to unbundling coming from the Business Roundtable, Federated Farmers, and Bruce Sheppard (representing Telecom shareholders). Legislation was introduced to enable the regulatory changes. Three other political parties (New Zealand First,[51] the Green Party[52] and United Future[53]) supported the decision, which would give the government at least 66 votes if there were no votes against the party line. The main opposition National Party initially opposed the unbundling decision, but later voted in favour of it after a select committee hearing. This left the ACT Party alone in opposing the decision.
Following the events of May 2006 the company was hit by a series of other decisions. Firstly, the Commerce Commission announced that it would rule on the contentious issue of mobile telephone termination charges. Then, in early-June, the Commission announced that calls between a landline and a mobile phone within a geographically defined boundary could be connected free of termination charges. The ruling allowed Vodafone New Zealand to establish a mobile phone product which could also provide free local calling, in direct competition with a product for which Telecom had long had a monopoly (the government, when it sold Telecom, enshrined free residential local calling as something it must continue with). Then, the Commerce Commission granted two of Telecom's competitors, CallPlus and ihug, access to an unrestricted, Unbundled Bitstream Service, which would allow them to provide competitive broadband services.
Finally, the company announced the voluntary separation of its business into two separate business units — Wholesale and Retail.[16] The Government introduced the Telecommunications Amendment Bill in November 2006 to force Telecom to open its network to competitors. The bill officially split Telecom into three business units from 31 March 2008, with network access separated from the wholesale and retail units.[18]
References
- ^ Twose, Helen (30 June 2007). "Telecom opts for tale of two cities". NZ Herald. http://www.nzherald.co.nz/category/story.cfm?c_id=49&objectid=10448770.
- ^ "Telecom Board of Directors". Telecom. http://www.telecom.co.nz/content/0,8748,200652-1548,00.html.
- ^ "Chorus — Our People". Chorus. http://chorus.co.nz/n92,4.html.
- ^ "Telecom Wholesale leadership team". Telecom Wholesale. http://www.telecomwholesale.co.nz/leadershipteam.
- ^ a b c d e f g "Telecom Corporation of New Zealand Annual Report (For the year ended 30 June 2011)". http://media.corporate-ir.net/media_files/IROL/91/91956/Annual_Report_NZ.pdf.
- ^ Griffin, Peter; Twose, Helen (19 July 2007). "NZ's wealthy telcos stingy on investment". NZ Herald. http://www.nzherald.co.nz/section/3/story.cfm?c_id=3&objectid=10452483.
- ^ Fletcher, Hamish (1 December 2011). "Plenty of pomp as Chorus and Telecom part". The New Zealand Herald. http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10769994. Retrieved 25 January 2012.
- ^ "History and quick facts". Telecom NZ. http://www.telecom.co.nz/content/0,8748,200633-1548,00.html#20013149.
- ^ "Kiwi Share". MED. http://www.med.govt.nz/templates/MultipageDocumentTOC____4213.aspx.
- ^ a b McDonald, Sarah (12 January 2009). "Telecom gives Ferrit the chop". National Business Review. http://www.nbr.co.nz/article/telecom-gives-ferrit-chop-39489. Retrieved 12 January 2009.
- ^ "Govt announces broadband changes". TVNZ. 3 May 2006. http://tvnz.co.nz/view/page/411366/709992.
- ^ Pannett, Rachel; Louisson, Simon (4 May 2006). "$1.1 billion wiped off Telecom's value as shares plunge". NZ Herald. http://www.nzherald.co.nz/section/story.cfm?c_id=3&ObjectID=10380243.
- ^ Nowak, Peter (9 May 2006). "Gattung admits Telcos not being straight". The New Zealand Herald. http://www.nzherald.co.nz/section/story.cfm?c_id=5&ObjectID=10380894.
- ^ Beston, Anne (25 May 2006). "Website ordered to remove ad lampooning Telecom". NZ Herald. http://www.nzherald.co.nz/section/story.cfm?c_id=5&ObjectID=10383435.
- ^ Telecon commercial
- ^ a b "Telecom to separate wholesale and retail operations". Telecom NZ. 27 June 2006. http://www.telecom-media.co.nz/releases_detail.asp?id=3325&page=index.
- ^ Keown, Jenny (1 July 2006). "Telecom names head for new wholesale division". NZ Herald. http://www.nzherald.co.nz/section/3/story.cfm?c_id=3&objectid=10389213.
- ^ a b Keown, Jenny (28 November 2008). "Telecom's tough year continues — it's split into three". NZ Herald. http://www.nzherald.co.nz/section/story.cfm?c_id=3&ObjectID=10412818.
- ^ Trevett, Claire; Keown, Jenny (26 January 2007). "Telecom finally organises broadband for multimillionaire". NZ Herald. http://www.nzherald.co.nz/index.cfm?objectid=10420956.
- ^ Keown, Jenny (25 January 2007). "Rivals move after millionaire can't get Telecom broadband". NZ Herald. http://www.nzherald.co.nz/index.cfm?objectid=10420775.
- ^ "Theresa Gattung to Conclude Role as Telecom CEO". Telecom NZ. 2 February 2007. http://www.telecom-media.co.nz/releases_detail.asp?id=3414.
- ^ "Goodbye to 025 network". NZ Herald. 31 March 2007. http://www.nzherald.co.nz/section/1/story.cfm?c_id=1&objectid=10431887. Retrieved 31 March 2007.
- ^ a b "Telecom Future-Proofs Mobile Services With New Network Investment". Telecom NZ. 8 June 2007. http://www.telecom-media.co.nz/releases_detail.asp?id=3455&page=1&pagesize=10&filtertext=UMTS&m1=1&y1=1996&m2=4&y2=2008&filter=filter.
- ^ "Telecom New Zealand Appoints Paul Reynolds as Chief Executive Office". Telecom NZ. 28 June 2007. http://www.telecom-media.co.nz/releases_detail.asp?id=3459&page=index.
- ^ "Telecom names new boss". NZ Herald. 28 June 2007. http://www.nzherald.co.nz/section/3/story.cfm?c_id=3&objectid=10448394.
- ^ Twose, Helen (6 September 2007). "Gattung's $5m golden goodbye". NZ Herald. http://www.nzherald.co.nz/section/3/story.cfm?c_id=3&objectid=10461941.
- ^ Twose, Helen (17 January 2008). "Telecom's Chorus takes centre stage". NZ Herald. http://www.nzherald.co.nz/category/story.cfm?c_id=59&objectid=10487239.
- ^ Twose, Helen (16 January 2008). "Telecom's new network unit named Chorus". NZ Herald. http://www.nzherald.co.nz/section/story.cfm?c_id=5&objectid=10487151.
- ^ Chang, Adrian; Vaughan, Gareth (7 May 2009). "Vodafone, Telecom reach deal". Business Day (Fairfax New Zealand). Archived from the original on 8 May 2009. http://www.webcitation.org/5gcpbuBJx.
- ^ "EPMU prepares Visionstream campaign". Stuff.co.nz. 8 July 2009. http://www.stuff.co.nz/business/industries/telecoms-it-media/2575080/EPMU-prepares-Visionstream-campaign/.
- ^ "CTU urges Govt to stop broadband talks". NZ Herald. 25 August 2009. http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10592927.
- ^ "Telecom may have breached spam laws". Stuff.co.nz. 14 February 2011. http://www.stuff.co.nz/technology/4651906/Telecom-may-have-breached-spam-laws.
- ^ "Back Benches Ep. 3 2011". TVNZ. 09 March 2011. http://tvnz.co.nz/back-benches/s2011-e3-video-4051088.
- ^ "Telecom broke anti-spam law". National Business Review. 9 June 2011. http://www.nbr.co.nz/spam.
- ^ "Telecom names CDMA shut-down date". Netguide. 1 July 2011. http://www.techday.co.nz/netguide/news/telecom-names-cdma-shut-down-date/20479/.
- ^ "Vodafone — company facts & figures". Vodafone. http://www.vodafone.co.nz/aboutus/12.1.1_facts_figures.jsp?item=facts.
- ^ Saarinen, Juha (18 July 2005). "ISPs formally complain to Commerce Commission". http://computerworld.co.nz/news.nsf/UNID/232444CFFD9ADC6ECC25703F0009B334?OpenDocument&pub=Computerworld.
- ^ "Supreme Ass Award goes to Xtra broadband". Stuff.co.nz. 1 February 2007. http://www.stuff.co.nz/northland/3946972a10.html.
- ^ "The Roger Award". http://canterbury.cyberplace.co.nz/community/CAFCA/publications/Roger/index.html.
- ^ Nowak, Peter (25 October 2005). "Free calls mean less broadband — Telecom". NZ Herald. http://www.nzherald.co.nz/section/story.cfm?c_id=5&ObjectID=10351794.
- ^ Nowak, Peter (31 October 2005). "OECD takes shot at Telecom". NZ Herald. http://www.nzherald.co.nz/topic/story.cfm?c_id=363&ObjectID=10352757.
- ^ Nowak, Peter (8 February 2006). "PM joins critics of internet monopoly". NZ Herald. http://www.nzherald.co.nz/section/story.cfm?c_id=5&ObjectID=10367253.
- ^ Nowak, Peter (24 March 2006). "Open up access, says 'internet evangelist'". The New Zealand Herald. http://www.nzherald.co.nz/section/story.cfm?c_id=3&ObjectID=10374148.
- ^ Bell, Stephen (28 March 2006). "Cerf wary of biased broadband business models". Computerworld. http://www.computerworld.com.au/index.php/id;1287275520;fp;4;fpid;78268965.
- ^ Nash, Kieran (14 December 2009). "Telecom's XT network still down south of Taupo". the New Zealand Herald. http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10615386. Retrieved 18 February 2010.
- ^ "Telecom XT outages unacceptable — association". NZ Herald. 27 January 2010. http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10622612. Retrieved 18 February 2010.
- ^ "XT outage blamed on 'unusual problems'". NZ Herald. 16 February 2010. http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10626499. Retrieved 18 February 2010.
- ^ Vass, Beck (3 February 2010). "XT users share $5m compo package". NZ Herald. http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10623758. Retrieved 18 February 2010.
- ^ "Govt to open up Telecom network for faster broadband". NZ Herald. 3 May 2006. http://www.nzherald.co.nz/section/story.cfm?c_id=3&ObjectID=10380108.
- ^ Withers, Tracy (3 May 2006). "NZ Says Telecom Must Give Rivals Greater Access to Network". Bloomberg. http://www.bloomberg.com/apps/news?pid=10000081&sid=aAkS5cuhU0uQ&refer=australia.
- ^ NZ First (4 May 2006). "NZ First Welcomes Telecom Competition". http://www.scoop.co.nz/stories/PA0605/S00102.htm.
- ^ NZ Greens. "Government moves on Telecom welcomed". http://www.greens.org.nz/searchdocs/PR9776.html.
- ^ United Future NZ. "Copeland: Local loop unbundling decision a win for all New Zealanders". http://www.unitedfuture.org.nz/press/show_item.php?t=0&i=1387.
External links
- Telecom New Zealand Website
- YahooXtra
- Chorus - A Telecom New Zealand Company
- Yahoo! - Telecom Corporation of New Zealand Limited Company Profile
- Telecon - Telecom Parody
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Gale Directory of Company Histories
International Directory of Company Histories. Copyright © 2006 by The Gale Group, Inc. All rights reserved.
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