TelstraClear UFB Interview - A UFB Future For TelstraClear

Wednesday, 18 May 2011, 6:53 pm
Article: Alastair Thompson

See also:
Part 1 - TelstraClear UFB Interview - The UFB Network NZ Already Has
Part 2 - TelstraClear UFB IV - Reinstating A NZ Telecomms Monopoly

In recent weeks TelstraClear CEO Dr Allan Freeth has been at the sharp end of a united telecommunications industry campaign against legislation to enable Ultra Fast Broadband which is currently proceeding through Parliament.

Dr Freeth has said the planned government reforms [before changes announced after this interviewed was filmed] will hand Telecom a monopoly in New Zealand telecommunications in a manner which will likely stifle investment and innovation for at least the next decade and lead to a third world telecommunications system.

At Dr Freeth's invitation Scoop's Alastair Thompson and Selwyn Manning interviewed the TelstraClear CEO in depth about his company's views on the future of telecommunications in New Zealand - and the role of TelstraClear in that future.

For additional background see:

- TelstraClear: Ultra Fast Broadband (UFB) Legislation and TelstraClear
- Technical background presentation on the TelstraClear HFC Cable network in Wellington and Christchurch (.pdf)
- TelstraClear Corporate Overview (.pdf)
- Video - TelstraClear Real World Traceroute - From Scoop Home To Scoop HQ

In Part 1 of this interview Dr Freeth discussed TelstraClear's network in NZ, its capacity and issues around international connectivity.

In Part 2 the discussion moved on to the nub of the current issue, how the manner in which the Government is planning on funding UFB will effectively reinstate a NZ telecomms monopoly.

In this third and final part of the interview with TelstraClear CEO Dr Freeth we discuss TelstraClear's own strategic position and possible responses to the coming fibre-to-the-home UFB future.

[Note we are publishing part 3 of the video interview (conducted on May 2nd) on the same day that Telecommunications Minister Steven Joyce has announced a u-turn on the regulatory holiday which has been at the center of TelstraClear's criticisms of the Government's UFB scheme. TelstraClear has welcomed this decision.]

In part 3a of the extended interview with Dr Freeth:

- We begin with a discussion of whether TelstraClear might now consider separating out its own HFC fibre/coaxial UFB network from its core assets to enable it to play a part in the Government's UFB plans.

- Dr Freeth says that the issue facing the builders and owners of the new UFB network in Christchurch and Wellington will be different from elsewhere in the country, in that in those two cities the new network will face competition from an existing competing UFB network capable of delivering competitive speeds. In terms of what they might do when it comes to the future of their network: "Would we consider partnerships? We have made it very clear to everybody that everything is on the table, but you have to come and talk real to us."

- Dr Freeth says nobody from Crown Fibre Holdings had come to speak to Telstra about its HFC network until about a month ago. He had been waiting for them to do so for 18 months.

- In terms of its capacity for further upgrading, Dr Freeth says the HFC network is a great network and very robust as shown during the recent Christchurch earthquake. He said that it would be likely that eventually the HFC network would have been converted to fibre sometime in around five years. However that path is not clear now.

- Dr Freeth says the HFC network's ultimate speed limitations depend mainly on switching and transmission equipment. So in theory it could increase speed again to 150-200mbs if there was demand.

- Regarding discussions with Crown Fibre Holdings there were some discussions but they had stopped.
- Dr Freeth then answers a question on the pricing differences between Australia and NZ. In Australia data caps and speeds are both roughly double what they are in NZ for around the same price. His answer is that he believes the difference in price is one about network scale. New Zealand is an expensive market to operate in due to its lack of scale.

- Regarding competition with the UFB network Dr Freeth said it was likely they would compete hard against it. Dr Freeth says TelstraClear has considered the implications of dropping their prices but they need to make a market assessment for what pricing is appropriate for a product which is clearly superior to ADSL and VDSL in terms of speed and contention rates.

- Dr Freeth says that TelstarClear has five strategic plans dependent on different events occurring. They consider their strengths to be innovation, bundled products and customer service. He says they remain determined to be part of the NZ market, but that is contingent a little on there being a market in which they can compete. He says that their strength at present is in being vertically integrated. He is concerned that in the future the way the market is structured will mean that innovation will be stifled.

In part 3b of the extended interview with Dr Freeth:

- The discussion continues around TelstraClear's forward looking strategy. Dr Freeth begins by answering a question on whether the company is likely to move investment from the residential sector into the business sector. He replies saying that the residential sector is now very important to the company.

- Dr Freeth then explains the emerging relationship it is forming with North Power who have been building a fibre network in Northland. Dr Freeth says TelstraClear has enjoyed its partnership with North Power where it is playing the role of a content and services provider.

- He then says emphatically that the company will not be walking away from its network - especially its fibre backbone which will continue to play an important role whatever the future of broadband in NZ

- Dr Freeth then answers a question about whether TelstraClear might be in the market to purchase the Telecom retail assets post separation. "Clearly Telstra never stops looking for opportunities for investment around the world and in NZ," he says. But adds that it all depends on the detail.

- Finally Dr Freeth says he can "never say never" to the possibility of a sale of the HFC network in Wellington and Christchurch to a separated Chorus 2. "It all comes down to the economics and price in the end," he says.

ENDS

© Scoop Media

Alastair Thompson

Scoop Publisher

Alastair Thompson is the co-founder of Scoop. He is of Scottish and Irish extraction and from Wellington, New Zealand. Alastair has 24 years experience in the media, at the Dominion, National Business Review, North & South magazine, Straight Furrow newspaper and online since 1997. He is the winner of several journalism awards for business and investigative work.

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