Teflon Theresa stays, Telecom New Zealand promises to behave

, posted: 13-May-2006 10:13

Although some observers expected Telecom to stand its ground and fight the proposed tough new regulation that the government has put on the table, I couldn't see how that would pay off for the embattled telco.

If Telecom was to resist the regulation, there's little doubt that worse would folllow. Cunliffe's quick combination of hard regulatory jabs was bad enough; anything further, like enforced structural separation, would amount to a knock-out punch for Telecom, which is already on the ropes.

In light of the above and falling share price there was only thing Telecom could do. It has now promised to work within the new rules rather than fighting them, an undertaking that has been met with scepticism from many quarters. That people don't trust Telecom's undertakings is no surprise. Take the wholesale broadband target fiasco for instance: Telecom undertook to deliver one-third of all residential broadband connections by the end of 2005 through resale and wholesale. That target was missed by a large margin however, whereas its retail operation exceed the goal set out for it easily. Nobody believes that was by coincidence and Telecom made matters worse by afterwards saying the undertaking only applied to new connections, and not the grand total.

While Telecom's announcement that it will behave is big on waffle but light on details, it's interesting to note that Theresa Gattung remains at the helm. Sure, she's delivered big, fat dividends to share holders in the past, but it all came crashing down to earth this year.

Even though the AAPT, regulation and document leak scandal albatrosses hang around Gattung's neck, Telecom chairman Dr Rod Deane says she has the full support of the board.

Amazing stuff - she really is Teflon Theresa.

Also curious is the composition of the management team that will steer Telecom through the unchartered wates of the new regulation. Gattung is joined by Mark Ratcliffe and Kevin Kenrick, but where are Simon Moutter and Matt Crockett? Have they been sidelined, or will they jump in as and when they're needed? The present GM of industry affairs and government relation, Bruce Parkes, isn't mentioned either.

Maybe there is a faction or "Old Guard" within Telecom then that will be jettisoned as its thinking no longer fits the new reality? We'll see over the next few weeks.

Following yesterday's "we'll behave announcement" by Telecom, Adrian Bathgate reports in the Dominion Post that the telco may voluntarily adopt structural separation. UK incumbent BT did just that after regulatory pressure, and it appears to have been a succesful move.

InternetNZ certainly thinks Telecom should separate its wholesale and retail businesses, but the Internet body is firmly in the sceptics' camp, saying the telco could just follow the letter of the law rather than the spirit. It's good to be cautious and what InternetNZ describes may indeed happen if Telecom's competitors sit on their hands and wait. However, if they get going with new investment, what choice does Telecom have but to follow them?

Other related posts:
TDD vs FDD for LTE
Huawei TDD LTE demo aboard the Shanghai MagLev train
Apropos that new Telecom logo

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