Telecom New Zealand is a
WellingtonWellington is the capital of New Zealand, at the southwestern tip of the North Island between Cook Strait and the Rimutaka Range. The Wellington urban area is the major population centre of the southern North Island and is New Zealand's third most populous urban area with residents. There are ...
,
New ZealandNew Zealand is an island country in the south-western Pacific Ocean comprising two main landmasses , and numerous smaller islands, most notably Stewart Island/Rakiura and the Chatham Islands. The indigenous Māori named New Zealand Aotearoa, commonly translated as The Land of the Long White Cloud...
-based
telephone companyA telephone company provides telecommunications services such as telephony and data communications. Most of the largest telcos, whatever their origins, are or were at one time nationalized or state-regulated monopolies...
and, through its subdivision
XtraXtra Limited , is New Zealand's largest Internet service provider, a wholly owned subsidiary of Telecom New Zealand. Xtra offers various internet services including ADSL and dial-up connections within New Zealand and has been doing so since its inception in the mid 1990s.The name Xtra is also used...
, an
internet service providerAn Internet service provider is a company that offers its customers access to the Internet...
. It has been run as a publicly-traded private company since 1990. It is also New Zealand's second largest
mobileA mobile phone or mobile is a long-range, electronic device used for mobile telecommunications...
operator. Telecom is the largest company by value on the New Zealand Exchange (NZX) and movements in its share price have a great influence on the index of movements in the top 50 companies. Further, it is the 39th largest telecommunications company in the OECD.
Telecom was formed in 1987 from a division of the
New Zealand Post OfficeThe New Zealand Post Office was a New Zealand government department until 1 April 1987. At that date, the department was abolished under the Postal Services Act 1987, and three state-owned enterprises were formed:* New Zealand Post Limited,...
and privatised in 1990. The selling price is still considered by many to be extremely low, given that Telecom had a
monopolyIn economics, a monopoly exists when a specific individual or an enterprise has sufficient control over a particular product or service to determine significantly the terms on which other individuals shall have access to it...
of all phone lines in New Zealand at the time. Some consider that the decision to privatise Telecom was a mistake and that it would have been better to keep Telecom as a government entity. Others consider that the
capital requirementThe capital requirement is a bank regulation, which sets a framework on how banks and depository institutions must handle their capital. The categorization of assets and capital is highly standardized so that it can be risk weighted...
s to modernise the network were better provided by private enterprise than the government.
On 31 March 2008, Telecom was operationally separated into three divisions under
local loop unbundlingLocal loop unbundling is the regulatory process of allowing multiple telecommunications operators to use connections from the telephone exchange's central office to the customer's premises...
initiatives by central government – Telecom Retail; Telecom Wholesale; and
Chorus, the network infrastructure division.
History
In 1987 the New Zealand Post Office divested itself of the newly created Telecom, which was created as a
state-owned enterpriseState-owned enterprises in New Zealand are registered companies listed under Schedules 1 and 2 of the State-Owned Enterprises Act 1986...
(SOE) on March 31. 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
TDMATime division multiple access is a channel access method for shared medium networks. It allows several users to share the same frequency channel by dividing the signal into different time slots. The users transmit in rapid succession, one after the other, each using his own time slot. This...
mobile data network. Beginning in 1987, the New Zealand telecommunications market was progressively deregulated.
1990s
In 1990 Telecom was sold to two
United StatesThe United States of America is a federal constitutional republic comprising fifty states and a federal district...
-based telecommunications companies, Bell Atlantic and
AmeritechAT&T Teleholdings, Inc., formerly Ameritech Corporation is a U.S. telecommunications company that arose out of the 1984 AT&T divestiture...
, for NZ$4.25 billion.
http://www.telecom.co.nz/content/0,8748,200633-1548,00.html#20013149 Around the same time, the
Kiwi Share agreement was drawn up, which included a provision that the company retained free local calling for residential customers. Also in 1990,
Clear CommunicationsClear Communications was a telecommunications company based in New Zealand. Until merging into Telstra's operations in 2001, it was the biggest rival to Telecom New Zealand....
(now
TelstraClearTelstraClear is New Zealand's second-largest telecommunications company and is a wholly-owned subsidiary of Telstra Corporation , with around 400,000 customers....
) entered the New Zealand telecommunications market and so was the first network to compete with Telecom.
In 1991 Telecom listed on the New Zealand,
AustraliaAustralia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the continental mainland , the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans...
n and
New YorkNew York is a state in the Mid-Atlantic and Northeastern regions of the United States and is the nation's third most populous. The state is bordered by New Jersey and Pennsylvania to the south, and Connecticut, Massachusetts and Vermont to the east...
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 DeaneRoderick "Rod" Deane, , New Zealand economist, public sector reformer, and businessman.-Education :Deane completed a Bachelor of Commerce degree with first-class honours in economics and a doctorate in economics at Victoria University of Wellington...
was appointed CEO of the company. Then in 1993 Ameritech and Bell Atlantic reduced their
shareIn financial markets, a share is a unit of account for various financial instruments including stocks , and investments in limited partnerships, and REITs...
in Telecom to a combined 49.6%, and
BellSouthBellSouth Corporation is an American telecommunications holding company based in Atlanta, Georgia. BellSouth was one of the seven original Regional Bell Operating Companies after the U.S...
(now
VodafoneVodafone is a British mobile network operator, with its headquarters in Newbury, Berkshire, England, UK. It is the largest mobile telecommunications network company in the world by turnover, and has a market value of about £75 billion...
) 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 TVFirst TV was the name of a cable television network that was operated in New Zealand's two main North Island cities, Auckland and Wellington by Telecom New Zealand in the 1990s.-Trial stage :...
.
1996
- Telecom establishes a telephone exchange
In the field of telecommunications, a telephone exchange or telephone switch is a system of electronic components that connects telephone calls...
in the United States for international traffic.
- Telstra New Zealand Limited (now TelstraClear
TelstraClear is New Zealand's second-largest telecommunications company and is a wholly-owned subsidiary of Telstra Corporation , with around 400,000 customers....
) sets up operations in the New Zealand business market.
- Telecom launches Xtra
Xtra Limited , is New Zealand's largest Internet service provider, a wholly owned subsidiary of Telecom New Zealand. Xtra offers various internet services including ADSL and dial-up connections within New Zealand and has been doing so since its inception in the mid 1990s.The name Xtra is also used...
, which is New Zealand's largest internet service providerAn Internet service provider is a company that offers its customers access to the Internet...
today.
1997
- Saturn Communications Limited (now TelstraClear) enters the residential phone market in Wellington.
- Telecom buys back NZ$1 million of its shares.
1998
- Ameritech sells down its 24.8% shareholding in an international public offering.
- Bell Atlantic issues exchangeable notes that are convertible into the Telecom shares that it owns.
- Telecom celebrates 500,000 mobile customers connected to its mobile network.
- Southern Cross Cables Limited
The Southern Cross Cable, operated by a privately-owned New Zealand company named Southern Cross Cables Limited, is a trans-Pacific network of telecommunications cables commissioned in 2000....
, half owned by Telecom, announces plans to build a fibre-optic cable linking New Zealand with Australia and North America.
- Vodafone New Zealand buys BellSouth and starts a campaign to attract Telecom customers to its network.
1999
- Telecom establishes a presence in Australia, buying 78% of AAPT
AAPT is Australia's third largest land line telecommunications company and is a wholly owned subsidiary of Telecom New Zealand. The company is a member of the Infrastructure Assurance Advisory Group for the Critical Infrastructure Protection branch of the Attorney-General's...
, Australia's third-largest telecommunication company.
- Telecom upgrades its nationwide payphone network to smart card technology.
- Telecom's broadband Internet service based on ADSL technology, called JetStream
JetStream and Mobile JetStream are two brand names used by Telecom New Zealand to market its retail and resale ADSL-based fixed line and CDMA2000-based 3G wireless Internet access offerings respectively...
, is launched and rolled-out progressively in local exchanges.
- Telecom begins charging customers who connect to the Internet using a local dial up number forcing all ISPs in New Zealand to change to an 0867 dial up number. Many consumers complain that this is in breach of Telecom's Kiwishare Agreement where residential customers are allowed free local calling.
- Theresa Gattung
Theresa Gattung is a former CEO of Telecom New Zealand.Gattung was educated at McKillop College, Rotorua, the University of Waikato and Victoria University of Wellington...
is appointed 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
The politics of New Zealand takes place in a framework of a parliamentary representative democratic monarchy. The basic system is closely patterned on that of the Westminster System, although a number of significant modifications have been made...
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
TelstraClear is New Zealand's second-largest telecommunications company and is a wholly-owned subsidiary of Telstra Corporation , with around 400,000 customers....
.
2004
- Telecom won the Roger Award
The Roger Award For The Worst Transnational Corporation Operating in New Zealand is an annual media campaign run since 1997 by two activist organisations, Campaign Against Foreign Control of Aotearoa and GATT Watchdog...
for The Worst Transnational Corporation operating in New Zealand.
2005
- Telecom releases 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
Exploit can mean:*Exploit *Exploit *Exploit *Exploit *An achievement. The first summit of mount Everest was a stunning exploit....
to the mediaMass media denotes a section of the media specifically designed to reach a very large audience such as the population of a nation state. The term was coined in the 1920s with the advent of nationwide radio networks, mass-circulation newspapers and magazines. However, some forms of mass media such...
allowing access to almost anyone's voicemailVoicemail is a centralized system of managing telephone messages for a large group of people...
.
- Telecom posts a profit of NZ$
The New Zealand dollar is the currency of New Zealand. It also circulates in the Cook Islands , Niue, Tokelau, and the Pitcairn Islands. It is divided into 100 cents....
916 million.
- Telecom's online retail store Ferrit launches with about 150 retailers.
2006
- May 3: The New Zealand Government announces that it will require Telecom to unbundle the local loop
In telephony, the local loop is the physical link or circuit that connects from the demarcation point of the customer premises to the edge of the carrier or telecommunications service provider's network...
to provide "access to fast, competitively priced broadband internet".http://tvnz.co.nz/view/page/411366/709992
- May 4: NZ$
The New Zealand dollar is the currency of New Zealand. It also circulates in the Cook Islands , Niue, Tokelau, and the Pitcairn Islands. It is divided into 100 cents....
1.1 billion of its market capitalisation was wiped off following the announcement. http://www.nzherald.co.nz/section/story.cfm?c_id=3&ObjectID=10380243
- May 9: An audio clip recorded on March 2 was released involving Telecom CEO Theresa Gattung
Theresa Gattung is a former CEO of Telecom New Zealand.Gattung was educated at McKillop College, Rotorua, the University of Waikato and Victoria University of Wellington...
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. http://www.nzherald.co.nz/section/story.cfm?c_id=5&ObjectID=10380894
- May 19: A video titled "Telecon" incorporating the May 9 audio clip and a dubbed Telecom ad was released. Telecom got it removed from YouTube
YouTube is a video sharing website on which users can upload and share videos. Three former PayPal employees created YouTube in February 2005. In November 2006, YouTube, LLC was bought by Google Inc. for $1.65 billion, and is now operated as a subsidiary of Google...
but it is still available at other locations. http://www.nzherald.co.nz/section/story.cfm?c_id=5&ObjectID=10383435 Telecon commercial
- Late May: Roderick Deane resigns as chairman, and is replaced by Wayne Boyd the following month.
- June 27: Telecom announces it will voluntarily separate its business into two operating entities - Wholesale and Retail. http://www.telecom-media.co.nz/releases_detail.asp?id=3325&page=index
- July: Matt Crockett is appointed CEO of Telecom's Wholesale division. http://www.nzherald.co.nz/section/3/story.cfm?c_id=3&objectid=10389213
- November 28: The Telecommunications Amendment Bill is introduced to split Telecom into three business units, with network access separated from the wholesale and retail units.
2007
- January 16: 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.
- January 19: It is reported that Paritai Drive, Orakei
Orakei is a suburb of Auckland city, in the North Island of New Zealand. It is located on a peninsula five kilometres to the east of the city centre, close to the shore of the Waitemata Harbour, which lies to the north, and Hobson Bay and the Orakei Basin, two arms of the Waitemata, which lie to...
, one of the richest streets in AucklandThe Auckland metropolitan area , in the North Island of New Zealand, is the largest and most populous urban area in the country with a population approaching 1.4 million residents, percent of the country's population. Demographic trends indicate that it will continue to grow faster than the rest...
, is still not capable of receiving a broadbandThe term broadband can have different meanings in different contexts. The term's meaning has undergone substantial shifts.-In telecommunication:...
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. http://www.nzherald.co.nz/index.cfm?objectid=10420956 http://www.nzherald.co.nz/index.cfm?objectid=10420775
- February 2: Telecom announces Director and CEO Theresa Gattung
Theresa Gattung is a former CEO of Telecom New Zealand.Gattung was educated at McKillop College, Rotorua, the University of Waikato and Victoria University of Wellington...
will be stepping down effective 30 June 2007 and a search for a new CEO will begin immediately.
- February 5: Telecom announces that from March 2007 they will begin rolling out ADSL2+, more than a year after originally stated for roll out.
- March 31: The 025 D-AMPS cellular network
IS-54 and IS-136 are second-generation mobile phone systems, known as Digital AMPS . It was once prevalent throughout the Americas, particularly in the United States and Canada...
is closed down.
- April 1: 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
The Auckland metropolitan area , in the North Island of New Zealand, is the largest and most populous urban area in the country with a population approaching 1.4 million residents, percent of the country's population. Demographic trends indicate that it will continue to grow faster than the rest...
CBD (situated to allow as many businesses as possible to connect). Any company or private individual within this range would be offered a connection.
- June 8: Telecom Mobile announces a plan to build a hybrid W-CDMA
W-CDMA , UMTS-FDD, UTRA-FDD, or IMT-2000 CDMA Direct Spread is an air interface found in 3G mobile telecommunications networks. It is the basis of Japan's NTT DoCoMo's FOMA service and the most-commonly used member of the UMTS family and sometimes used as a synonym for UMTS...
/UMTS-CDMA network 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, 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.
- June 28: Telecom announces that Dr Paul Reynolds, CEO of BT Wholesale
BT Wholesale is a division of BT Group responsible for the wholesale leasing of PSTN lines, broadband services and other telephony services to retail customers such as BT Retail, Vodafone and Carphone Warehouse.
...
, has been selected as the new CEO, to commence on 27 September. Simon Moutter was appointed as acting CEO in the interim.
- June 30: Theresa Gattung steps down with a reported leaving payment of $5.125 million in cash and 12 weeks annual leave owing.
- September 27: Dr Paul Reynolds commences as CEO of Telecom.
- November 21: Mark Ratcliffe, Chief Operating Officer for Technology, is appointed CEO of Telecom's soon-to-be spun-off network division.
2008
- January 16: Telecom announces the formation of Chorus, its new network infrastructure division. http://www.nzherald.co.nz/category/story.cfm?c_id=59&objectid=10487239 http://www.nzherald.co.nz/section/story.cfm?c_id=5&objectid=10487151
- March 31: Telecom officially separates into three divisions (Chorus, Telecom Wholesale, Telecom Retail)
- April 1: Russ Houlden, a colleague of Reynolds at BT, is appointed Chief Financial Officer. He replaces Marko Bogoievski, who joined Infratil
Infratil Ltd is a New Zealand-based infrastructure investment company. It owns several airports, electricity generators and retailers, and a public transport business, with operations in New Zealand, Australia and Europe. Infratil was founded by Lloyd Morrison, a Wellington-based merchant banker....
.
2009
- January 12: Telecom announces the closure of its online retail store Ferrit.
- May 29: Telecom launches its UMTS 850MHz network, XT Mobile Network
The XT Mobile Network is a 3G UMTS mobile network run by Telecom New Zealand, which operates on the WCDMA 850 MHz frequency. It features improved performance, better global roaming and a wider range of handsets compared to the older Telecom CDMA network...
, to the public.
- August
August is the eighth month of the year in the Gregorian Calendar and one of seven Gregorian months with a length of 31 days.This month was originally named Sextilis in Latin, because it was the sixth month in the original ten-month Roman calendar under Romulus in 753 BC, when March was the first...
: An industrial dispute emerges between Chorus and the Engineering, Printing and Manufacturing UnionThe Engineering, Printing and Manufacturing Union is the largest private sector trade union in New Zealand. It was formed in 1996 by the merger of the Engineers' Union , the Printing, Packaging and Manufacturing Union , and the Communications and Energy Workers' Union .The EPMU represents workers...
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. http://www.stuff.co.nz/business/industries/telecoms-it-media/2575080/EPMU-prepares-Visionstream-campaign/ http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10592927
- October 16: New logo announced
Telecom Mobile
Telecom Mobile is
New ZealandNew Zealand is an island country in the south-western Pacific Ocean comprising two main landmasses , and numerous smaller islands, most notably Stewart Island/Rakiura and the Chatham Islands. The indigenous Māori named New Zealand Aotearoa, commonly translated as The Land of the Long White Cloud...
's second-largest mobile operator, with less than 50% of market-share, slightly behind
VodafoneVodafone is a British mobile network operator, with its headquarters in Newbury, Berkshire, England, UK. It is the largest mobile telecommunications network company in the world by turnover, and has a market value of about £75 billion...
. Telecom used to operate
AMPSAMPS or amps can mean any of the following:* 2-Acrylamido-2-methylpropane sulfonic acid, AMPS http://www.lubrizol.com/SpecialtyMonomers/default.html* Abbreviation of the plural for Ampere, a unit of electrical current...
, Digital D-AMPS/
TDMATime division multiple access is a channel access method for shared medium networks. It allows several users to share the same frequency channel by dividing the signal into different time slots. The users transmit in rapid succession, one after the other, each using his own time slot. This...
and currently operates
CDMA2000CDMA2000 is a hybrid 2.5G / 3G technology of mobile telecommunications standards that use CDMA, a multiple access scheme for digital radio, to send voice, data, and signalling data between mobile phones and cell sites. CDMA2000 is considered a 2.5G technology in 1xRTT and a 3G technology in EVDO...
. AMPS and D-AMPS service was sold under the 025 brand and CDMA services are sold under the 027 brand. Telecom turned off the 025 network on 31 March 2007
http://www.telecom.co.nz/content/0,8748,205317-201933,00.html?nv=tpd. Most of its customers had migrated to the 027 network. The 027 CDMA EV-DO network is marketed as T3G, a 2 MB third-generation mobile system.
On the 8 June 2007, Telecom announced a plan to build a hybrid
W-CDMAW-CDMA , UMTS-FDD, UTRA-FDD, or IMT-2000 CDMA Direct Spread is an air interface found in 3G mobile telecommunications networks. It is the basis of Japan's NTT DoCoMo's FOMA service and the most-commonly used member of the UMTS family and sometimes used as a synonym for UMTS...
/UMTS-CDMA network
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, to be called
XT Mobile NetworkThe XT Mobile Network is a 3G UMTS mobile network run by Telecom New Zealand, which operates on the WCDMA 850 MHz frequency. It features improved performance, better global roaming and a wider range of handsets compared to the older Telecom CDMA network...
, based on the WCDMA HSPA technology, to replace its current CDMA EV-DO network.
The network was launched on 30 May 2009 running at 850 MHz with some 3G 2100 MHz for extra coverage in urban areas. Telstra's
Next GNext G is a 3G UMTS mobile network run by Telstra in Australia.The network was built between November 2005 and September 2006, and launched in October 2006. Next G is the largest mobile network in Australia, providing larger coverage than other 3G providers in Australia and over three times larger...
(in Australia) and AT&T Wireless also have networks running on 850 MHz, which can cover greater geographic distances and penetrate buildings more effectively than higher frequencies. Current CDMA phones are guaranteed by Telecom to work until at least June 2012. The Telecom UMTS network is planned to have no GSM coverage, no roaming coverage for 2G phones. Foreign 850MHz (North American) UMTS handsets can roam to this network, 2100MHz (European) handsets would have limited coverage.
Customer numbers and market share
The following shows customer numbers and market share information for Telecom Mobile, including both the now-shut-down 025 network and current 027 network customers (these refer to Telecom Mobile's numbers starting with 025 and 027). Since
Vodafone New ZealandVodafone New Zealand is a British owned telecommunications company, a subsidiary of Vodafone Plc operating in New Zealand. It is New Zealand's largest mobile phone operator, based in Auckland. The company was formed in 1998, after Vodafone purchased BellSouth's New Zealand operations...
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.
| 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% |
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; On XTRA Broadband it used to cost over $1200 to download 100GB of data in a month, plus monthly access fees (at residential rates, business was more expensive). Prices have since dropped as competition in the broadband market becomes stronger. The unlimited plans have since been removed as Telecom found it was unable to deliver the speeds promised. Traffic management was meant to be applied over Peer-to-Peer and related traffic, but was instead implemented over all traffic. 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
ISPAn Internet service provider is a company that offers its customers access to the Internet...
,
XtraXtra Limited , is New Zealand's largest Internet service provider, a wholly owned subsidiary of Telecom New Zealand. Xtra offers various internet services including ADSL and dial-up connections within New Zealand and has been doing so since its inception in the mid 1990s.The name Xtra is also used...
.
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 providerAn Internet service provider is a company that offers its customers access to the Internet...
s formally complained to New Zealand's Commerce Commission via a letter.
http://computerworld.co.nz/news.nsf/UNID/232444CFFD9ADC6ECC25703F0009B334?OpenDocument&pub=Computerworld Notably absent from the list of signatories were Telecom’s ISP, Xtra, and several ISPs owned by its main competitor,
TelstraClearTelstraClear is New Zealand's second-largest telecommunications company and is a wholly-owned subsidiary of Telstra Corporation , with around 400,000 customers....
.
On February 1 2007 the
Consumers' Institute- The history of Consumer :The Consumers’ Council was established in 1959 ‘to protect and promote the interest of consumers of goods and services’. In 1963 the name Consumers Institute was adopted and in 1967 it became a separate government funded entity...
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".
Telecom has been given the
Roger AwardThe Roger Award For The Worst Transnational Corporation Operating in New Zealand is an annual media campaign run since 1997 by two activist organisations, Campaign Against Foreign Control of Aotearoa and GATT Watchdog...
more than once, in 2004 and 2007 - and only the second company awarded as such, with the defunct TranzRail being the first.
http://canterbury.cyberplace.co.nz/community/CAFCA/publications/Roger/index.html
Effects of monopoly
The
New Zealand TreasuryThe New Zealand Treasury is a public sector organisation and the Government’s lead advisor on economic and financial policy. Its role is to help the Government improve economic performance and manage scarce resources...
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
TelstraClearTelstraClear is New Zealand's second-largest telecommunications company and is a wholly-owned subsidiary of Telstra Corporation , with around 400,000 customers....
) 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
In
an article published on 25 October 2005, Telecom claimed 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 internet experts and competitors disagreed and even the secretary of the OECD
took a shot at Telecom.
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 ClarkHelen Elizabeth Clark , a New Zealand politician and administrator, is the head of the United Nations Development Programme, the third-highest UN position. Clark was the 37th Prime Minister of New Zealand for three consecutive terms from 1999 to 2008 and led the Labour Party from 1993 until it lost...
criticised the state of the internet in New Zealand . This was followed by extensive criticism in the media such as in two high profile television programmes, in two episodes of
Campbell LiveCampbell Live is a half-hour long New Zealand current affairs programme weeknights at 7.00pm, on TV3 and is hosted by New Zealand television personality, John Campbell. Carol Hirschfeld is the back up support host and the show producer...
(whose past major sponsors include Telecom), during which CEO Theresa Gattung was challenged by host
John CampbellJohn Campbell is the presenter of Campbell Live, a primetime 7.00pm current affairs programme on TV3 in New Zealand.-Early Career:...
, 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 ReviewThe National Business Review is a weekly New Zealand newspaper aimed at the business sector. The paper is owned by Barry Colman who also publishes the Grocers Review and several other small trade publications....
, 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
ICANNICANN is the Internet Corporation for Assigned Names and Numbers. Headquartered in Marina Del Rey, California, United States, ICANN is a non-profit corporation that was created on September 18, 1998 and incorporated September 30, 1998 in order to oversee a number of Internet-related tasks...
meeting,
Vint CerfVinton Gray "Vint" Cerf is an American computer scientist who is the "person most often called 'the father of the Internet'."...
was reported to have made a personal visit to
David CunliffeDavid Richard Cunliffe is a New Zealand politician. He is a member of the Labour Party, and the sitting member of parliament for New Lynn, West Auckland. He served as the Minister of Health and Minister for Communications and Information Technology for the Fifth Labour Government of New Zealand...
, the telecommunications minister where it is believed he recommended that Telecom be unbundled . 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.
Local loop unbundling
In a decision by the New Zealand Government on May 3 2006, Telecom was forced to unbundle the
local loopIn telephony, the local loop is the physical link or circuit that connects from the demarcation point of the customer premises to the edge of the carrier or telecommunications service provider's network...
. This allowed competitors (such as
TelstraClearTelstraClear is New Zealand's second-largest telecommunications company and is a wholly-owned subsidiary of Telstra Corporation , with around 400,000 customers....
,
OrconORCON may refer to:* Orcon Internet Limited, a New Zealand ISP* The aerospace contractor ORCON Corporation* Orcon, a Belgian/Dutch air-conditioning company* Project Orcon, a World War II project to use pigeons to control guided missiles* ORCON, a U.S...
and
Ihugihug was New Zealand's third largest ISP , before it was bought, then absorbed by Vodafone New Zealand . According to 2005 estimates, it had over 100,000 internet and phone subscribers...
) to offer
broadbandThe term broadband can have different meanings in different contexts. The term's meaning has undergone substantial shifts.-In telecommunication:...
and other communications services throughout New Zealand by installing their own equipment in exchanges. 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
InternetNZInternetNZ is a non-profit organisation dedicated to protecting and promoting the Internet in New Zealand and fostering a coordinated, cooperative approach to its ongoing development.- Current Councillors :The elected InternetNZ council as at 2008-08-14 are Neil James, Donald Clark,...
and Paul Budde applauded the decision, with opposition to unbundling coming from the
Business RoundtableThe New Zealand Business Roundtable , a market-oriented thinktank, operates from Wellington, New Zealand. Businessman Robert McLeod chairs the organisation, with Bill Gallagher MBE, Nick Calavrias and Bill Day as Vice-Chairs. The Executive Director is Roger Kerr. Members, who pay a five-figure...
,
Federated FarmersFederated Farmers of New Zealand Incorporated is an organisation in New Zealand which lobbies on behalf of its member farmers.It has a network of 24 provinces and seven industry groups. Federated Farmers provides a locally based, democratic organisation that lobbies on farming issues both...
, and Bruce Sheppard (representing Telecom shareholders). Legislation was introduced to enable the regulatory changes. Three other political parties (
New Zealand FirstNew Zealand First is a political party in New Zealand. It had members in the New Zealand House of Representatives for over fifteen years, from the date that Winston Peters, its leader, won his Tauranga electorate seat in 1993...
, the
Green PartyThe Green Party of Aotearoa New Zealand is a political party in the New Zealand parliament. It focuses firstly on environmentalism, arguing that all other aspects of humanity will cease to be of concern if there is no environment to sustain it...
and United Future ) 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 PartyThe New Zealand National Party is the largest party in the New Zealand House of Representatives and in November 2008 formed a minority government with support from three minor parties...
initially opposed the unbundling decision, but later voted in favour of it after a select committee hearing. This left the
ACT PartyACT New Zealand is a political party in New Zealand that espouses free market classical liberalism in the New Zealand Parliament. According to party leader Rodney Hide, the party stands for 'individual freedom, personal responsibility, doing the best for our natural environment and for smaller,...
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
VodafoneVodafone is a British mobile network operator, with its headquarters in Newbury, Berkshire, England, UK. It is the largest mobile telecommunications network company in the world by turnover, and has a market value of about £75 billion...
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 entities - Wholesale and Retail. 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.
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