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Telecom New Zealand

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Telecom New Zealand is a Wellington, New Zealand-based telephone company and, through its subdivision Xtra, an internet service provider. It has been run as a publicly-traded private company since 1990. It is also New Zealand's second largest mobile phone operator. Telecom is the largest company by value on the New Zealand Exchange Ltd 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. [1]

Telecom was formed in 1987 from a division of the New Zealand Post Office and privatisation in 1990. The selling price is still considered by many to be extremely low, given that Telecom had a monopoly of all phone lines in New Zealand at the time. Some consider that the decision to privatise Telecom was a mistake & that it would have been better to keep Telecom as a government entity. Others consider that the capital requirements to modernise the network were better provided by private enterprise than the government.

Contents

Background

History

1987

  • The New Zealand Post Office divests itself of the newly created Telecom which was created as a State Owned Enterprise (SOE) on March 31 1987.
  • The Government-owned Telecom Corporation is to have a commercial focus. It purchases telecommunications assets of the Post Office for NZ$3.2 billion and work begins on improving the services and network.
  • Telecom launches its 025 mobile network and TDMA mobile data network. The New Zealand telecommunications market is progressively deregulated.

1990

  • Telecom is sold to two United States-based telecommunications companies, Bell Atlantic and Ameritech, for NZ$4.25 billion [2]. The two companies today still have part-ownership of the company.
  • Clear Communications (now TelstraClear), begins the first network to compete with Telecom.
  • The Kiwi Share agreement is drawn up and part of this agreement retains free local calling for residential customers.

1991

  • Telecom lists on the New Zealand, Australian and New York stock exchanges.

1992

  • Telecom implements a NZ$200 million dollar fibre-optic cable connection between Australia and New Zealand.

1993

  • Ameritech and Bell Atlantic reduce their shares in Telecom to a combined 49.6%.
  • BellSouth (now Vodafone) sets up the first mobile network to compete with Telecom.

1995

  • Clear Communications reaches an agreement on local service interconnection.
  • Telecom creates First Media Ltd to develop a cable television network across Auckland and Wellington, called First TV

1996

  • Telecom establishes a telephone exchange in the United States for international traffic.
  • Telstra New Zealand Limited (now TelstraClear) sets up operations in the New Zealand business market.
  • Telecom launches an Internet Service Provider, Xtra, which is New Zealand's largest internet service provider 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, 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, Australia's third-largest telecommunication company.
  • Telecom upgrades its nationwide payphone network to smart card technology.
  • Telecom's fast Internet service based on ADSL technology, called JetStream, 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.

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 Politics of New Zealand 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 won the Roger Award for The Worst Transnational Corporation operating in New Zealand.

2005

  • Telecom releases Bitstream, a 256kbit ADSL service sold at wholesale prices (at approximately 10% below the retail price) to other ISP's.
  • 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 Mass media allowing access to almost anyone's voicemail.
  • Telecom posts a profit of $NZ 916 million.

2006

  • May 3: The New Zealand Government announces that it will require Telecom to unbundle the local loop to provide "access to fast, competitively priced broadband internet".[3]
  • May 4: $NZ 1.1 billion of its market capitalisation was wiped off following the announcement. [4]
  • May 9: An audio clip recorded on March 2 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. [5]
  • 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 but it is still available at other locations. [6] Telecon commercial
  • June 27: Telecom announces it will voluntarily separate its business into two operating entities - Wholesale and Retail. [7]
  • 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. [8]

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, 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. [9] [10]
  • February 2: 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.[11]
  • February 5: Telecom announces that from March of 2007 they will begin rolling out ADSL2+, more than a year after originally stated for roll out.
  • March 31: The 025 Digital AMPS cellular network is closed down. [12]
  • April 1: All NZ 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.
  • May 2007: 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.
  • June 28: Telecom announces that Paul Reynolds (businessman), then CEO of BT Wholesale has been selected to replace Theresa Gattung as the new CEO. His employment will commence on 27 September. [13] Simon Moutter has been appointed as acting CEO in the interim.[14]
  • June 30: Theresa Gattung steps down with a reported leaving payment of $5.125 million in cash and 12 weeks annual leave owing.[15]


2008

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 and current local-loop 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, however business only plans were dropped). Prices have since dropped as competition in the broadband market becomes stronger (for example, residential and business can now have an unlimited data plan for $44.40). 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 p2p 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 control of local loop services. Telecom has also leveraged its control of residential services to establish the country’s largest internet service provider, Xtra.

Competitors have alleged that Telecom engages in unfair practices to prevent them from gaining ground, for example by resellsing 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. [16] Notably absent from the list of signatories were Telecom’s ISP, Xtra, and several ISPs owned by its main competitor, TelstraClear.

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.

Late 2005, early 2006

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[17]. This was followed by extensive criticism in the media such as in two high profile television programmes, in two episodes of Campbell Live (whose major sponsor is Telecom), during which CEO Theresa Gattung was challenged by host John Campbell (broadcaster), and an episode of the New Zealand edition of Sunday (TV series). Critical articles have 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 [18] [19]. 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.

In a decision by the New Zealand Government on May 3 2006 - Telecom has been forced to unbundle the local loop. This will allow competitors (such as TelstraClear and Ihug) to offer broadband and other communications services throughout New Zealand by installing their own equipment in the exchanges. [20] [21]. The announcement of this decision was rushed 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 budget 2006. Most of Telecom's competitors and many independent commentators such as InternetNZ and Paul Budde have applauded the decision. Legislation will have to be introduced to enable the regulatory changes. Three other political parties, New Zealand First [22], the Green Party [23] and United Future [24] all appear to support the decision which would give the government at least 66 votes if there are no votes against the party line.

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 allows Vodafone to establish a mobile phone product which can also provide free local calling, in direct competition with a product for which Telecom has 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 [25].

The Government introduced the Telecommunications Amendment Bill in November 2006 to force Telecom to open its network to competitors. If passed, the bill will split Telecom into three business units, with network access separated from the wholesale and retail units.

2007

On February 1 2007 the Consumers' Institute of New Zealand 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". [26]

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. Telecom now faces competition in all areas- cellular, internet, toll-calls and, subject to ongoing developments, in local calling.

Telecom Mobile

Telecom Mobile is New Zealand's second-largest mobile operator, with about 49% [27] market-share, slightly behind Vodafone. Telecom used to operate AMPS, Digital D-AMPS/Time division multiple access and currently operates CDMA. 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 [28]. 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-CDMA/UMTS-CDMA network, based on the WCDMA HSPA technology, to replace its current CDMA EV-DO network. Construction is planned for late 2007 or late 2008 with current CDMA phones guaranteed by Telecom to work for the next five years.

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 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.

Telecom also has the advantage over Vodafone in phone number availability. Telecom Mobile's 027 network has 10 million numbers available, while Vodafone has only 3.4 million available.

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%

Xtra

Xtra Limited (trading as Xtra), a subdivision of Telecom New Zealand, is New Zealand's largest Internet service provider. Xtra, also known as Yahoo!Xtra offers various internet services including ADSL and dial-up within New Zealand and has been doing so since its inception in the mid 1990's.

From the time of Xtra's inception, Xtra has been providing dial-up internet throughout New Zealand. In 1999 Telecom created New Zealand's only ADSL service. Telecom later allowed other ISP's to access its ADSL networks (under increasing government and public pressure). Today, despite a array of wholesale options available through Telecom Wholesale, it is widely believed that Telecom has provided and still is providing unfair and monopolistic terms of trade regarding its wholesale ADSL services [29]. Many feel the the only way to achieve a truly free market is to unbundle Telecoms local loop.

Xtra's "Go Large" plan was introduced as New Zealand's first completely unlimited ADSL service in 2006, however there has been much public criticism and disappointment at the appalling instability and general slowness of the newly introduced plan. [30] The Go Large Plan was advertised with unlimited data usage and maximum speed. What was not clearly stated on advertisements, however, was that there was a fair use policy and traffic management that restricted users to a download limit between 4pm and 12am. If one were to continually exceed this limit, they would be placed in a "download pool", or contacted with offers to switch to another plan [31][32].

The largest ISP

As a subdivision of Telecom New Zealand, Xtra has retained some monopoly of its parent company. To many people, this monopoly is widely regarded as an unfair advantage over other ISPs. Many lobbyists, including Slingshot's CEO Annette Presley have persuaded New Zealand's Communications Ministry to force the unbundling of Telecom's local loop, so as to fairer trading terms and lessen Xtra's ISP monopoly. The LLU (Local loop unbundling) has not yet been completed, however some initial tests have been completed. Unbundled access is expected to arrive about mid 2008.

ORBS

During 2001 Xtra and Actrix (New Zealand Internet Service Providers) won a High Court injunction to get themselves off the Open Relay Behavior-modification System (ORBS) anti-spam blacklist operated by Alan Brown. ORBS had been a blacklist of IP addresses relating to open mail relays, which can be abused by spammers to send unsolicited bulk e-mail. Hundreds of organisations subscribed to the list, including Bigfoot.com and at least one other large free mail provider. They rejected e-mail from any IP address listed in ORBS.

The court action led (indirectly) to the end of one of the oldest DNSBL services ORBS' death: Alan Brown replies Court forces ORBS to remove Xtra e-mail from blacklist.

Xtra Broadband Refund

As of 22 February 2007, Telecom has decided to refund all of it's Go Large customers (approximately 60,000) starting from $130 per customer. This has been caused by the overwhelming complaints and criticisms Telecom Xtra has received due to their lack of action, over hyped promises and under-delivering of the Go Large plan. Customers who have been on the Go Large plan since 8 December 2006 until present, are entitled to $130-$160 credit refund. The refund may cost Telecom Xtra up to 7.5 - 8.5 million NZ dollars.

The credit refund is to be processed in customers' bills in March and April.

Some have speculated Xtra refunds their customers using bill credit rather than cash as a measure to prevent customers from switching to other ISPs, if the customers intended to use the money for that purpose.

Also, in addition to refunding customers, Telecom Xtra may also have to refund other smaller NZ ISPs as a result of manipulation and overpricing of wholesale prices set by Telecom for other ISPs to purchase. This refund may set Telecom Xtra back by a further 800,000 NZ dollars. This proposal is being considered by the Commerce Commission of New Zealand.

XtraMSN/Yahoo!Xtra

XtraMSN was one of the trading names of Telecom New Zealand's ISP Xtra, and was used as the branding for its default home page for customers. The present name came from a deal between Xtra and MSN, a merger of Xtra's homepage xtra.co.nz with Microsoft New Zealand's msn.co.nz.

Several other MSN services besides the portal were cobranded with Xtra in the XtraMSN brand (e.g. Hotmail). Several versions of capitalising XtraMSN have been used by Telecom and Microsoft New Zealand in their promotional literature.

A Yahoo!Xtra Bubble page
A Yahoo!Xtra Bubble page

In 2007 Xtra changed to Yahoo!7 in Microsoft's place [33]. Their main portal is now Yahoo!Xtra. During the change over Telecom experienced much backlash over a change in email set up. Part of the agreement between Yahoo!7 and Xtra required Xtra's email addresses be moved over to Yahoo!7 servers in Australia. This required settings changes in order for customers to access their Yahoo!Xtra "Bubble" email accounts. Users were forced to change basic settings such as mail server, but also more advanced settings such as port numbers and authentication.


Yahoo!Xtra provides many different services which are a break from the traditional Internet provider:

The Yahoo!Xtra Mail Pro webmail interface
The Yahoo!Xtra Mail Pro webmail interface
  • An improved webmail client has been released which allows for interactions similar to a desktop email client, coupled with no limits on storage.
  • Flickr Pro. All Xtra Broadband customers are able to upload and share their photos on this service without any limitations that are placed on the free version.
  • Yahoo!Xtra Bubble - an heavy customisable web interface which allows users to create their own pages based off RSS feeds and other news/media sources which allows one to create a personal series of sites.
  • Sub accounts - Xtra Customers can have up to 10 sub accounts, all of which are able to use Yahoo!Xtra services.
  • Briefcase - Xtra customers have one gigabyte of storage to upload files of their choice.



Officemail

Officemail is the name of Telecom Xtras email service for domain accounts. Instead of having an @xtra.co.nz address, this meant that once you had registered a domain name of your choice, you could have email services hosted with Xtra as well. Officemail is a fairly recent creation, coming into existence in mid 2007. Previously it shared the same settings as xtra.co.nz users however with the Yahoo!xtra launch - uses had to use the new Officemail settings.

Company division

This section requires further editing and expansion.

On DATE, the New Zealand Government announced that Telecom must separate into three business units before March 31, 2008.

On 16 January, in response to the announcement, Telecom announced the name of their split network division, Chorus. Chorus, a business unit led by Mark Ratcliffe is responsible for providing equal access to providers using Telecoms local network.

The 'Chorus' name will also be placed on service vans which install and maintain the local exchanges and cabling. It is due to launch on the 31st of March.[34]

Other details have yet to be announced.

Services provided by Telecom

Plans available



Settings

The following Telecom products have setting pages:

Contacting Telecom

Telecom New Zealand offer multiple ways of contacting them. This is detailed in greater detail in this article.

External links

Retrieved from "http://www.nzconnection.net/Telecom_New_Zealand"
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