Telecom New Zealand
Encyclopedia
Telecom New Zealand is a New Zealand
-wide communications service provider
(CSP), providing fixed line telephone service
s, a mobile
network, an internet service provider
(through its subsidiary Xtra
), a major ICT provider to NZ businesses (through its Gen-i division), and a wholesale network infrastructure
provider to other NZ CSPs (through its Chorus 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.
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. 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 requirement
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 unbundling
initiatives by central government – Telecom Retail; Telecom Wholesale; and Chorus, the network infrastructure division.
(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.
-based telecommunications companies, Bell Atlantic and Ameritech
, for NZ$4.25 billion. 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 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, Australia
n 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
.
1996
1997
1998
1999
2001
2004
2005
2006
2007
2008
2009
2011
. It is a wholly owned subsidiary of Telecom.
's second-largest mobile operator, with less than 50% of market-share, slightly behind Vodafone
. Telecom used to operate AMPS
, Digital D-AMPS/TDMA
and currently operates CDMA2000
. 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. 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.
Telecom announced on 8 June 2007 the intention to build a W-CDMA
/UMTS network, 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. All their cell sites provide service at 850 MHz with some 3G 2100 MHz overlay in urban areas to serve inbound roaming customers with 2100 MHz only phones. Telstra's Next G
(in Australia) and AT&T Wireless also have networks running on 850 MHz. 850 MHz services can cover greater geographic distances and penetrate buildings more effectively than higher frequencies. The new Telecom network has no GSM coverage, which means there is no service for 2G only phones.
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.With this is mind Telecom has recently increased marketing and bringing in better services such as its latest offer of 5000 texts to any network for $12 compared to 2degrees who have recently launched a $10 service where they get 2500 texts to any network and further more Vodafone's $10 2000 texts Vodafone to Vodafone texts only. Heavy criticism has been made to Vodafone which hasn't brought out text plans to all networks which its customers are losing faith in and jumping ships to either Telecom or 2degrees.
, 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 provider
s formally complained to New Zealand's Commerce Commission via a letter. 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".
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.
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.
However, some experts and competitors disagreed - including the secretary of the OECD.
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 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. 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.
. 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. 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
, the Green Party
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 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. 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.
New Zealand
New Zealand is an island country in the south-western Pacific Ocean comprising two main landmasses and numerous smaller islands. The country is situated some east of Australia across the Tasman Sea, and roughly south of the Pacific island nations of New Caledonia, Fiji, and Tonga...
-wide communications service provider
Communications Service Provider
A communications service provider or CSP is a service provider that transports information electronically. The term encompasses public and private companies in the telecom , Internet, cable, satellite, and managed services businesses.The market in which a communication service provider specializes...
(CSP), providing fixed line telephone service
Plain old telephone service
Plain old telephone service is the voice-grade telephone service that remains the basic form of residential and small business service connection to the telephone network in many parts of the world....
s, a mobile
Mobile phone
A mobile phone is a device which can make and receive telephone calls over a radio link whilst moving around a wide geographic area. It does so by connecting to a cellular network provided by a mobile network operator...
network, an internet service provider
Internet service provider
An Internet service provider is a company that provides access to the Internet. Access ISPs directly connect customers to the Internet using copper wires, wireless or fiber-optic connections. Hosting ISPs lease server space for smaller businesses and host other people servers...
(through its subsidiary Xtra
Xtra (ISP)
Xtra Limited is New Zealand's largest Internet service provider . It was founded in 1996 and is a wholly owned subsidiary of Telecom New Zealand. Xtra has provided dial-up Internet access throughout New Zealand since its inception...
), a major ICT provider to NZ businesses (through its Gen-i division), and a wholesale network infrastructure
Telecommunications network
A telecommunications network is a collection of terminals, links and nodes which connect together to enable telecommunication between users of the terminals. Networks may use circuit switching or message switching. Each terminal in the network must have a unique address so messages or connections...
provider to other NZ CSPs (through its Chorus 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.
Telecom was formed in 1987 from a division of the New Zealand Post Office
New Zealand Post Office
The New Zealand Post Office was a New Zealand government department.As a Government Department, the New Zealand Post Office or N.Z.P.O., previously the Post and Telegraph Department or P & T, had as the political head the Postmaster General who was a member of Cabinet, and, when it was a separate...
and privatised in 1990. The selling price was considered by some to be extremely low, given that Telecom had a monopoly
Monopoly
A monopoly exists when a specific person or enterprise is the only supplier of a particular commodity...
of all phone lines in New Zealand at the time. 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 requirement
Capital requirement
Capital requirement refers to -The standardized requirements in place for banks and other depository institutions, which determines how much capital is required to be held for a certain level of assets through regulatory agencies such as the Bank for International Settlements, Federal Deposit...
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 unbundling
Local loop unbundling
Local loop unbundling is the regulatory process of allowing multiple telecommunications operators to use connections from the telephone exchange 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 of New Zealand
State-owned enterprises in New Zealand are registered companies listed under Schedules 1 and 2 of the State-Owned Enterprises Act 1986...
(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
Time division multiple access
Time 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 its 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 StatesUnited States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
-based telecommunications companies, Bell Atlantic and Ameritech
Ameritech
AT&T Teleholdings, Inc., formerly known as Ameritech Corporation , was a U.S. telecommunications company that arose out of the 1984 AT&T divestiture. Ameritech was one of the seven Regional Bell Operating Companies that was created following the breakup of the Bell System...
, for NZ$4.25 billion. 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 Communications
Clear Communications
Clear 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 TelstraClear
TelstraClear
TelstraClear 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, Australia
Australia
Australia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area...
n and New York
New York
New York is a state in the Northeastern region of the United States. It is the nation's third most populous state. New York is bordered by New Jersey and Pennsylvania to the south, and by 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 Deane
Roderick Deane
Roderick Sheldon "Rod" Deane is a New Zealand economist, public sector reformer, and businessman. He has served as Deputy Governor of the Reserve Bank of New Zealand, and as CEO and chairman of the country's largest telecommunications company, Telecom New Zealand.-Education:Deane grew up in...
was appointed CEO of the company. Then in 1993 Ameritech and Bell Atlantic reduced their share
Share (finance)
A joint stock company divides its capital into units of equal denomination. Each unit is called a share. These units are offered for sale to raise capital. This is termed as issuing shares. A person who buys share/shares of the company is called a shareholder, and by acquiring share or shares in...
in Telecom to a combined 49.6%, and BellSouth
BellSouth
BellSouth 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 Vodafone
Vodafone
Vodafone Group Plc is a global telecommunications company headquartered in London, United Kingdom. It is the world's largest mobile telecommunications company measured by revenues and the world's second-largest measured by subscribers , with around 341 million proportionate subscribers as of...
) 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
First TV
First 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 exchangeTelephone exchangeIn 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 TelstraClearTelstraClearTelstraClear 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 XtraXtra (ISP)Xtra Limited is New Zealand's largest Internet service provider . It was founded in 1996 and is a wholly owned subsidiary of Telecom New Zealand. Xtra has provided dial-up Internet access throughout New Zealand since its inception...
, which is New Zealand's largest internet service providerInternet service providerAn Internet service provider is a company that provides access to the Internet. Access ISPs directly connect customers to the Internet using copper wires, wireless or fiber-optic connections. Hosting ISPs lease server space for smaller businesses and host other people servers...
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 LimitedSouthern Cross CableThe Southern Cross Cable, operated by Bermuda company 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 AAPTAAPTAAPT 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 JetStreamJetStreamJetStream and Mobile JetStream are two former 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 GattungTheresa GattungTheresa 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 GovernmentPolitics of New ZealandThe politics of New Zealand take 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 TelstraClearTelstraClearTelstraClear is New Zealand's second-largest telecommunications company and is a wholly owned subsidiary of Telstra Corporation , with around 400,000 customers....
.
2004
- Telecom purchases Gen-i Ltd (May).
- Telecom purchases Computerland Ltd (September).
- Telecom won the Roger AwardRoger 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...
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 exploitExploit (computer security)An exploit is a piece of software, a chunk of data, or sequence of commands that takes advantage of a bug, glitch or vulnerability in order to cause unintended or unanticipated behavior to occur on computer software, hardware, or something electronic...
to the mediaMass mediaMass media refers collectively to all media technologies which are intended to reach a large audience via mass communication. Broadcast media transmit their information electronically and comprise of television, film and radio, movies, CDs, DVDs and some other gadgets like cameras or video consoles...
allowing access to almost anyone's voicemailVoicemailVoicemail is a computer based system that allows users and subscribers to exchange personal voice messages; to select and deliver voice information; and to process transactions relating to individuals, organizations, products and services, using an ordinary telephone...
. - Telecom posts a profit of NZ$New Zealand dollarThe 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
- 3 May: The New Zealand Government announces that it will require Telecom to unbundle the local loopLocal 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...
to provide "access to fast, competitively priced broadband internet". - 4 May: NZ$New Zealand dollarThe 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. - 9 May: An audio clip recorded on 2 March was released involving Telecom CEO Theresa GattungTheresa GattungTheresa 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. - 19 May: A video titled "Telecon" incorporating the 9 May audio clip and a dubbed Telecom ad was released. Telecom got it removed from YouTubeYouTubeYouTube is a video-sharing website, created by three former PayPal employees in February 2005, on which users can upload, view and share videos....
but it is still available at other locations. - 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.
- July: Matt Crockett is appointed CEO of Telecom's Wholesale division.
- 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.
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.
- 19 January: It is reported that Paritai Drive, OrakeiOrakeiOrakei 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 AucklandAucklandThe Auckland metropolitan area , in the North Island of New Zealand, is the largest and most populous urban area in the country with residents, percent of the country's population. Auckland also has the largest Polynesian population of any city in the world...
, is still not capable of receiving a broadbandBroadbandThe term broadband refers to a telecommunications signal or device of greater bandwidth, in some sense, than another standard or usual signal or device . Different criteria for "broad" have been applied in different contexts and at different times...
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. - 2 February: Telecom announces Director and CEO Theresa GattungTheresa GattungTheresa 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. - 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 networkDigital AMPSIS-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. D-AMPS is considered end-of-life, and existing networks have mostly been replaced by GSM/GPRS or CDMA2000...
is closed down. - 1 April: All New Zealand telecommunications providers including Telecom introduce number portabilityLocal number portabilityLocal number portability for fixed lines, and full mobile number portability for mobile phone lines, refers to the ability to transfer either an existing fixed-line or mobile telephone number assigned by a local exchange carrier and reassign it to another carrier...
. - 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 AucklandAucklandThe Auckland metropolitan area , in the North Island of New Zealand, is the largest and most populous urban area in the country with residents, percent of the country's population. Auckland also has the largest Polynesian population of any city in the world...
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-CDMAW-CDMAW-CDMA , UMTS-FDD, UTRA-FDD, or IMT-2000 CDMA Direct Spread is an air interface standard 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, 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 WholesaleBT WholesaleBT 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.-External links:*...
, has been selected as the new CEO, to commence on 27 September. Simon MoutterSimon MoutterSimon Paul Moutter is a New Zealand engineer and businessman, currently CEO of Auckland Airport.-Qualifications and awards:* BSc Bachelor of Science , Massey University...
was appointed as acting CEO in the interim. - 30 June: Theresa Gattung steps down with a reported leaving payment of $5.125 million in cash and 12 weeks annual leave owing.
- 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.
- 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 InfratilInfratilInfratil Limited 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...
.
2009
- 12 January: Telecom announces the closure of its online retail store Ferrit.
- 29 May: Telecom launches its UMTS 850 MHz network, branded as XTXT Mobile NetworkMobile Network Code: 503 05NZ non-geographic prefix: 027The XT Mobile Network is a UMTS mobile network run by Telecom New Zealand. It operates nationwide in the 850 MHz frequency, with 2100 MHz infill in major urban areas....
, to the public. - August: An industrial dispute emerges between Chorus and the Engineering, Printing and Manufacturing UnionEngineering, 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. - 16 October: New logo announced
- December: Telecoms new mobile phone network XT Mobile NetworkXT Mobile NetworkMobile Network Code: 503 05NZ non-geographic prefix: 027The XT Mobile Network is a UMTS mobile network run by Telecom New Zealand. It operates nationwide in the 850 MHz frequency, with 2100 MHz infill in major urban areas....
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 NetworkXT Mobile NetworkMobile Network Code: 503 05NZ non-geographic prefix: 027The XT Mobile Network is a UMTS mobile network run by Telecom New Zealand. It operates nationwide in the 850 MHz frequency, with 2100 MHz infill in major urban areas....
caused by failing Radio Network Controller in Christchurch. - 27 April: Telecom releases first Android (operating system) handset on the XT Mobile NetworkXT Mobile NetworkMobile Network Code: 503 05NZ non-geographic prefix: 027The XT Mobile Network is a UMTS mobile network run by Telecom New Zealand. It operates nationwide in the 850 MHz frequency, with 2100 MHz infill in major urban areas....
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 MediaFairfax MediaFairfax Media Limited is one of Australia's largest diversified media companies. The group's operations include newspapers, magazines, radios and digital media operating in Australia and New Zealand. Fairfax Media was founded by the Fairfax family as John Fairfax and Sons, later to become John...
's Dominion PostThe Dominion Post (Wellington)The Dominion Post is a metropolitan broadsheet newspaper published in Wellington, New Zealand, owned by the Australian Fairfax group, owners of The Age, Melbourne, and The Sydney Morning Herald.- Foundation :...
reports that Telecom is under investigation by the Department of Internal AffairsDepartment of Internal Affairs (New Zealand)The New Zealand Department of Internal Affairs is a state sector organisation whose roles include the issue of passports; administering citizenship grant applications, and lottery grant applications; enforcement of censorship and gambling law; registration of births, deaths, marriages and civil...
' (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 WellingtonVictoria University of WellingtonVictoria University of Wellington was established in 1897 by Act of Parliament, and was a former constituent college of the University of New Zealand. It is particularly well known for its programmes in law, the humanities, and some scientific disciplines, but offers a broad range of other courses...
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. McConnochie later appeared on the TVNZ 7 show, Back BenchesBack BenchesBack Benches is a New Zealand political interview show, presented by Wallace Chapman and Damian Christie. It is filmed at the 'Backbencher' pub across the road from Parliament Buildings in Wellington, at 9.10 pm Wednesday nights , and reshown on Thursday mornings, Friday nights, and Saturday mornings...
to discuss the matter. - 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 ReviewNational 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....
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. - 1 July: Telecom announce a shutdown date of 31 July 2012 for their CDMA Cellular network.
Xtra
"Xtra" is New Zealand's largest Internet Service ProviderInternet service provider
An Internet service provider is a company that provides access to the Internet. Access ISPs directly connect customers to the Internet using copper wires, wireless or fiber-optic connections. Hosting ISPs lease server space for smaller businesses and host other people servers...
. It is a wholly owned subsidiary of Telecom.
Telecom Mobile
Telecom Mobile is New ZealandNew Zealand
New Zealand is an island country in the south-western Pacific Ocean comprising two main landmasses and numerous smaller islands. The country is situated some east of Australia across the Tasman Sea, and roughly south of the Pacific island nations of New Caledonia, Fiji, and Tonga...
's second-largest mobile operator, with less than 50% of market-share, slightly behind Vodafone
Vodafone
Vodafone Group Plc is a global telecommunications company headquartered in London, United Kingdom. It is the world's largest mobile telecommunications company measured by revenues and the world's second-largest measured by subscribers , with around 341 million proportionate subscribers as of...
. Telecom used to operate AMPS
Advanced Mobile Phone System
Advanced Mobile Phone System was an analog mobile phone system standard developed by Bell Labs, and officially introduced in the Americas in 1983, Israel in 1986, and Australia in 1987. It was the primary analog mobile phone system in North America through the 1980s and into the 2000s...
, Digital D-AMPS/TDMA
Time division multiple access
Time 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 its own time slot. This...
and currently operates CDMA2000
CDMA2000
CDMA2000 is a family of 3G mobile technology standards, which use CDMA channel access, to send voice, data, and signaling data between mobile phones and cell sites. The set of standards includes: CDMA2000 1X, CDMA2000 EV-DO Rev. 0, CDMA2000 EV-DO Rev. A, and CDMA2000 EV-DO Rev. B...
. 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. 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.
Telecom announced on 8 June 2007 the intention to build a W-CDMA
W-CDMA
W-CDMA , UMTS-FDD, UTRA-FDD, or IMT-2000 CDMA Direct Spread is an air interface standard 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 network, to be called XT Mobile Network
XT Mobile Network
Mobile Network Code: 503 05NZ non-geographic prefix: 027The XT Mobile Network is a UMTS mobile network run by Telecom New Zealand. It operates nationwide in the 850 MHz frequency, with 2100 MHz infill in major urban areas....
, based on WCDMA HSPA technology, to replace its current CDMA EV-DO network. The network was launched on 29 May 2009. All their cell sites provide service at 850 MHz with some 3G 2100 MHz overlay in urban areas to serve inbound roaming customers with 2100 MHz only phones. Telstra's Next G
Next G
Next G is a third generation mobile telecommunication network operated by Telstra in Australia.-Background:After a review, Telstra announced a plan to upgrade its ageing networks and systems; which includes a new 3G network to replace the then current CDMA mobile network.-Construction:The network...
(in Australia) and AT&T Wireless also have networks running on 850 MHz. 850 MHz services can cover greater geographic distances and penetrate buildings more effectively than higher frequencies. The new Telecom network has no GSM coverage, which means there is no service for 2G only phones.
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
Vodafone 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, New Zealand and 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.
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.With this is mind Telecom has recently increased marketing and bringing in better services such as its latest offer of 5000 texts to any network for $12 compared to 2degrees who have recently launched a $10 service where they get 2500 texts to any network and further more Vodafone's $10 2000 texts Vodafone to Vodafone texts only. Heavy criticism has been made to Vodafone which hasn't brought out text plans to all networks which its customers are losing faith in and jumping ships to either Telecom or 2degrees.
| 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 ISPInternet service provider
An Internet service provider is a company that provides access to the Internet. Access ISPs directly connect customers to the Internet using copper wires, wireless or fiber-optic connections. Hosting ISPs lease server space for smaller businesses and host other people servers...
, Xtra
Xtra (ISP)
Xtra Limited is New Zealand's largest Internet service provider . It was founded in 1996 and is a wholly owned subsidiary of Telecom New Zealand. Xtra has provided dial-up Internet access throughout New Zealand since its inception...
.
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 provider
Internet service provider
An Internet service provider is a company that provides access to the Internet. Access ISPs directly connect customers to the Internet using copper wires, wireless or fiber-optic connections. Hosting ISPs lease server space for smaller businesses and host other people servers...
s formally complained to New Zealand's Commerce Commission via a letter. Notably absent from the list of signatories were Telecom's ISP, Xtra, and several ISPs owned by its main competitor, TelstraClear
TelstraClear
TelstraClear is New Zealand's second-largest telecommunications company and is a wholly owned subsidiary of Telstra Corporation , with around 400,000 customers....
.
On 1 February 2007 the Consumers' Institute
Consumers' Institute of New Zealand
- 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 Award
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...
more than once, in 2004 and 2007 - and only the second company awarded as such, with the defunct TranzRail being the first.
Effects of monopoly
The New Zealand TreasuryNew Zealand Treasury
The 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 TelstraClear
TelstraClear
TelstraClear 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
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 experts and competitors disagreed - including the secretary of the OECD.
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 Clark
Helen Elizabeth Clark, ONZ is a New Zealand political figure who was the 37th Prime Minister of New Zealand for three consecutive terms from 1999 to 2008...
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 Live
Campbell Live
Campbell 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...
(whose past major sponsors include Telecom), during which CEO Theresa Gattung was challenged by host John Campbell
John Campbell (broadcaster)
John 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 Review
National Business Review
The 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 ICANN
ICANN
The Internet Corporation for Assigned Names and Numbers is a non-profit corporation headquartered in Marina del Rey, California, United States, that was created on September 18, 1998, and incorporated on September 30, 1998 to oversee a number of Internet-related tasks previously performed directly...
meeting, Vint Cerf
Vint Cerf
Vinton Gray "Vint" Cerf is an American computer scientist, who is recognized as one of "the fathers of the Internet", sharing this title with American computer scientist Bob Kahn...
was reported to have made a personal visit to David Cunliffe
David Cunliffe
David 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.
XT Network Outage
Telecom's new XT network faced two major, high profile outages in the consecutive months of December 2009 to February 2010. As a result of the loss of service Telecom offered a five million dollar compensation package for its customers.Local loop unbundling
In a decision by the New Zealand Government on 3 May 2006, Telecom was forced to unbundle the local loopLocal 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...
. This allowed competitors (such as TelstraClear
TelstraClear
TelstraClear is New Zealand's second-largest telecommunications company and is a wholly owned subsidiary of Telstra Corporation , with around 400,000 customers....
, Orcon
Orcon Internet Limited
Orcon Internet Limited , is a state-owned New Zealand telecommunications company. It is currently New Zealand's fourth largest ISP.-History:...
and Ihug
IHUG
ihug 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 broadband
Broadband
The term broadband refers to a telecommunications signal or device of greater bandwidth, in some sense, than another standard or usual signal or device . Different criteria for "broad" have been applied in different contexts and at different times...
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 InternetNZ
InternetNZ
InternetNZ 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 2010-04-08 are Frank March ,...
and Paul Budde applauded the decision, with opposition to unbundling coming from the Business Roundtable
New Zealand Business Roundtable
The 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. Members, who pay a five-figure subscription fee, represent most of the...
, Federated Farmers
Federated Farmers
Federated 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 First
New Zealand First
New Zealand First is a political party in New Zealand that was founded in 1993, following party founder Winston Peters' resignation from the National Party in 1992...
, the Green Party
Green Party of Aotearoa New Zealand
The Green Party of Aotearoa New Zealand is a political party that has seats 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 Party
New Zealand National Party
The 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.-Policies:...
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
Vodafone New Zealand
Vodafone 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, New Zealand and was formed in 1998, after Vodafone purchased BellSouth's New Zealand operations...
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
CallPlus
CallPlus is a New Zealand telecommunications company, parent of internet service provider Slingshot. It provides voice and data communication services to business customers. CallPlus is the fourth-largest telecommunications company in New Zealand, with revenues of over NZ$100 million .Annette...
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. 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.