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Posted by rod@drury.net.nz in Communications at 8:03 pm on Sunday, 10 June 2007
Lots of rumours on Kordia announcing an acquistion tomorrow. I was asked for my thoughts. Two things came immediately to mind.
- Where is Seeby going to have his party?
- Why is Kordia, a State Owned Enterprise, buying a retail ISP?
I would have thought Kordia would be the natural manager of state managed infrastructure, so this move would disappoint me. Regardless, becoming a vertically integrated ISP and competing against private industry doesn’t seem quite right.
Interested in other peoples thoughts.
blog
I guess their pitch is all about convergence and integrated suites of offerings so vertical integration is pretty much a fundamental requirement of delivering on the promises.
I can see the headlines though…. “Helen Clark attends funeral of online gaming player found dead after SOE Kordia’s subsidiary Orcon disconnected the players internet connection for failing to pay his bill. Experts are of the opinion that said player had a fundamental bodily requirement to be connected 24*7 and the disconnection was directly responsible for his death. Wayne Brown and Geoff Hunt visited with the players family dressed as Rune Characters and carrying a wireless internet modem to ensure continuing connectivity for the deceased’s family.”
Kordia would need to be very very careful to keep retail and wholesale seperate in this era of structural seperation. I’d like to be a fly on the wall where Mallard (SOE minister) and Cunliffe have a discussion about this.
Kordia are famous for killing entrepreneurial spirit with their 50 years of business process hanging around their neck. Did you know that Roger Quail (head of IP Wireless - supplier to Woosh) was on the BCL management team?
Anyway to quote Mr David Bowie:
There’s a brand new dance
But I don’t know it’s name
That people from bad homes
Do again and again
It’s big and it’s bland
Full tension and fear
They do it over there
But we don’t do it here
Fashion - Turn to the left
Fashion - Turn to the right
We are the goon squad
And we’re coming to town
Beep-beep - Beep-beep
An infrastructure provider like Kordia doing fashionable stuff like retail. Hmm, I look forward with interest to see if the clothes fit. I suspect the pants may need to be taken up.
And hey, recent press has suggested that Kordia’s rollout to support Probe was a failure due to lack of attention by their probe partner Telecom. If anything it’s a good way to make Telecom pay attention.
Question 2: Cos infrastructure is boring, and not as profitable as retail UNLESS you have an actual or near monopoly.
As a BCL / Kordia connected and ripped off customer for 2 years now, and despite being strung along numerous times about it getting cheaper connections, we have this in the Herald last week.
http://www.nzherald.co.nz/category/story.cfm?c_id=93&objectid=10443831
“The WorldxChange service, Xnet Xtend, will start from $99 a month but customers will also need to pay up to $800 for installation of a small antenna to receive the radio signals.”
Yawn, entry level broadband for $99.00?….AGAIN! This is NO better than it has EVER been under Telecom, Inspire net etc etc, and has ALWAYS been too expensive. When are BCL / KORDIA going to wake up that it is this price that has prevented more than 2000 people connecting to their network.
Kordia should be offering 1Mbit/sec for $99.00 by now surely? Are you listening Hunt?
Anyway, based on Kordias past record (e.g the Failure of XTEND LITE - where NO RSP actually offered it despite the fanfare last year), I predict that they will get NO more customers on xtend before the xtend equipment becomes obsolete….because it is already.
Frankly, everyone concerned with Xtend at Kordia should be Fired.
Orcon is a smart choice for Kordia. As much as Seeby would like to see his photo on the cover of Rolling Stone magazine, he runs a vibrant young organisation that actually knows how to make the stuff work.
The mistake however will be when Kordia recites typical aquisition mantra and moulds Orcon into something that has most of its clueful staff leaving in droves for new ventures.
One sure thing, Seeby is defintely buying the next round of beers!
Peter Mott
previous owner 2day.com
-/-
Well its happened, just received this from Orcon, cannot say I’m thrilled to being supplied by a government department now.
The first thing we want to make absolutely clear is that it is business as usual for us here at Orcon. We will continue to offer the same great products and services, at the same great prices.
Most importantly, you will continue to receive the same great service that you have come to expect from us here at Orcon. Kordiaâ„¢ fully support us in our vision to deliver cutting edge communications and Internet products and services backed by the best possible service.
The great thing about having Kordiaâ„¢ as a parent is the contributions that they can make over and above what we already offer. Think more products, new services, and competitive pricing, all with the same great Orcon service. We are also really proud to say that Orcon remains a 100% Kiwi-owned company!
Watch this space… we’ll keep you posted with what’s on the way.
If you ignore the fact that Kordia is an SOE for a minute, it makes good sense. LLU will not be the bottleneck for broadband internet much longer, backhaul will.
Orcon has a good retail customer base and Kordia have the plumbing (and the capital) to enable Orcon to deliver on the benefits of LLU.
So together they make a strong business. Kordia have a ready-made retail market for their backhaul network and a new channel with a bit more focus for their wireless offering, and Orcon have access to capital, which has never been a strength for Orcon.
So should SOEs dabble in retail markets? Well, in markets where private sector companies have a cosy monopoly/duopoly/cartel and there is also a good social responsibility argument, then why not? Kiwibank has done well for itself and I think a Telco SOE would do well too.
Perhaps we can look forward to a SOE Petroleum company next?
Mark Frater
(ISPANZ director, ex owner - Quicksilver Internet)
Could this be the way the state is going to own a network?
And sold for $23.4M
Kordia snaps up Orcon for $23.4 million
http://www.nzherald.co.nz/section/3/story.cfm?c_id=3&objectid=10445012
Ernie asks the question …
https://www.tuanz.org.nz/blog/e379f711-b2b6-4423-9e32-4a8bf9f301db/9ac1e1f5-2857-471c-8e69-37515ed90357.html
I think BCL need the retail ISP arm simply to better pimp its wireless products. Simple as that.
Is it a good idea for an SOE to play in retail? Sure, why not, if that SOE happens to be well managed, which is where this particular buy falls down.
And regarding any talk of a SOE Telco, it makes sense, with the quarter-billion dollars Transpower’s spending, the money MOD, REANNZ, Police, GSN, MOH are looking to spend, and the existing assets of BCL and its future investments, the Government could put together a very tidy multiservice network to service all of those organizations and more, better, and at half the cost they’ll spend individually. BUT, it shouldn’t use BCL to do this, from all accounts its culture and management is piss poor and anything but visionary. Better yet set up a new company, let it partner with private industry, e.g. the FXs, if it wants to, heck even list half of it on the NZX in a few years.
There seems to be this idea that doing this will upset Telecom and Telstra, and they’ll throw their toys out of the cot and stop investing which is ridiculous.