I retired from personal blogging in July 2008.
But you can find me over at http://blog.xero.com.
Plenty of commentary in the last week mauling Telecom over its recent results. This Australian article was particularly brutal.
New Zealand leads by negative example
The interesting quote for me was this one on Marko
Recently departed TNZ finance chief Marko Bogoievski did not agree with the way the company’s board accepted the New Zealand Government’s bid for strong internal separation. He said shareholders would be better off with full separation - spinning off the network and wholesale business into a separate company either by sale to an infrastructure manager or the creation of a new listed company.
The argument goes that shareholders get all the downside of more regulation and no upside for a sale of excellent assets.
When Marko left I think it was common knowledge that it was a disagreement with the board over how it deals with Government. But the impression was Marko was pushing hard against the Governmnet driving Telecom. This never made sense to me but this article seems to clarify his position that he was in favour of full seperation rather than operational separation which to me is much more logical and better for Telecom.
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I agree. A two-way split is the most logical, with two newly branded companies. Wind up the existing parent and distribute the shares in the new companies to the existing shareholders. You’d be able to get rid of a lot of bad legacy and keep things simple. I still expect that to be the long-term outcome.
So, the logic here is that splitting into 2 companies, ie, one is the network and one is the wholesale, then the network company would be more willing to install an expensive fibre network nationwide? If Telecom is unwilling to do that now, when it is stronger financially, then what on earth, would a spin off the network company can do, when it is financially weaker? This logic seems like 2 + 1 = 5.
No, I’m saying that no one company can monetize he public good of the infrastructure layer. So the glass is funded in a Debt or Bond style returning a fixed rate of return. Each user pays a cost plus access fee to cover that part of it.
NetCo can tender for that work and earn a nice stable income. RetailCo stays listed and injects services over the open access network.
A variation on your idea Rod which I guess we have to some extent now and once the Vodafone/iHug/Vector option takes off we will have it to a great extent.
We have multiple providors of the glass - NetCo, Vector, etc and then if one screws up like the electricity infrastructure seems about to we can all vote with our feet and move.
I think we need multiple choices at all levels not just the retail level which is what we basically have with ISP’s. The bigger ISP’s buy international bandwidth on SX cable, satellites etc. They should be able to locally at least in the bigger cities.
I think the government is so concerned about getting ADSL to everyone (driven I believe by a commitment to doing it for schools) that they lost the plot about making sure it could be delivered to wealth and job creators.
Here is a submission on separation that is worth reading
http://www.med.govt.nz/upload/53259/ElliotAdvisors.pdf