Tuesday, May 25, 2010

Telecom New Zealand

I posted a comment about Theresa Gattung's book Bird on a Wire when it was merely forthcoming, and elsewhere made a comment about reports that she was less than generous in her comments about her successor.

I haven't said much more about the book so far, partially because reading a book in which every fourth sentence ends i an exclamation mark is almost as tiring as a conversation with TG used to be.

But the news from across the Tasman this morning that TCNZ is considering structural separation made me think of a small comment in the book. This was that once TG and her team realised that they couldn't continue to promise new services to the NZ Government and not deliver, and that hence (meaningful) functional separation was going to be imposed, that she and Marko Bogioveski concluded that full structural separation was a better alternative.

The book describes how they had convinced the Board, but the Board the went soft on the idea. Theresa suggests the Board's change of heart was a consequence of the comfort they were given by CEO candidates they interviewed that indeed the functional separation was achievable (which is opresumably a veilled reference to Paul Reynolds with his BT experience).

At the time I was still working for Telecom/AAPT and I know I disappointed Marko because I convinced him that structural separation was worth considering but he wanted me to give him a strategy document on it. I simply didn't have the data to turn the proposition into substance, but the broad economic theory I subsequently publuished as Why vertical structural separation is in the interest of incumbent telcos and why they don't see it.

The senior management team and Board at Telstra need to understand the New Zealand journey. The Australian Government has presented them the very best alternative - a staged stuctural separation as the NBN is constructed. They should be grasoing that opportunity with both hands.

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