How Freeview, TiVo, Browning and Telecom fit together

Image Credit: http://www.flickr.com/photos/24026191@N02/3353222455/

I've been following the TiVo and Freeview developments with interest.

I always thought that there was a good market for a decent PVR (akin to MySky) for Freeview in NZ.

There are interesting parallels in the UK where BT launched MicrosoftTV (known as MediaRoom) with the UK Freeview service under the banner BTVision.

It's been clear here that there is not enough capital for Freeview to do this on its own in NZ. Just take a look at the MyFreeviewHD link on the site.

It's basically a simple page that says you can buy a Freeview approved PVR that can record 2 channels with a basic 8 page programme guide. It's clear that there is no appetite to release this product.And they have just followed the same branding as MySky HDi without the 'i'. You have to look hard to find one on the site. When you do, you'll find is $1150. Ouch.

What is also clear is that Freeview is reaching a maturity point as a business. The infrastructure is in place and I would be surprised if more than 50% of installed decoders are stand-alone. My pick is that a fair chunk of them are embedded in TV's like Sony Bravia. So not much left to do for a start-up - all the work is being done by the Consumer Electronics companies.

Enter TiVo - I think this will shake up the local marker due to its pure simplicity. The reason TiVo is successful in the US is because it is smart about recording programmes in an Amazon kind of way. MySky is totally driven by the customer - so the ability to 'discover' new programming is down to what other people tell you. TiVo's strength is that it predicts what you might want to watch based on what you have recorded already.

It's a different proposition to MySky.

It's also a different proposition to Freeview - TiVo is about control.

So that is why it's attractive to Mr Browning who announced his resignation today. It's not a defection as opposed to a well managed move given Steve's previous background at TVNZ.

It will be a different business to Freeview - which is about digital quality - and will require more input. Input in terms of cash and product management.

Which brings in Telecom.

Hybrid TV have stated they are looking for a third investor. Telecom has always had an aspiration to get into Internet based TV. There have been multiple attempts - FirstMedia, trials with Sky, investigations with Freeview. But it's never really worked out what its role is - content delivery, content aggregator or owner. This meant it made some pretty poor decisions by trying to play in areas where it had limited skills i.e. trying to own swathes of content.

This is a gift wrapped opportunity to get into TV in NZ in a relatively cheap way without having to deal with content rights. Development risk is low, technology and brand are proven, there are no major content deals to be done (movies are easy for anyone to get). It's the right way to do it.

I would pick them to add this to their refreshed home broadband proposition - home VoIP, broadband and TiVo - which they could bring to market later this year. Only speculation on my part but its what I would do!

As long as Seven, TVNZ and Telecom - should it be them - stay in governance mode as opposed to management mode then Steve will have good support to hit his 120k customers in year 1.

Playing with fire

It's old news now, but I have been thinking about why Vodafone has been running its high risk campaign about it's 3G network that has led to Telecom launching its Commerce Commission action.

If you've missed it, here's the background...

Vodafone's Christmas campaign is all about coverage this year with a tag line of 'NZ's largest and fastest 3G network*' with the asterisk linking to a disclaimer that this is 3G based on W-CDMA coverage.

Technically this is all true - Vodafone have the only W-CDMA network in NZ.

Of course this would be fine if Telecom NZ didn't have 3G network (it does) nor if it's coverage was greater (it is) nor if the speed comparisons were unequivocal (they are equivocal as Vodafone does not have its top speed rolled out everywhere)

Which is why Telecom has taken its commerce commission action.  

One of the sideshows of this has been the pissing contest taking place on Geekzone, which is the wrong place for a PR guy to get cute about what Telecom has said about its current (larger) 3G network which it is about to replace with a newer, faster  3G network. Suggesting that there is a like with like comparison on  a network that hasn't been built and ignoring the current network as it is due to be replaced is just madness. Especially since the current network is still being offered to customers.

I've been in a position where I have provided expert evidence at the Advertising Standards Complaints Authority and the Environment Court. These are not places for bluff and bluster. The Commerce Commission is probably worse. A few well chosen questions and your evidence will be treated with contempt. Placing your corporate view on public sites like Geekzone is great when you are talking about your own company, but taking your competitor's statements and using them for your own justification is really unwise with this type of action looming. I hope for Paul's sake it doesn't get used against him as it would undo all the good work he has done to date being Vodafone's online presence - but I digress, that's not the point I am trying to make.

Here are my points

1. Vodafone *must* have known this action was coming - as I have said 3 things matter to customers on mobile. Coverage, Handsets and Price. Telecom will not give up its local coverage advantage easily as it is pretty much all it has to offer right now. The action was inevitable.

2. Vodafone can't possibly think it will win this - all Telecom has to do is prove to the commerce commission that 

a. EVDO is 3G; and

b. The majority of customers could be misled by this as they don't know what WCDMA is (especially non Vodafone customers who are clearly the target for this campaign). The only people who know are on Geekzone - that's a few thousand- the rest has no idea whether a 1.25 MHz channel or 5MHz channel matter in this debate.

They would have to seriously under-rate the technical evidence coming from Telecom to take this on. It's a pretty simple case and there are still experienced people at Telecom to take this on.

3. The outcomes for Vodafone aren't pretty

a. The maximum fine is $200 k - they would stand to get whacked with all of this

b. The greater cost is the campaign cost - in the best possible outcome, they would have to modify the campaign (maybe to fastest only, or if they were smart, emphasising global 3G coverage. Worst case they would have to pull the lot - that's millions.

c. Which leads to Brand costs - getting nailed on this would put Vodafone squarely into the camp of other large corporates who are just trying to use confusion to gain marketing advantage. Remember that?

d. Worst of all for Vodafone, Telecom would get some confidence, which it badly needs.

4. At best this was only going to be a short term campaign - Telecom's launch of its WCDMA network will give it a coverage advantage based on exactly this proposition. Until Vodafone launches its 900MHz WCDMA at which point it will all be the same.

5. Vodafone have a handset portfolio which is so large compared to Telecom's currently it is embarrassing. Vodafone have 49 on the books and have a bunch of parallel importers as well. Telecom list 22 - but it doesn't take a lot to realise that these are seriously outmoded. If they were playing football, Telecom would be completely within its rights to ask a few players to swap teams at half time just to make a game of it. 

So it seems to be high risk for limited reward. For Vodafone to success against the commerce commission, Telecom would have to end up crying on the stand that they never really had 3G, the ITU got its standards wrong, and it had mis-measured coverage and all it had to offer in mobile for now is legal action. Even then the Commerce Commission might take some pity on them.

So that leaves me with these questions.

Why run a campaign on coverage that is so tenuous and so clearly short-lived?

 Are Vodafone that keen to have a marketing advantage on coverage that they would take this sort of risk?

Why not play to your strengths which are handsets and global 3G? This would just ram Telecom as these will continue to be core advantages for sometime after Telecom launches its new network.

Who is giving these guys advice? This took me less than an hour to come up with - and the Geekzoners have been on the money as well. Maybe they are not taking any advice?

Have engineers taken over the marketing team at Vodafone? I thought the industry pretty much agreed years ago after the Qualcomm patent wars that it didn't matter if it was W-CDMA, CDMA2000 or 4G - customers just don't care so long as they are getting the service where they want it.

I think this is similar to the iPhone situation earlier this year - Vodafone are so looking to land a king hit on Telecom that they have lost sight of how to do this without misleading customers. Sticking with their core advantages may not be sexy but it would leave them with a very strong position and no risk.

The only other strategy they could possibly have is force Telecom to launch early with an underbaked network which will take them years to recover from. Given Telecom delayed launch until mid 2009 that isn't going to happen.

My call - Commerce Commission will rule against Vodafone - Vodafone will have to pay the fine and pull the campaign. I'll put a bottle of good quality scotch on that for any takers.

This leaves the door open for Telecom to innovate - ideally on data rates - with their new network. I think Vodafone will find that with all the changes at Telecom at the head of Mobile they are probably safe on that front for a while.

Christmas comes a year early for Telecom

Unfortunately it's not good news.Christmas offers for 2008 arrived in 2007...

Handsets offered for this Christmas are pretty much the same as last Christmas.

It really seems as though bridges were burned with CDMA handset suppliers - nothing of note to be offered this year at all.

 This will be very easy for Vodafone to trump should they choose to.

Sadly I pick about about 4-5% market share loss between now and T-Day. That is going to take a couple of years to win back.

One down, one to go

Over the last weekend, TelecomOne took place.

Ben and Mauricio's posts sum up really well the types of things that were covered over the weekend at TelecomOne. Big cultural shifts. Noticed by externals. All good.

I didn't go. Arlene and I have an understanding that we make enthusiastic mutual agreements for what we both do. We weren't both enthusiastic.

Despite that, or probably even because of my lack of attendance, TelecomOne was a roaring success.

There are a bunch of people within Telecom who have now had a great experience in terms of getting together their ideas to make Telecom work better. Awesome.

I have two requests for Telecom people.

1. If you attended TelecomOne

The most important thing they have the responsibility to do now is to do something very different in their day to day work even though the prevailing culture will not be that supportive.

2. If you didn't attend TelecomOne

Don't write this off via the Telecom clobbering machine - attendees gave of their own free time and energy to make this happen. Take the time to engage with them. Don't engage over a meeting - just get in a big open space and start sharing. TelecomOne isn't just about the content that was developed in terms of ideas and plans. It's about a more collaborative (and fun) style. 

TelecomOne was spawned as an idea out of the last KiwiFoo. Gripnostril (when can we tell people who you are?) has been the power behind this and is a great example of how 8 months of tenacity and perserverance will really pay off. Well done - take credit for it - it was your idea. Great leadership.  'If you do something with it, it *is* your idea'.

TelecomOne was one of two ideas that I really got excited about after I attended KiwiFoo earlier this year. The other one is about 3 weeks away from becoming real. 

Thanks Nat, Jenine and Mahurangi College for providing the environment where these ideas can flourish.

The only thing we have to fear is fear itself

I've been closely following the developments in Atawhai and Titahi Bay relating to Telecom's difficulties with the local community following its proposals to install mobile phone sites adjacent / near to local schools.

Some background if you don't know me...

When I joined Telecom I was part of its mobile engineering group. Over my time at Telecom I was involved in probably the most contentious period that the local mobile industry faced. Networks were moving from being carphone based to needing to meet customer requirements for mobile handsets that were used indoors. Network sites were moving from relatively invisible locations to being required to be located in the community.

I personally fronted up to numerous community meetings, resource consent hearings and also gave evidence in the Environment Court. I also spent a lot of time visiting concerned residents in their homes to talk *with* them (as opposed *to* them) about their concerns and options we had to address them.

I was often asked whether I would consider installing a mobile phone site next to my own house. I was (and remain) so confident about their safety that my desk was located about 15 m away from a very busy urban site , on the same level.  I ate my own dogfood.

At that time, as of now, the most contentious element of mobile phone sites  was the issue of whether they were safe from a health perspective.

It's a totally understandable question - these installations are characterised as being physically out of proportion (15 - 20 m high) with the local environment (especially suburban areas), emitting something you could not see, hear, taste, smell or feel. It's the perfect unknown threat.

Furthermore there is a sense of lack of choice about these types of installations - no-one really wants them around yet they do want the utility that mobile phones provide.

In short I seriously empathise with people who have genuine concerns about mobile phone sites, and moreso if they are concerned about their children. They are feeling a real emotion.

What I take issue with is people who should know better, and who confuse this issue with many others. They stir up the local community and quite often, in my opinion, raise a spectre of concern that causes so much stress for the individuals that is much more damaging to the health than anything a mobile phone site could possible cause. These types of sites are the result. 

The two main arguments being used now are the same as 10 years ago

1. Mobile phones are new - not enough time to prove whether there are long term effects.

Some studies are showing health issues related to mobile phone sites - we should be cautious about their implementation.

2. Mobile phone sites are like power lines and there are cancerous effects from power lines so the same must be true.

I have to answer these points 

1. This technology is not new. Mobile phone technology has been around for 20 years. Furthermore it's based on radio technology that has been around for over 100 years. If long term safety issues were going to arise they would be found by now. 

Furthermore the World Health Organisation has spent $250m on this issue and continues to research it. 

2. Mobile phone sites are based on Electromagnetic frequency (EMF) transmission. High Voltage power lines are based on Extra Low Frequency (ELF)  electromagnetic frequency (EMF).

The World Health Organisation (WHO) rates ELF as a possibly carcinogenic to humans. This is on a three point scale of carcinogenic, probably carcinogenic and possible carcinogenic. Note that gasoline engine exhaust is in the same category of possibly carcinogenic.

So that's the ELF side (ie high voltage power lines)

WHO has this to say about EMFs specifically from mobile phone sites.

From all evidence accumulated so far, no adverse short- or long-term health effects have been shown to occur from the RF signals produced by base stations

Telecom has clearly made some errors on judgement in how the consultation was (or more importantly wasn't undertaken). This can be resolved by respecting that those who have fears are genuinely concerned, respecting that and trying to find a mutually agreeable solution.

But to see Nick Smith and Sue Kedgeley suggesting that radiations levels are high and that the Crown would be liable for compensation if there are health affects are purely grandstanding and not adding to the debate. Both of these people should know that the Environment Court in NZ has made it clear in its judgement related to the case of Shirley School that other communities should refer to this decision. 

What is key for Telecom now is to spend lots of one on one time with this community to rebuild trust and come to an understanding of how to best work together. It will only be through respecting the community's concern will any progress be made.

It doesn't really matter what I say I guess - it's what I do.

Ella has just started at a pre-school two days a week. There are two sites within 100 m of the pre-school. My position on this issue is clear.

Why your CEO needs to support innovation initiatives

I am on a roll at the moment on innovation in corporations.

There is a universal success factor that applies to all corporates I have talked with who have had some success with corporate innovation programmes.

The CEO has to support it.

The reason is simple.

Any innovation programme that is undertaken within a corporate is disruptive by nature. It usually arrives at products or services that cannibalise existing product and service revenues. By implication it threatens the certainty and security of the remuneration package that people currently enjoy. 

Naturally people respond - they try to remove what it is that is threatening their security. Consciously or unconsciously, innovation initiatives are constantly attacked from within. Call it organ rejection if you like.

This is where the CEO comes in. 

He or she does not have to 'get' innovation, but they have a role in ensuring it has enough oxygen to survive. That it doesn't get slowly suffocated by the inertia / momentum of the 'here and now' business.

This means setting up a structure where as few as possible senior decision makers are involved in the process of deciding which ideas that are spawned from the innovation programme are taken forward into development.

This is something I found personally very difficult in my role in running Telecom's innovation programme. My preferred approach is to enrol as many people as possible in assessing an idea to get buy-in. That doesn't work when you are asking the turkeys to vote for Christmas (no offence intended by use of the term 'turkey' - honest!). You can (and should) share the ideas around and solicit them from everywhere, but the actual decision making needs to be held very tightly.

The CEO has to support this type of very tight structure. Otherwise it's a worthless investment and just frustrates everyone.

So I was super pleased to see this tweet from @gnat yesterday. 

@gripnostril and I met w/ the CEO of Telecom today. He is bigtime clueful, grokked Foo Camp faster than anyone I've ever explained it to.about 12 hours ago from twhirl in reply to Gripnostril

He has been working with @gripnostril to get some time with Paul Reynolds, Telecom CEO, to pitch the idea of a foocamp style event for Telecom NZ.

Paul has supported the concept but they needed to get some facetime with him to see if he *really* supported it. 

He does. Bodes well for the long-term survival of the company IMHO.

Delay to Telecom NZ WCDMA launch is good for shareprice

Stuff reported today that ABN Amro analyst Geoff Zame suggested that if Telecom did not complete a marketing launch of its WCDMA network this year that it would be detrimental for the share price. The reported reason is that Telecom would be on the sidelines when the rush for Christmas connections comes through.

I disagree.

Everything that I have read suggests that the network is currently not fit for launch. That is not surprising. I know that there are a lot of people in Telecom who are working damned hard on getting this network up and running. I don't think this is an execution issue -its a reality issue.

Telecom announced that it was going WCDMA in June 2007, suggesting that build would not commence until late that year that it would be in market by Christmas this year. 

That's  12 months - gutsy stuff.

By comparison, the deployment of CDMA in 2001 / 02 took 15 months (that was an extremely aggressive and well managed deployment) and was voted telecommunications project of the year by TUANZ. That was on existing sites.

Vodafone's 3G deployment was of the order of  15 months after signing Nokia up - and they were hit pretty hard by customers reacting to coverage issues. 

In Telecom's case they are rolling out 2 networks

1. 2100 MHz WCDMA

2. 850 MHz (either GSM/EDGE or WDCMA)

The 2100 MHz network in particular requires new sites and resource consents. To go from 'hmm I think I'd like a new site in this area' to having property and resource consent in the bank takes about a year. A year was always going to be too short.

You would have to be doing well to do both of these in 15 months - not forgetting Telecom have operational separation, Next Gen broadband and all the rest happening.

If Telecom were beholden to a pre-Xmas date, this network would look more like MobileMe.

It will be much better for the long-term shareprice for Telecom to get coverage right for this new network as opposed to try and bank a short-term win, and then brand damage based on a sub-standard network. And to think that there would be significant uptake on the new network before it was bedded in pre-Xmas is optimistic to say the least. One can only hope Telecom has some CDMA offers to go out that are sharp enough to stay competitive this Xmas.

Reynolds has already announced in last week's result that there will be no EBITDA growth until 2010. Good to see him stick to the long-term plan - this approach will start to turn Telecom around from a dividend stock to a growth stock. That's the real issue for the analysts - the dividend payout made Telecom a very attractive part of their portfolios in the past. Now that Telecom are focussing on longer term bets this stock is no longer easy money. There is the possibility of still quite good dividend payouts and (if you are risk embracing) the possibility of longer term share price growth. 

Key issue now is when to get in.

Telecom, Kevin Roberts and Brand

I noticed with interest the appointment of Kevin Roberts to the Board of Telecom. Looks like I am not the only one as well.

I have had some limited contact with Kevin during my time at Telecom - the most interesting being a 2 day workshop where we tried to discover the key purpose of Telecom. Fascinating and inspirational. I've also worked with a lot of Saatchi's people, most recently Saatchi X who are (in my opinion) world-class Retail designers - they get the whole notion of designing Retail for customers. This is to the extent where they went around a bunch on NZ stores and just watched what customers did before leaping into any design work. Much better than what you would expect from a normal ad agency. So I have a lot of respect for the work that Saatchi can do to communicate a brand.

A few things I noted from yesterday

1. Governance - Kevin says that he is privileged to contribute to the governance of Telecom. I was very pleased to see this. Kevin has spent a lot of time through Saatchi and Saatchi advising Telecom directly on Brand Communications. Saatchi's has been Telecom's key agency as long as I was there (15 years). This Board role has to be separate from that - good to see he gets that. I do wonder how Telecom can get the full benefit of his brand expertise as both a director and its number 1 supplier , surely this starts to become a conflict of interest? Will be interesting to see how it is managed.

2. Comments about the lack of marketing and brand expertise on the Telecom Board. Wayne Boyd himself says that Kevin will bring Brand and Marketing expertise, as well as customer satisfaction skills. There is already significant brand and marketing expertise on the Telecom board with Rod McGeogh (anyone who can lead a successful bid for the Sydney Olympics knows how to execute a marketing strategy) and Ron Spithill (global marketing manager Alcatel). This may signal even more of a marketing focus for Telecom. However, given Kevin (through Saatchi and Saatchi) is already providing Telecom's brand execution, how much more can he offer than this? And is this really the problem?

3. The Telecom brand - the Radio NZ interview with Wayne Boyd yesterday included some commentary along the lines of 'if Telecom got its Brand and Marketing right then shareholder benefits will follow'. This is not a Wayne Boyd quote but a reporter's quote. This is mostly right but not completely.

In my opinion, Brand is the promise that you make explicitly and implicitly to your customers. Everything they see, touch, hear and feel when they interact with you defines the Brand. It's not that complex a concept (although it is difficult to tell a good story in a short period of time and keep your business in sync with it) and Telecom has been really good at making these promises and communicating them through its marketing and PR efforts supported by Saatchi. It invests a lot into this, wins global awards and therefore this is not where it falls over. 

Where it needs the most effort is in the delivery of the promise. In my mind this is where Telecom really needs to look in terms of its leadership. Telecom needs to make promises that it keeps - its recent brand damage has been caused by saying one thing and doing another. This is the long hard road to rebuilding brand equity.  Where is that leadership coming from?

I have been thinking about brand, marketing and customers for a while now and have a small series of posts that I think will help explain this further. Kevin talks about the whole notion of Lovemarks superceding brands - my view is that is a bit glib. Love is damned easy to talk about but really hard to build. 30 second ads and stories don't cut it in my mind - but more for a later post.

There - I've made a promise, time to deliver on it.

Disclaimer: I hold Telecom shares and have spent a lot of time trying to build a view and product set in Telecom that says if you do right by customers, then you'll get great results. I really want to see Telecom become a loved brand in NZ again.

Telecom 850 WCDMA - more developments?

Juha posted on the rumours of a delay to the launch to Telecom's WCDMA network. I have no further detail but it's got me thinking some more.

I've been doing a lot more sniffing around on the handset situation for Telecom should they decide to move to 850 WCDMA as part of their UMTS roll-out.

Based on my last post suggesting it needs to be driven by coverage, handsets and pricing for customers, it's clear that there is a potential long-term coverage play for Telecom in all of this. However handsets are the key.

It's my opinion that, should Telecom go down this path, they should only look at one radio spec for their handsets. That is quad-band GSM and a least dual band WCDMA (850 / 2100). Throw in 1900 WCDMA if you can get it, but given that is primarily a US driven requirement and they have rolled 850 WCDMA there 1900 is not a mandatory requirement.

The reason behind choosing a single spec handset is that Telecom can then run a very simple and effective long-run campaign for its customers : 

Buy any Next Gen Mobile Telecom handset and you can roam anywhere around the world and have the best coverage for voice and data here or overseas. Period. 

Very strong coverage position to take and one that could put Vodafone on the backfoot for quite a period of time.

My reasoning for this spec, as opposed to a local spec for 850 only devices and 850 /2100 devices for 'Worldmode' is simple. 

1. Remove a confusing choice for customers about whether they might or might not want to travel somewhere in the world with their mobile. With this spec they can travel anywhere. The last thing you want a customer to have to check is what band their mobile is before they travel - there is usually too much to do anyway!

2. Take a position on coverage that Vodafone can't match - Fastest data here and around the world, where-ever you go.

Key driver for this is handsets. A couple of days of searching the 'net and this is a mixed picture.

On the positive side there is the number 1 handset vendor globally, Nokia, who have a range of 13 devices that meet this criteria. Not bad until you see that their overall range for GSM 900 / UMTS 2100 stands at 58. Still, much better than the days of TDMA and CDMA where the Nokia devices available were around 3-4 vs. 50 -60. The other positive is around iPhone. Will provide great coverage for the 3G iPhone. However this will probably neutralise Vodafone locally at best as they will have mopped up most of the early adopters, notwithstanding supply chain issues from Apple.

On the negative side - there just aren't very many other providers of this spec. A look at GSMArena shows Sony Ericsson has 6, Samsung has 1 and these are out of ranges of around 40 for Sony Ericsson and 70 for Samsung. HTC also has a few and then the numbers dwindle after that.

Overall the answer is that the range is good enough, however there is very little negotiating leverage for Telecom with such a small range of providers. That will probably drive up cost of sale temporarily. The temptation for Telecom will be to buy a cheap handset that reduces cost of sale. That is a short term game. 

Do. Not. Do. That. 

If there is one thing that I have learned from 15 years of deploying AMPS, D-AMPS, CDPD and CDMA it's that as soon as you bow to this short-term demand then you are forever trying to paper over the cracks.

Thinking long-term would mean the following

1. Build strong and deep relationships with 4-5 handset vendors. Don't nickle and dime them.

2. Don't launch until you have a nationwide NZ 850 WCDMA network - start with a superior local coverage position and hold it all the way through.

3. Buy a handset spec that gives best global roaming. And only one spec please!

4. Price data on a 10 year return on infrastructure, not 3.

The pain will be taking a hit on Mobile market share until this launches. Given how low the share-price is now, I think this is probably priced in already according to Valuecruncher.

Why would Telecom NZ launch an 850 MHz UMTS network?

Mauricio posted this rumour earlier today that Telecom is looking at UMTS at 850 MHz on a nationwide basis. I have no idea if this is true or not but I thought I'd assess it in advance on the off-chance it is true.

In my experience over the last 15 years with Mobile network deployments there have been a bunch of hypotheses about what you can do to attract customers to your network. These have included products and services, video, social networking - all the 'next big things'. 

In the end, it does not matter about differentiating on features and services if you haven't got three basics at the same level as the rest of the market. In order, they are

1. Coverage (Where can I use it?)

2. Handsets / Devices (What devices are available?)

3. Price (How much does it cost? Can I afford it?)

This is what customers repeatedly have told me when I have asked them what is important. In fact, given the benefits of mobility customers surprisingly rate Price significantly lower than coverage or handsets.

Most of Telecom's strategic errors around mobile have been when they have forgotten about these 3 fundamental truths - in particular the first. I consider roaming as part of coverage - and Telecom has been on the back-foot here for about a decade. In particular, apart from a period recently when these elements were equal, most of Telecom's major losses in market share have occured when the people involved in setting strategy have been too worried about the economics and trying to engineer a short-term position. But I am off topic now.

Back to the rumour - Why would Telecom look at this particular path?

Marketing wise, they have been saying that they have the best nationwide data network (true - CDMA in NZ is still the best natiowide mobile data networ) and a global roaming proposition (true). The issue is that it's a very limited range of devices that can handle this and when it comes to data, a key part of mobile now, the global proposition is non-existent for UMTS. Worldmode phones, while great, only operate on GPRS as far as I know. And there is a very small selection - 3 at my count out of the portfolio of 24.

This position gets even worse with the current stated proposition for WCDMA. 3 urban cities at launch and  nationwide EDGE network. Not good enough. It reminds me of BellSouth's entry into the NZ market. Lots of marketing and a very inferior coverage proposition. Many years after Vodafone bought BellSouth and had pretty much equalised on coverage , I still had Telecom customers tell me they were still with Telecom because of the vastly superior coverage. Power of brand...

So a quick assessment of the speculated 850MHz nationwide network. Why would Telecom do this?

1. Coverage - given the current plan this would provide a massive boost for local data coverage, allowing Telecom to switch off its CDMA network earlier. It doesn't add anything significant for global roaming. The global roaming game is at 2100 MHz for WCDMA - end of story. Anyone trying to convince you of anything else is dreaming.

2. Handsets - This is the tough one to swallow. This strategy does not help the handset situation at all. It means a more specific spec for handsets which means less range to select from. My guess is that Telecom will be forced to run a reduced portfolio compared to Vodafone locally. All they can do is ensure they have a set of choices for each price-point . Shouldn't be an issue at the mid-range but I would anticipate issues at the low-end and the high-end. Telecom may try and offer low-end at CDMA. This would follow the same path tried for trying to maximise the value of the TDMA network. That didn't work. This won't either. Don't do it!!!

3. Price - Telecom will have a relatively empty WCDMA network. Where they could really do well is if they do what Vodafone didn't do when they launched their 3G network. Offer a really sharp data plan. 

So, if you are an investor in Telecom stocks consider the following

1. If Telecom announce an 850 MHz network AND can talk to a reasonable set of handsets tomorrow then this is very good news. Especially if the focus is coverage and handsets as opposed to video services etc. If CDMA closure is announced, even better. Means that the long-term picture for Telecom's mobile business is built on a reasonable foundation. 

2. If there is no word on 850 MHz network then it is too late for this to be available for launch - doesn't rule it out but means another year of pain in Mobile. Whether you hold or sell will depend on the commentary around mobile.

3. If the rumour is squashed and the focus is all on ecosytems of products and services then be very very worried. Those don't matter if you don't have coverage and handsets sorted. Value down the mobile component of the business and cash-out while you can.

If it was me, I'd do the following

1. Roll out 2100 UMTS as far as you can - aim to make this the core of the network. take the capital hit now and a long-term view on return

2. Backfill with 850 UMTS - necessary evil and provides a short-term coverage advantage if you go full nationwide. Or worst case equalises this position.

3. Aim to close down CDMA in 3 years. Most customers will swap out their handsets in this period anyway. Find ways to make this work without blowing cost of sale.

4. Introduce an all you can eat data plan that goes where Vodafone can't easily follow  - look for their profit pool and nuke it. Great for customers and great for the revenue line.

Clarification of status

A couple of questions - one on my blog and one on a comment I posted to another blog - as well as some surprised looks from people in the business have led me to believe I need to clarify my employment status.

1. I have resigned from Telecom - my last day is June 30th. There's a strong financial incentive linked to this date.

2. Until recently I was working on Telecom's Next Generation Telecom (or NGT) programme. I am no longer working on that programme.

3. I am working in the Broadband part of Telecom on what could only be described as special projects, supporting the widely held view that there is only one place you can go after Special Projects. Its pretty busy and a good way to finish my time here.

4. I don't have a job lined up for when I finish - I am planning on spending a lot of time enjoying being a Dad, I have a couple of ideas which I will talk about soon enough, and I am unashamedly looking for one or two days a week work to help keep the bank manager happy. Any offers considered :)

Naturally the posts and comments that I make are my own opinion (unless I state otherwise). And they will be flavoured by my experience at Telecom as well as other perspectives that I hold.

That should make it clear.

Blast from the past

I saw this article this morning about a proposal from Telecom to install 6 new cellphone antenna the Foxton water tower.

Brought back a lot of memories - my first role at Telecom was running around the country side picking locations for cell-sites. Invariably we got a lot of resistance from people with genuine concerns about the health issues that might be associated with these installations. While people were genuinely freaked out (the unknown does affect people pretty deeply), when you think that these installations put out about as much power as a 1 bar heater, mounted at 20m (or more) above ground, there really isn't much ground for concern.

We did meet some extremely cool people as well. I recall talking to a farmer in Eketahuna about using his hilltop - he was very cagey until we said we would pay a rental and put in place a road up to the site. We got invited in for the best farm lunch ever :)

I remember this site in particular - was a great place to use existing infrastructure (my personal opinion was that the visual effects of sites was much more of an issue than health effects) and had great height for coverage. The primary concern from residents was that the local chicken farm would be somehow affected causing mutations, which would eventually poison the entire community. Council decided to take the offer on and also ended up doing a deal with Vodafone as well. Telecom antennas are on the top.

The reporter is probably the same one - persisted in thinking they were intelligent by using antennae as the plural of antenna. Antennae are on insects. Antennas are used for cellsites.

Broadband Speed Increase

Living in Lowry Bay, we've been accustomed to relatively low broadband speeds of not much more than 1Mbps. This despite having a cabinet less than a km away. A couple of years ago while trialling IPTV services this annoyed not just myself but also my family as I was trying to get them to watch Video on Demand services with frequent buffering.

Up until now, I was of the opinion that this was a 'laws of physics' issue - copper wasn't in good enough condition to carry the bits fast enough. This was also because the modem I had was a Cisco unit which I considered to be state of the art - I mean if Cisco couldn't make it work, who could?

Until last week that is - I have been doing some work sourcing new modems for Telecom and thought I would try one out at home. Primary reason was that I had a separate Cisco WiFi point and modem and this was causing some clutter in the home office, so I thought an integrated device would make some sense.

I connected one up (brand yet to be disclosed - we haven't finalised commercials yet) and I was stunned to find I was operating at better than 4 Mbps. And I know we haven't been upgraded to DSL2+ yet.

Research indicates that the primary reason for the speed increase is that the modem is using a Broadcom chipset which matches what we use in the DSL cabinet down the road.

I have a few thoughts on this

1. I wanted to fix one problem and got a significant extra benefit for *free* - my clutter is seriously reduced and I have at least 3 times the broadband speed from previous. If that isn't keeping a customer happy then what is?

2. My experience in mobile is strangely much more robust - devices pretty much operate at maximum bandwidth. This is because they all have the same Qualcomm chipset (small exception where Nokia was operating their chipset for a while for CDMA 1x). While the Qualcomm model is more monopolistic it does ensure standardisation - which means things work better and more consistently. We all fear this from time to time, but the downside of choice is that you have to integrate more and more things go wrong. Having one supplier at either end of an important link makes things work better.

3. Taking the mobile argument on another step, I used to think that CDMA was a fragmented standard (it is - trust me), however broadband is much more so. It has not matured yet to the state where it is like GSM - hard to know whether what you have bought (or what your Telco has recommended) will work that well.

4. The speed makes a difference - streaming video from local sites is snappier, sites load faster, and I can even stream sport in watchable quality. Might even consider getting a faster upload plan now.

Overall lesson - check your modem has a Broadcom chipset. If not consider upgrading to one that does - you'll be pleasantly surprised.

Farewell NGT

Today is my last day at Next Generation Telecom.

I've been working on this programme for the last 18 months or so and we've been able to get it from the feasibility work completed by Group Strategy, through a very rigorous design phase now going into Build.

It's been a hard road - we had quite a frustrating period as we went through the change in leadership at Telecom. It was necessary - we weren't really ready to move forward.
I am personally very pleased at where we've ended up.

NGT was described in the investor briefing session yesterday. There is a lot sitting behind this slide which comes from the Retail Briefing.

We started this phase with 3 of us in a room having 2 'AHA' moments.

1. We will not be able to compete as a Retailer in the market on product differentiation based on Network. Everyone can pretty much have the same stuff. What we can differentiate on is service.

2. We don't know how to design 'properly' for the customer - we have to learn.

We now have a team of close to 100 including our partners at Tech Mahindra, we have a brand promise that we are designing for that will be a game changer in NZ. The people building NGT are now first and foremost advocates for the customer and have the skills and capability to make that work for NZ. We have personas we are designing to, we are directly validating our design with customers, we are constantly challenging what we are doing to deliver to the customer. This is a very different Telecom.

It's been a privilege for me to be part of this team - I have learned a lot and worked with some amazing people. Thank you.

I'll be taking some time out from today and working with the Retail Broadband business at Telecom until the end of June. The rest of the year I will have my hands full with 2 year old Ella and trying to turn a couple of good ideas into good businesses.

Hard Handoff

14 years ago last week I started a new job at Telecom Mobile as a Cellular Engineer back in the days when that meant running around the country installing new cellsites. These days with that kind of title I'd be splicing genes...


One of the things I learned in the first week (other than sneezing next to one of my new colleagues got me banished to the other end of the floor) was the concept of handoff.

Handoff is part of the magic that makes mobile telephony work. It is the mechanism that allows a mobile to move from cell to cell while maintaining the call. Its what makes it 'mobile'. The only hitch was that 'maintaining the call' was a bit of a euphemism. The way it worked was that the system would detect that call quality was declining (or in the digital systems the mobile would detect that an adjacent cell had better quality characteristics), work out where the the best cell for the call might be, prepare a spare channel on the new cell and tell the mobile to tune to that channel.The mobile tunes to the new channel (leaving the call on the old one behind) and all things going well(there is NO such thing as perfect engineering) the call would be resumed on the new cell on the new channel.There was a noticeable break in the conversation while this process occurred - I used to think of it as a hopeful period where you'd hope that the system and the mobile had all got their act together.

I learned that belief was quite important in this process and spent a lot of time driving around testing the network, listening for breaks in calls and hoping that the calls would stay up. I guess that would be why I wasn't the best engineer - too much hope and belief!

That type of handoff is a hard handoff - breaks the connection before it makes the new one. The CDMA systems these days have a much more reliable and secure way of making handoffs work - the mobile stays in contact with a number of cells so never breaks the conversation until it gets to the edge of the system. That's a soft handoff - much better for customers but not so much fun for engineers. No so much hope and belief required.

I've initiated my own hard handoff this week and resigned from Telecom. The reason its a hard handoff is that I haven't got a new role to move to. I know what I want to do - which is to lead a company that makes a real difference for customers - and once I decided that, it would have been mercenary to look for that while I was here. Hence the resignation.

Mobile phones don't have their own emotions - but if they did they'd feel a mixture of uncertainty every time they went through a handoff. But over-riding all of that they'd be hopeful and optimistic. They'd believe that they could do it. And they'd just let go of what had been good for them and trust that they'd find something better.

Corporate Blog Guidelines

I like this sensible advice from Lance Wiggs.

Keeps it simple, and has two basic themes

1. Blogging is a conversation - it's happening whether you are there or not. If you want to be part of that conversation then make an effort and be part of it!

2. If you're going to be part of it, be genuine. And you don't have to give your company secrets away to participate.

I know its common sense but sometimes that is a rare commodity in corporate land.

I've been interested in Paul Brislen's presence in various forums, in particular geekzone. I am sure that it makes those forums richer for the fact that Paul is out there with Vodafone's view on a regular basis. I do note that Paul doesn't have his own blog - any idea why that is?