Telecom’s Broadband – getting there but room to improve

I decided to check out with Telecom’s broadband sign-up page to see how the impact of Telecom’s ongoing transformation is affecting end users. Overall things seem much easier to navigate than previously, and the plans are better. But there are still gaps between what I saw and where Telecom could, and should, be.

The Technologies

The broadband landing page is great – although one could argue that starting with a technology rather than a use case is going to alienate a good percentage of people. The little speedos by the titles help though, and it’s great to see the UFB prices advertised as the same as VDSL.

The Plans

The UFB (why would you want anything else) plans are on the low side, but the data caps are consistent with the other two technologies offered, so I guess that’s one less thing to think about. I would really like to see an additional much higher cap so that families can rule forget about the constraint of caps. I’d also like to see the ability to have or at least see a guaranteed CIR – committed information rate of the line – both domestically and offshore. There is, for example, no point having a 100 mbps UFB line to the exchange if your data then goes through congested local or international backhaul that gives you under 1mpbs in reality. So why not guarantee a minimum speed, and why not charge for increased professional grade packages?

The way the plans are displayed is admirably simple – but it was only on the second visit that I picked out the 100mbps UFB option. The xDSL naked option is similarly hidden.

Address

Once you pick a plan, and I like that this happens before the address checker, it’s time to find your address. I feel that Telecom misses a trick here by not welcoming their mobile customers (like me), who already have a relationship but perhaps not a fixed-line. I’ve spend tens of thousands of dollars with Telecom, so surely a kick-back would be in order?

And for folks like me who have a fixed-line internet with another provider, but no phone line (or unknown phone line) there is no explicit option beyond “I am new here.”

To UFB or not UFB

And then it all ground to a halt with a fundamental error. While UFB has been available in my street for some months, Telecom is simply not offering it to customers.

There are over 30 residences at this address, but perhaps Telecom has decided that multi-family and high occupancy dwellings are just too hard. That’s perhaps a reflection of Chorus playing hardball with buildings (it’s all about a required bit of equipment called an MDU) and it’s also about ISPs having no power to drive Chorus to deliver to the end user. I’d like to see Chorus pay for this, and certainly they should get zero credit for “passing residences” when there is seemingly no willingness or ability to actually connect.

But back to Telecom. I this case they are simply wrong, as one other ISP, at least, is getting UFB installed into this building. Thanks indeed to the ever-awesome Vibe Communications, who usually target large corporate and small ISP customers.

So I strongly recommend that you shop around if you see the message above, and at very least check the UFB rollout map (which shows my residence as being in the UFB zone).

Caps Pricing

The pricing is as seen earlier, but the choices for what happens when you go over a data cap are not good at all. You can choose to either lose your internet (64kbps will not run anything), or you can pay an extortionate rate per GB. While, for example, the first 500GB on the maximum plan costs $129, the second 500GB would cost $500, and let’s not forget that the UFB line rental overhead was paid for out of the first 50o GB.

Fixing the way data caps are charged

Nobody can predict with certainly how much internet they will use, and everybody (especially in aggregate) is using more and more GB of data over time. So charging like this has three strongly negative  impacts.

  • Customers who over-estimate how much data they will use will pay more than they should – and be very unhappy with Telecom
  • Customers who underestimate how much data they use, will pay more than they would have if they were on the right plan, and so will be very unhappy with Telecom
  • All customers will experience a chilling effect on data use – with a bias towards using less internet than is natural, and this bias is holding back society and the economy. That makes us all very unhappy with Telecom.

There is a solution, and to me a fair answer here is simple.

Telecom, and other ISPs, can automatically charge customers at the appropriate rate for their data use. Use 40GB or less one month? Pay $85 that month. Use 458GB the next month? Then pay $129 for that month, and so on. For households that use over 500GB, why not charge at a pro-rated rate per GB at the $129/500GB rate. Even better, charge $149 (say), the 1TB rate. And for those who want to cap their bill, allow them to pick a maximum before throttling, and provide them plenty of warnings.

Fixed line Phone

I like that the internet offering is not pushing calling as a priority, and it feels like a big shift from the past where the process was to get a phone line and add internet. Good.

But the calling options could be better – they seem to be very specific deals that depend on who you call and when – why not offer a simpler “all you can eat” plan?

Contract or no contract

The contract page is problematic. There is a very strong push to sign customers up to as 12 month contract (this is for VDSL – there was no UFB option for me). Contract for 12 months and you save $300, and get $100-$130 of value. Don’t contract and you retain flexibility but pay $300 for the privilege. I almost never contract – as I don’t want my ISP telling me where I can live or preventing me from switching.

Why not recognise that customers who pay up front are quite valuable – and why not give them time-related loyalty bonuses? For example “If you are still with us after 12 months – you get a month free”. But more importantly, the 12 month contract customers are paying for that $300 up front cost in their monthly payments – so why is there no monthly discount for those who are taking on the installation costs?

I really did like the installation option to pick a date and time. Well done to Telecom (and the wider industry that makes this happen). I wonder how it works in practise.

Details details details – far too many

The next page asks far too many personal details for your account set-up. It starts with the personal and gets worse. I see no reason whatsoever that my ISP should know my relationship status, date of birth, number of credit cars or next of kin. I have no confidence that this data won’t be exposed to many people, and I have no confidence that it all be kept securely.

There is a better way.

Powershop, which also delivers a variable amount of service over a fixed line to the premise, asks for your name, date of birth, email, contact phone number and address for service. They also want property details, a password and payment details. I’d really like to see them remove date of birth, but there is plenty that Telecom are axing that is clearly not required for a utility.

Privacy

Back to Telecom. I do like that you can get around some of the hideously personal fields with privacy friendly options, though you do need to hunt, and you may in effect have to lie on the form (e.g. employment), which is likely against the terms and conditions.

Overall

And that’s it. There was a summary page and a submit button. That last page (no screenshot sorry – as it was just the fake details I had entered) didn’t give me much confidence that Telecom where going to deliver the service – just that they would think about it.

Score

Telecom’s process and offers are much improved, and very well done for that. But we are not there yet. The plans can be made fairer (and a march stolen on competitors), the UFB access to multi-resdence dwellings needs to be solved, and more faster and larger options can be provided. A solid B, with a commendation for improvement.

Over at BigPipe, Telecom’s secret simple broadband brand, they seem to be doing a lot right. The sign-up is far less invasive, and the plans are unlimited and it’s month to month. But there is no UFB, a requirement to buy your own modem (why not sell one) and it’s a low-rent brand that many people would not feel comfortable with. But why not replace the Telecom offers with ones like these?

Posted in NZ Business | 3 Comments

Telecom’s burden is marketing: Spark

What does Telecom do?

For me it’s simple – as a telco (leaving aside Gen-i) it provides reliable internet and voice connectivity. That connectivity is accessed over the air and via copper and fibre, and there is a strong switch towards demand for pure data access, rather than voice, txt or other services.

When Telecom wins it delivers simplicity, and three recent changes were great to see. The first was the removal of cripplingly expensive data roaming costs so that we don’t have to do the SIM dance when travelling across the pond and to other frequent destinations. The second was the rollout of the iOS (and Android I suspect) application for mobile customers, an application that allows easy addition of data packs for relatively reasonable costs. It’s not perfect – I’ve heard about delays and the incessant texts are annoying – but it’s worlds away from the past. The third is a new system for in-store staff, which makes their work, and ability to deliver great customer service, lot simpler than before, though I suspect there is plenty more to do.

So the proposed name change to Spark is disturbing, and for three reasons.

The first is that the old name is strong, while the new one is appalling. We are incredibly dependant upon our telecommunication providers and demand similar levels of dependability and reliability from them as we do banks. “Telecom” is a name rich in history, not all of it bad, and can be relied upon as a NZ institution to deliver a good service. “Spark” is a small thing that is liable to disappear very quickly.

The second is that this rebranding is a distraction. Telecom’s transformation, like Air New Zealand’s before it, is a long, slow gradual process. It means a return to simplicity of offerings, delivering outstanding customer interactions, and relentless focus on delivering  fast unrestricted data pipes over a variety of mediums. This is happening, but changing the name has nothing to do with these activities, and will cause staff and customers to wonder what the heck is going on. I’d much prefer that the focus remains on the changes, and allow our increasingly positive interactions with Telecom improve their brand equity.

Thirdly this feels like an expensive capture by marketing folks, internally and externally. Telecom has long had an issue with the strange belief that they are a marketing company rather than a product or services company. This has meant wildly expensive spending on television and other advertisements, constant rebranding of the company and products (XT as an example) and a vast and complex series of products that makes doing business incredibly difficult. At issue is not just the cost, but the energy of staff and senior management that goes into “marketing” rather than into delivering great products and services.

Overall

The change happens on April 1, so there is a chance it’s all a joke. Please.

For me the rebranding is a critically poor decision, a distraction and a reason to question what is happening at the board and senior executive level.

Perhaps it’s happening because the marketing department has little ability to create impact at the product level, and they need something to do. A lot of the delivery of Telecom’s products is outsourced (e.g. to Alcatel Lucent), but external marketing websites, TV and billboard advertisements and rebrandings are relatively easy for the marketing team to do. This means vast budgets and numbers of people internally and externally are focused on marketing overhead rather than the core issues like products, pricing and customer interactions.

If I were a board member this would be simple – I’d be strongly advocating that this is evidence of marketing over-reach, and that the budget be stripped and the existing team reduced almost to zero. What a sad waste.

Posted in NZ Business | 15 Comments

Let’s fix the New Zealand Food System

In 2001, while I was living in the USA, I read the book Fast Food Nation, shortly after it was released.

I stopped eating meat.

The USA’s food system was so broken that the quality of the meat being consumed was not just poor, but dangerous to consumers. Abattoir lines were so fast that workers, who were generally very poorly paid, overworked and temporary, were operating in conditions that made it essentially impossible to maintain hygiene standards. Chickens were raised in barns where disease ran rampant, over-use of antibiotics increased human resistance to these drugs by bacteria, while perverse economic incentives driven by anti-Cuba sentiment prioritised fat-producing high fructose corn syrup (HFCS) over sugar.

Overall the bacteria levels in meat were often critically high, essentially every piece of chicken had salmonella, and there was no semblance of control by the regulators. Indeed the producers had fought and won a long battle against the FDA for self-inspection and increasingly lower FDA funding, so that there were too few inspectors and their powers were crippled.

It was the end game from the classic USA prioritisation of quantity and short term profits at the expense of quality. Products from giant food companies were reformulated time and time again, and became less and less like real food and more and more like chemicals.

Meanwhile the US has led a global explosion of a switch to ‘irresistible’ foods that are very high in salt, sugar (or HFCS) and fat, foods that our bodies are triggered to just keep eating, and yet which create all sorts of health and well-being issues.

Since then we’ve seen the rise of markets like Whole Foods, which will not sell chemicals-as-food, and end to end control of branded meat. The situation is a lot better, but only if you can afford it, and in the USA most cannot.

New Zealand

So a contributing factor for my choice to return to New Zealand in 2003 was that our strong food system meant that the quality of our food was second to none. It was a joy to be able to eat meat, knowing that from the farm to my plate it was protected by an unimpeachable food system.

But time moves on, and somehow something has changed. This Metro expose has the details, which I won’t repeat here, but it appears to be excellent journalism.

It is arguable that our food inspection system, which traditionally separated the inspectors from the producers, has become corrupted. Not in the money-under the table sense, but in the sense that some inspectors are no longer independent. This letter to the Minister by Stephen Judd from late 2010 correctly identifies the hazards of allowing self-regulation in an industry like this. Despite the best intentions, the short term profit incentives will always be to increase production at the expense of safe food, and the system will be steadily undermined.

The Metro expose comes after the publicity from the well known Fonterra food system issues, and forces us all to consider whether or not our food system in New Zealand is even in control. Urgent action is required.

Beyond Control

But just being in control of our food system is not good enough for New Zealand. Our economy and society is completely dependant on our food exports, and to maintain our reputation and to increase our export margins our food system needs to be inarguably the best in the world. We should be demanding – and tracking – the highest quality of standards from the farm to the plate. That means everything from treatment of animals (including diet), environmental sustainability on farms, animal transport and processing, food handling and so on and on.

I would like to see a future where consumers, whether local or international, have visibility of the entire food system, from farm to their plate. We should be delivering the evidence that shows why the world should completely trust our food system over all others, showing that our food is the highest quality.

New Zealand’s food safety may be perceived by some as an environmental, safety or social issue, but if this is unaddressed it will become the most critical economic issue of our time. As New Zealanders interested in our economic security we should collectively have zero tolerance for accepting anything that would bring our food system into disrepute.

This is not a game where self-regulation is acceptable, but that’s just one symptom to address. The underlying cause is that we need to lift our standards, starting at the political level, to ensure that we remain the best in the world at what we do.

Posted in NZ Business | 3 Comments

When broken forecasting means billions wasted

This line records use of a certain item by New Zealand population since 2000. Where do you think it will be in say 20 years time?

The statistic went up, and then down, and so the best estimate to me would be a flat or downward trend. But rather strangely the authors of this chart determined that all of their estimates would be up, and that the lowest change would be a substantial increase. Here it is, with my added red line eyeball trend:

The chart, of course, is estimated vehicle use in New Zealand, expressed in millions of kilometres travelled. It’s sourced from the ” National Long-Term Land Transport Demand Model, NZIER and NZTA (2013)”, and that’s a critical model as it feeds into all sorts of cost-benefit analysis and policy for transport in New Zealand.

International and local evidence is that vehicle use is declining, driven by a new generation that cares about global warming, and prioritises iGadgets, internet use and public transport over cars and other structural shifts. So seeing a forecast like the below is completely unreasonable (the red is my straight line projection again):

It’s a basic mistake that is and will cost the country billions – in over-spent costs to build more roads, and, worse, in the opportunity cost of not applying that investment to more productive areas of the economy.

The bias towards cars is also reflected in this chart of forecast public transport statistics – which doesn’t pass the giggle test either. Witness the trend and the projections below (the red is my version of the trend-line):

So for some unfathomable reason the growth in the use of public transport is forecast to immediately and dramatically fall, while the growth in the use of cars will immediately and dramatically rise. It’s ludicrous.

I plucked those charts from the Treasury Paper “Infrastructure Evidence Base: Transport Sector“, published today. It’s wonderful to see papers like that published, but not when the underlying assumptions are flawed.

The executive summary acknowledges this flaw, stating:

“Historic assumptions about future revenue growth from fuel taxes are being re-evaluated in light of international trends such as driving less, increasing fuel prices, e-commerce, increasing fuel efficiency and alternate fuels.”

That’s repeated elsewhere – and I wonder what the authors really think.

While the report covers road, rail, marine and air modes of transport, it ignores the most popular transport method – walking, and ignores cycling as an alternative which takes thousands of cars off the road each day.

But it does state that congestion in Auckland has been decreasing:

There has been notable progress in Auckland since 2009, which shows evidence of improvement in travel times during the morning peak period, despite population increases.

And that’s backed up by a chart – I’ve added the census data for Auckland population from 2006 and 2013. The trend from 2009 is unmistakeable, and not coincidentally the liveability of Auckland has skyrocketed during that time:

There is no mention of why congestion has lowered in Auckland, and I suspect that the considerable rise in medium and high density housing, the major improvements in the bus and train systems in Auckland along with the rise in cycling and walking are deemed out of scope. That’s a shame, as it contributed towards Auckland being a far more liveable city, and that in turn is driving the economy here.

The narrow scope, along with laughable forecasting of lower growth in public and higher growth in private transport collectively mean that the report is fundamentally broken.  

A broken report means that we cannot yet even fairly communicate in New Zealand about the quality of our transport infrastructure and the future investment required. That’s really not acceptable in an election year.

Posted in NZ Business | 4 Comments

Our new US ambassador has a tough act to follow

The nominee for the USA’s Ambassador to New Zealand is one Mark David Gilbert.

Here’s the text from the Whitehouse.gov press release, 4 months ago:

Mark D. Gilbert, Nominee for Ambassador to New Zealand, Department of State

Mark D. Gilbert is a Director at Barclays Wealth (formerly Lehman Brothers) in West Palm Beach, Florida.

Mr. Gilbert was the Senior Vice President of Goldman Sachs in Miami from 1989 to 1996 and

the Senior Vice President Sales Manager of Drexel Burnham Lambert in Boca Raton from 1986 to 1989.

Mr. Gilbert was the Democratic National Committee’s Deputy National Finance Chair from 2009 to 2013.  He served on the Obama for America National Finance Committee from 2007 to 2008 and 2011 to 2012, and was a member of the Presidential Inaugural Finance Committee in 2009.  Mr. Gilbert was Finance Chairman and Advisor to the Klein for Congress Campaign from 2005 to 2006 and was a Trustee on the National Finance Committee for Kerry for President in 2004.

Before beginning his business career, Mr. Gilbert was a professional baseball player for several years and played in the major leagues with the Chicago White Sox in 1985.  Mr. Gilbert received a B.S. in Finance from Florida State University.

Let’s start at the bottom, as NZHerald led with the White Sox connection in their article on February 14th. While Gilbert was indeed a former Chicago White-Sox player, his career with mercilessly short, lasting, says Wikipedia, the 7 days from July 21 1985 to July 27 1985 and paid, says baseball-alamac.com, $60,000 for the year (the minimum). Amazingly enough he played 7 games in those 7 days – making 6 hits and 3 runs in 22 at-bats. The White-Sox played 162 games in the regular season in 1985 and are Obama’s favourite team. 

The largest chunk of text from the press release is reserved for Gilbert’s work as a fundraiser for the Democratic Party and Obama/Kerry, and this is why he has been tapped as an ambassador. The WSJ reports that he raised at least $500,000 for Obama’s reelection in an article that somewhat unnecessarily points out that he was not implicated in Barclay’s Libor rate-fixing scandal. (A scandal that even today is on the front page of the WSJ). But the NYTimes shows Mark Gilbert has in fact bundled over $3.3 million for Obama since 2007 – just out of the top ten bundlers for Obama.

While it’s ok in the USA to be rewarded like this for fund-raising efforts (and indeed it’s sadly ok for fund raising efforts like this), it’s not activity that helps with credentials for an ambassador to New Zealand, although it does show a certain loyalty to the President. Evidence of that influence is small article that mentions that his daughter, Dani, was a DNC (Democratic National Committee – the Democratic Party) employee, and that Mark and Nancy Gilbert had visited the White House “several times.”

So we need to look beyond baseball and fundraising for his credentials.

Gilbert is described as a banking executive by NZHerald, which is incorrect I believe, as while he works for a bank, he is qualified and is an investment adviser and broker.

Gilbert started his career, an unknown time after a degree in Finance from Florida State University in Tallahassee, at junk bond dealer Drexel Burnham Lambert  from 1986 to May 1989. Drexel famously collapsed in Feb 1990. He got out before then to Smith Barney from May 1989 to August 1989, and then Goldman Sachs from August 1989 to October 1996. He moved to Lehman Brothers in October 1996, and stayed after they were taken over by Barclays in September 2008. Lehman’s collapse was a signature event near the start of the GFC.

Gilbert’s roles were, in my opinion, far too junior and removed from New York and London to be tainted with any of the Drexel, Lehman or Barclays scandals. As a broker, which is a relationship sales role, he is someone who helps land, advise and retain wealthy individuals from Florida with his employing institution. While he is a Director at Barclays, the Herald writer may not have known that Director is a common role in banking, and it appears from Barclays own job ads one that is picked up when staff are around 30 years old (i.e. 7-10 years after entering as a new graduate.) Barclays itself has several CEOs, Group Heads, and so on, down to hundreds of Managing Directors and Directors.

He discloses some volunteer work with the Boca Raton Festival and the Sundance Institute on his FINRA Brokercheck report. These seem to be low key and fund-raising based. I found a reference to a one-off fund raising event for the Sundance Institute for example, and it seems he is a regular donator to their efforts, and he and his wife donated at least once to the Boca Raton Festival.

So I see little in Gilbert’s bio that gives indication that he understands either New Zealand  or the issues that are likely to be dealt with over his term.

What makes this hard is that Gilbert has a very very tough act to follow, with the departure of Ambassador David Heubner, a Princeton undergraduate and Yale educated lawyer (as was his dotted line boss Hillary Clinton) who was a superb representative here for his country. I suspect we were lucky with Heubner as he was also the USA’s first openly gay ambassador, and perhaps had to have impeccable credentials to pass throughout the US Senate confirmation process. Certainly he was perhaps more highly qualified than many other ambassadors we have received here.

We should not lose sight of the fact that we are a tiny country as far as the USA is concerned, and placement of ambassadors here would likely be regarded as a job for the boys. That’s said, Heubner has shown what a professional can do for relations, and I suspect there are  hundreds of career professionals inside the Department of State who would be very frustrated that the Ambassador to New Zealand role is not ever available.

Of course while New Zealand is an afterthought for the USA, the USA is of critical importance to us, and every other country in the world. This is reflected in the quality of our own representative to the USA, ex Prime Minister and ex-Director General of the WTO Mike Moore.

Gilbert does, it seems, have a reputation for hard work, and clearly and his wife get along with a lot of people, so I really hope they immerse themselves in NZ once they arrive.

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The end of Kiwibank?

<updated to clarify this is for Kiwibank’s Core Banking System>

Fairfax Media report that Kiwibank is signing up to SAP as their “principal computer platform” provider for their core banking system. The core banking system runs the business of the bank – including real time transactions, interest calculations and payments., and it is unclear where the line is drawn between this and the other systems in the bank. 

If the reports are true, then that’s arguably very problematic.

SAP, and I’ve been through a few cycles of SAP rollouts, is a vast, complex and barely usable system for managing complex businesses. It has a history of failure, but I also sense that much of the failure is unreported.

SAP and other ERP systems are sold, as I understand, on making it easy for the most senior managers to manage their sprawling businesses. But SAP and other systems like it generally make it very very difficult for the huge numbers of end users inside the company to actually do business. The recurring joke is that  SAP promises to save tens of millions, costs hundreds of millions and causes billions of dollars in lost productivity and opportunity.

I can’t back that up, as I have never done a study on it, and I could never talk about anything I have seen, but I can refer to the AU$1.3 billion and six years that Commonwealth Bank reportedly spent on upgrading <update – it was a new install for core banking, and they run Peoplesoft/Oracle for their ERP> their SAP system to be able to do live transactions and for compliance with new laws. Note that ASB, which CommBank owns, coded and delivered their own live transactions banking system themselves back in 1969 - and it still works. And also note that in September last year Tom Groenfeldt reported only two SAP core banking replacements – CommBank and Nationwide Building Society in the UK.

CommBank is huge, and arguably needed the complexity of something like SAP. While the project was a big risk, they were able to throw vast resources at it and no doubt customise it to better fit their business. It looks like they got away with it.

Moving to a system like SAP (or installing any large IT project) is a very risky endeavour, and generally means changing the way you do business. The waterfall-like approach to these projects means that requirements are set years before delivery, and the rigidity and complexity of software like SAP almost always means failure to deliver on promised costs or benefits.

For Kiwibank I worry that they are too small, with only 850,000 customers, and with little money to invest, they will have to use the out of the box solution. And to quote Groenfeldt on smaller banks “When they do a core replacement, they make a fundamental decision to adopt the structures and procedures defined in the vendor’s package with minimal customisation.

So I worry not just that the cost of implementation will be high and the result may be poor, but that the very nature of what Kiwibank is will irreversibly change.

But then again I know very little about SAP for Banking, and I hope for their customer’s sake that I am wrong.

The ideal solution is, of course, for Kiwibank to wake up to the very strong  local development talent, hire them in and give them true power and air cover to reinvent banking, piece by piece and digital-first.  It’s that approach is good enough for the entire UK government, it’s good enough for a tiny antipodean retail bank. 

Posted in NZ Business | 37 Comments

UFB progress at 1.5% – who wants other 98.5%?

It’s great to see the UFB project continue, with the Quarterly Broadband Deployment Update for December 2013 showing over 27% of premises passed to date.

The real question is how we can increase the pace of actual connections, currently at 1.5%. I’m trying to connect myself and can confirm that the anecdotes I’ve heard to date about the complexity and time are true. There is plenty of money to be made by private sector businesses who accelerate this adoption, and I look forward to seeing who the winners are.

Posted in NZ Business | 2 Comments