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Telecom NZ: Hype Versus Reality 27 February 2002 Edition
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MID-DAY UPDATE: The phones are back on, the headlines have been updated.

First, time for the little note of thanks I give to those fine folks over at Vodafone when they come to the rescue after my phones go out.

As you can see (by the very fact that Aardvark is being published this morning), Vodafone's excellent coverage and reliability has provided me with the connectivity that Telecom is (once again) currently unable to.

So, go visit the Vodafone website, go buy their products, go use their services!

Note also that the news-links and headlines in today's edition won't be updated until normal phone service is restored.

Now on with today's column:

Telecom NZ is reportedly going cap in hand to a number of big-name players in the telecommunciations marketplace and asking them to help cover the huge losses incurred as a result of compliance with the Kiwi Share.

You've heard of the Kiwi Share -- it's that immutable, cast-in-stone guarantee that was made a binding condition sale when the corporation was privatised over 10 years ago. Well when I say immutable, we must not forget that some subtle but very important changes were made to this cast-in-stone agreement and quietly snuck through late last year when few people were watching -- so I guess we now have a Clayton's Kiwi Share.

Anyway, it seems that Telecom now wants several other telco-related service providers to ante-up about $36 million to offset those allegedly horrifying local-loop losses.

If all those Telecom TV ads are to be believed, it might be natural to expect that at least some of that money would go towards furthering Telecom's commitment to world-standard reliability and those comprehensive disaster-recovery measures they have in place.

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However, as any magician will tell you, sometimes what you see is not what you get.

For example, as I type this, my phones have been off for over 13 hours and I'm told that they might not be fixed for almost another day.

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I hate it when my phones go out for more than a few hours because it usually takes me days to catch up on the email backlog that ensures -- and I was already in "catch-up mode" before the outage.

Now if it was just me bitching then you'd be right to say "who cares, you choose to live miles from anywhere where it's uneconomic to provide the advertised levels of redundancy and disaster-recovery."

But hey, I'm not the only one bitching -- many areas north of Auckland were without phone services for at least part of yesterday after a fibre-optic cable failed for some reason.

Even emergency services were reportedly unable to receive calls and what's worse, they couldn't even fall back on their cellphones -- they were out too. From reports broadcast last night, it appeared as if things weren't put right for some of the affected areas until about 9pm last night.

What I can't figure out is exactly why all those backup circuits didn't kick in, or why the teams of trained experts didn't leap into action and organize alternative connectivity for the huge number of businesses affected.

Could it be that Telecom's claims about the reliability of its core network and the strength of its disaster-recovery systems are just a little overstated?

If that's the case then maybe that huge loss resulting from the Kiwi Share is also more than a little exaggerated also.

Now, if Telecom goes out and demands a big chunk of cash from the likes of TelstraClear, iHug, Compass, etc to offset part of this claimed loss, and the loss is more illusion than reality, might that be considered an act of fraud?

Of course I'm not about to suggest that Telecom are telling porkies and I'm sure that Telecom's beancounters can readily prove that the losses are real.

By the way (just to change the subject for a moment), did you know that Arthur Andersen's highly skilled team of auditors were able to show that Enron was a massively profitable public corporation -- right up until the day it collapsed owing billions of dollars?

Finally, I think it's important to note that despite claiming that the local loop represents a huge loss to the company, Telecom appears to have had little difficulty in sustaining its very healthy profit level during the last quarter -- even though telcos in other parts of the world are struggling.

Of course that recently announced price hike for domestic phone rentals (except in those areas where there is *real* competition) and the earlier hike in costs for XTRA customers wouldn't have hurt any would they?

Don't get me wrong -- I think Telecom does an excellent job of generating returns for its shareholders and, as a public company, that is exactly what it is obliged to do. It must also be said that Telecom are usually very responsive to my regular cellphone calls complaining that the land-lines are out, and the man they send out to wind up the local exchange when the spring runs down again is also pretty quick off the mark.

Quite frankly, I don't expect (or get) the type of reliability and redundancy that Telecom tout so frequently -- but surely those businesses who operate in the towns affected by yesterday's outage do.

One can't help but wonder whether someone at Telecom is having trouble cashing their reality check these days.

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