The new Telecom

Rob O’Neill at Stuff reports:

Over the past few months has “pulled the pin”, says chief executive , and made moves designed to change the telecommunications market.

Moutter is referring to initiatives such as sharp cuts announced in December to international data roaming charges, which have been a bugbear for many business travellers whacked with hefty bills for using the mobile internet services when overseas.

Telecom launched a flat daily rate for data roaming by on-plan customers across major travel markets such as Australia where roaming now starts at $6 a day. A $10 a day flat rate applies in other specified markets while elsewhere roaming charges will be cut by up to 92 per cent.

I’m heading to the US soon, and for once plan to keep my NZ sim card in the phone.

What has happened to Telecom? It used to be Vodafone and, more recently, 2degrees making the running in the fast-growing mobile market.

Moutter says Telecom is no longer spending time and energy defending the past or worrying about regulation. It has moved into what he calls “clear air”.

I think the separation of Telecom from Chrous has been great for Telecom. They no longer focus on protecting a monopoly and trying to vertically integrate around the monopoly portion.

Moutter, who in a previous life at Telecom (before a successful four-year stint leading Auckland International Airport) fought the threat of regulation and operational separation fiercely, says Telecom can now be much more clear about what drives its future value.

“A separated model feels a lot better to me than what we called operational separation,” he says.

Where operational separation bound the company up in rules, full structural separation since late 2011 has freed Telecom from a lot of that red tape and delivered a new sense of direction as a pure retail business.

The lesson here is you should regulate the monopoly aspects of a utility, but promote competition in the non-monopoly areas. Sadly Labour/Greens wish to do the opposite and turn power generation into a state controlled monopoly.

Moutter says “texting circles”, or deals such as Vodafone’s Best Mates, are the biggest barrier to winning back market share, but Telecom has moved on from such “closed network” deals, where customers get a discount on calls or texts within a single providers’ customer base, to what he describes as “any net” deals.

“If I was a Vodafone customer, I’d be wondering why I was being held captive,” he says.

A very good question.

Ironically for the man once charged with facing down the regulators, Moutter freely admits that is a product of regulatory intervention – the Commerce Commission’s decision to regulate mobile termination rates charged between providers for calls terminating on their respective networks.

“I was that guy running defence. That was my job.”

As one of those who advocated termination rate regulation, good to see Telecom not embrace it. It has been a great boon for consumers, and has helped foster competition as it makes it easier for people to choose the network offering the best deal – rather than be forced to go on the one their friends are with.

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