TEL Yield, GENi purchase,VOD,TLS,WOOSH......

[Contrarian]

Gidday
The only thing constant about this industry is change & innovation,
They can't just sit still they have to move on.. but which path to take?
What will Telcos be like in the future?

[MeNoBatty]

Wireless.

Copper and fibre on the last mile are too expensive to maintain.

[stephen]

This paper is getting old now, but I think it's still relevant:

http://www.isen.com/papers/Dawnstupid.html

Also see this:

http://www.firstmonday.dk/issues/issue6_2/odlyzko/

My take: current telcos will thrash around trying to control services offered on top of their infrastructure, but they will fail unless they can co-opt regulators. Telcos see themselves as providing value-add services, but these are precisely the easiest things for competitors to develop themselves. As IP predominates, the nature of the physical infrastructure will become irrelevant except where low latency is critical. Telcos are doomed to be low margin transporters of packets. Meanwhile, you will see non-traditional telecos emerge who've got clever about how to get packets around. Even in New Zealand there are little mammals vooming around the undergrowth doing clever things, hoping they won't be noticed until they're ready.

Value-add services will NOT be traditional entertainment (broadcast video/audio). They'll be point-to-point, consumer-to-consumer communication: chat, text, multimedia sharing, whatever.

Make of that what you will. I wouldn't be holding telcos as a long term bet though, unless they split themselves up into infrastructure vs value-add services arms, in which case I might be interested in the latter. I also wouldn't be investing in businesses who rely on copyright protection in the long term.

[Gryffyn]

Wireless and converged with enter/info tainment. Infrastructure costs will reduce as will cost of entry so service and content tie-ins will become important. Sky maybe a good bet afterall.

[stephen]

(IP = the TCP/IP internet protocols, not so-called "intellectual property")

[Halebop]

quote:Originally posted by MeNoBatty

Wireless.

Copper and fibre on the last mile are too expensive to maintain.


I agree but I think the technology has a way to go and in the meantime Telecom continue to rake in the bucks on their copper and copper/fibre system.

Woosh for example has just 5,000 subscribers and must be bleeding a poop-load of cash. I'm a subscriber and find for general surfing the lagginess of the wireless 256k connection defeats the benefit of having upgraded the pipe size from my old 128k ADSL connection.

The benefits include simple installation and alleged portability. I live in CBD Auckland and from my location connect to Woosh via a vodaphone cell site on Symonds Street. Having had many connection outages over the last two and a bit months (vs previously uninterrupted supply) and being told on various occassions that they were "upgrading" the site I can only assume this was techno-speak for "it doesn't really work properly yet" or their Symonds Street site is overloaded. Apparently the service is popular with students!

I regularly go to a friends place in Royal Oak which is still a reasonably central location. Only in the last couple of weeks did I get a signal there and it was so poor it would disconnect almost as soon as the modem dialled into the server.

Walker Wireless have a lot of issues to work through before they have a "killer application" methinks. As an additional minor point they recently signed up a new customer and accidentally assigned him one of my two existing woosh email addresses. This resulted in me now receiving his emails. I was a little surprised then when I received an email from their customer service manager advising I would need to change my email address... I thought fark off! I had it first! I have not responded to them and I'm still receiving the poor guys emails (and this happened over a month ago!). A killer technology or not - they might get killed by their own service levels first.

Because cashflow is king I suspect Telecom still has a better than even chance of winning this war - even if it means switching to VOIP and Wireless themselves at some point in the future.

[bongo66]

Vodafones new 3g network is one to look out for.

TELS 100 year old copper will no be able to handle new applications and their awful corporate culture and slap dash attitude to service means they will continue to lose customers to competitors.

Have moved most of my communication; net, cell, to others who provide service. Also getting my previous TEL landline number getting diverted to Voda mobile for free!!(shh dont TEL anyone)

Time to disconnect, Bongo

[Lawso]

Most of the above is double-Dutch to me. Can some of you technos please tell the rest of us what you think of TEL's purchase, announced today, of Gen-i. Sounds like a heck of a lot of money - $62.5m. Will it be good for TEL in NZ and AAPT in Aust? I'm nervous about any transaction when EW is on the other side!

[stephen]

As I said in an earlier TEL thread, growing by acquisition is a difficult thing to do right in the consulting services game. Clients and key staff are apt to up and leave soon after. Gen-i aren't a bad fit for Telecom Advanced Solutions, not too much overlap, so this effort might work better than most.

Which bits of my post above are hard to understand? I'll try and rewrite them if you're interested.

[stephen]

"TELS 100 year old copper will no be able to handle new applications."

Bull****. You can get at least 2 Mbps over copper to your house (ie DSL) right now, and there will be better to come.

TEL has a long way to go on pricing and marketing - hence NZ's laggardly broadband performance - but at a technical level, they have nothing to worry about.

The important thing is that there isn't really a lot of money in providing access. The value is in the cargo, not the railway.

[MeNoBatty]

quote:Originally posted by Halebop


quote:Originally posted by MeNoBatty

Wireless.

Copper and fibre on the last mile are too expensive to maintain.


I agree but I think the technology has a way to go and in the meantime Telecom continue to rake in the bucks on their copper and copper/fibre system.



I've not used Woosh as i dont have coverage yet, but have some friends on thier service. They say it is improving. Hopefully it is, but thats not my point. I used to have to log into a central database to search for information on a products and did this, albeit very slowly, through a cell phone connected to my laptop. It was great as i had all the info i needed while on the road. If Woosh (or someone else) can get wireless broadband with VOIP to work fast, reliably and low cost, it is the way of the future IMHO.

From my limited knowledge, Woosh's concept is a superior, mass market offering to the other NZ wireless implementers out there. WiFi is too short range and expensive. There are also a number of small ISPs out there trying old, fixed antena, 802.11 technology but that is too cumbersom for mass adoption.

There is currently no killer app for the mass adoption of broadband, unless you count p0rn or online games [:p], but these seem to be niche at the moment. VOIP appears to be the killer app (video streaming is a long way off, IMHO). Lets hope it arrives soon in a practical form.

Telecom have a future, but only if they can become more responsive and convert their customer base to new technologies. A bit like Microsoft really. MS are always last into a new technology, but then use their sheer size and cash flow to dominate the new space. Vodafone appear to have the upper hand at the mo.

[Halebop]

quote:Originally posted by bongo66

Vodafones new 3g network is one to look out for.

TELS 100 year old copper will no be able to handle new applications...


The generally accepted maximum bandwidth for 3G is around 2mbps (Mega Bytes Per Second) - at the bottom end of Telecom's uncapped broadband capability over copper wire (I think TEL can achieve up to 8mbps over copper). Therefore TEL are actually better able to provide applications of a non mobile kind if simple "broadband" is the requirement. My last employer had a 10mb connection over fibre optic cable - they certainly couldn't expect wireless to do the job. While it makes commerical sense to do away with cabling and building infrastructure using things like Wireless LAN, the best way to drive the data into your building or home if you are after quantity is still through a physical pipe.

With technology its that "killer" application that means the difference between so so or so-much success. I personally believe this will be in the form of some sort of entertainment (in order to make it into our homes). A "black box" providing true video on demand for example or an interactive hybrid, perhaps including decent computer gaming, "Tivo-esque" capabilities Etc. Presently, this makes the likes of TEL, SKY, BCL and Telstra or even TVNZ or Canwest better positioned to deliver.

Edit: Just as I posted this I looked over to my widescreen TV and plonked to either side is a Sky Digital box and an X-Box (I didn't mention Microsoft on my list did I? Oops). Underneath is a stacked stereo system. The winner will probably do all of these plus video on demand and VOIP. Any takers?

I'd be real surprised even if GSM or 3G find their own killer application they would be able to eclipse an "in home" alternative because the handset is too small to be useful beyond personal communications and the bandwidth capability is too limited for it to be used as a serious conduit to a larger device such as the mythical "black box" above.

To look at a fast developing (in a technology sense) example - Korea despite tremendous success of mobile communications is building a 100mbps internet backbone aimed at both the residential and commerical markets. If we extrapolated this to NZ, without the "local loop" being opened up, TEL would probably be the only company that could physically do it (not that they have much of an incentive to) ...And Vodafone would seem an unlikey investor in cables.

[stephen]

"2mbps (Mega Bytes Per Second) "

While I agree with this post in general, a correction is in order. Halebop is out by a factor of 8. Figures quoted of 2 mbps for DSL are in mega_BITS_ per second. There are 8 bits to the byte these days, and a "mega" byte is usally 1024 rather than 1000 bytes, so 2mbps is 256 kBps, or 0.256 megabytes per second. ("B" for byte, "b" for bit").

3G has a theoretical maximum of rather less than 2 Mbps, at 354 kbps.

ADSL ranges from 2 Mbps to 8. You'd only get 8 if you were a short distance from the exchange with little interference from other sources on the wire. 3 or 4 mbps is much more typical.

[Lawso]

This gets worse! It's Greek as well as double-Dutch as far as I'm concerned. Thanks for the response, Stephen, but all I care about is the effect on TEL's earnings & share price. Up 2c today on 1.8m traded so far, so it looks reasonably positive.

[Contrarian]

Gidday
thanks for responses, TEL sure *ucked up by being slow on the text uptake, Bellsouth phones could text each other on day one in NZ.

Regarding GENi I think Eric is cashing up NZ, perhaps to fund Powerhouse UK. The PE ratio TEL paid doesn't seem too high & TEL SHOULD be able to run it better than Eric, with synergy benefits.

Oh Yeah, on the yield front 30cps+ sustainable? & how much could the + be?

[Halebop]

quote:Originally posted by stephen

"2mbps (Mega Bytes Per Second) "

While I agree with this post in general, a correction is in order. Halebop is out by a factor of 8. Figures quoted of 2 mbps for DSL are in mega_BITS_ per second. There are 8 bits to the byte these days, and a "mega" byte is usally 1024 rather than 1000 bytes, so 2mbps is 256 kBps, or 0.256 megabytes per second. ("B" for byte, "b" for bit").

3G has a theoretical maximum of rather less than 2 Mbps, at 354 kbps.

ADSL ranges from 2 Mbps to 8. You'd only get 8 if you were a short distance from the exchange with little interference from other sources on the wire. 3 or 4 mbps is much more typical.


You are quite right Stephen. Mega-BITS in my haste to post became BYTES.

On the theoretical 3G maximum I'll stick with 2Mbps though. Your same connection that outside or in a moving car might only manage to do a maximum of 144kbps can be capable of doing 2Mbps when snug in your office. According to the FCC and other sources, conceptually 3G can achieve the following:

Capability to support circuit and packet data at high bit rates:
* 144 kilobits/second or higher in high mobility (vehicular) traffic
* 384 kilobits/second for pedestrian traffic
* 2 Megabits/second or higher for indoor traffic

In practice the experience can be different depending on how the network operator has configured their architecture. (As I'm sure will be the case in good old NZ!)

[HarryFlashman]

"TEL SHOULD be able to run it better than Eric" -- I very much doubt it. Gen-i has been extremely well managed, growing strongly even in tough times when competitors have faltered badly.

Gen-i has been succesful because of the positive attitudes and commitment of its staff - by doing the things a services company should do and doing them extremely well.

I don't think anyone has ever accused Telecom staff of having a positive attitude and commitment to service.

IMHO this is a sad fate for Gen-i. Sure Eric has got a very good price (and good luck to him) but Gen-i under Telecom ownership will become as grim a place to work (and to deal with) as TEL itself. I think there will be a great outflow of talented staff and maangement as the Telecom drones start to exert their dismal influence.

TEL can't manage its own IT and outsources to the equally-dismal EDS yet it now expects customers to outsource their IT to a TEL subsidiary. I think they'll have some explaining to do.

Shame Telstar Clear has stuffed up so badly at Dept of Corrections - TEL will never get better without competitive pressure.

Cheers
Hary

[Andrew]

Dont Give up on copper wire or Telecom. With the gains in technology copper wire will be even more useful. Who ever thought you would be able to connect to the internet through your electric power point. This is coming soon.