We can deliver on broadband: Telecom

Telecom's XT fiasco could have delivered a fatal blow to its plans to be the government's lead partner in the $1.5 billion rollout of ultra-fast broadband, say telecommunications experts.

But Telecom, while admitting the failures of its new generation mobile network has been a humiliating disaster, insists it is already too deeply involved in laying fibre cable to miss out on the massive infrastructure project.

Telecom has reassured the government that it can deliver – despite its problematic XT network – ultra-fast broadband (UFB) to all New Zealand households.

Telecom, a Canadian company and about 16 local companies are bidding for the job. Contracts are expected to be signed by September with the first of the fibre cable network being laid before Christmas.

The spotlight is on Telecom – with consumers and rival bidders questioning its capacity and expertise to deliver arguably the country's most important infrastructure project – since the embarrassing outages with the company's new $600 million XT mobile phone network. XT has been out of action in the southern half of New Zealand five times in two months. The most recent failure sparked a $10m compensation deal. Telecom has already announced a $5m compensation package, after a fault in January affected about 200,000 customers south of Taupo. In total, there were close to 470,000 XT customers late last year, so well under half have been affected.

Guy Hallwright, a telecommunications analyst with Forsyth Barr, said the XT debacle had damaged Telecom's prospects of winning the contract.

Hallwright believed Telecom would take a big hit if it missed out on the contract. "It's not the end of the world [for Telecom] but it's a very changed landscape.

"I think there would be a fall in the share price if they were ruled completely out of it because over time... they will pull back and become a retailer on another network."

Paul Budde, the managing director of the global telecommunications research and consultancy company BuddeComm, said Telecom had the expertise to deliver ultra-fast broadband but believed the XT disaster meant any contract will now have to be based on even more stringent conditions.

"As the largest player they [Telecom] should have taken the lead in projects like UFB. Their lack of leadership is now making people nervous that they can handle the UFB task. That is a real worry so the sooner they start taking charge of their own future, the better for all of us."

But Rob Spray, chief executive of the Telecommunications Industry Group, said Telecom was a huge company with a massive network "so the wheels won't stop".

Spray said even if Telecom did not get the contract to build the infrastructure it would be a strong competitor in the retail market that other local companies would find tough to compete in.

"They will be an important player either way."

Labour's communications and IT spokeswoman Clare Curran believed Telecom was more focused on cutting costs than the long-term service needs of consumers.

"They [Telecom] need to pick up the ball. I'm concerned about the skills issue; I think there has been way too much outsourcing within Telecom and I think we're seeing the results of that right now with the XT network. I think the government should formally ask questions of Telecom as to how the XT network was rolled out, whether it was adequately funded, whether it was adequately tested and what level of standards it met."

Telecom said it was ridiculous to suggest the company did not have the expertise to deliver ultra-fast broadband. A spokesman said Telecom had already laid 23,000km of fibre cable.

"In terms of fibre in the ground and the places it reaches, Telecom is doing, and has done, more than all the other players combined already.

"We have under way the largest private sector infrastructure investment programme in New Zealand's history. Do we care about New Zealand's national interest? The answer is, hell yes – look at the proof. We are spending that money now, every year. It is ridiculous to suggest we don't have the capacity or expertise."

Telecom had reassured the government that despite the XT public relations disaster, its UFB bids were sound. "Telecom can and will meet the government vision for fibre. We understand the rules and we can and will deliver."

- © Fairfax NZ News