Telecom cannot afford to skip history lessons

OPINION: Theresa Gattung's Bird on a Wire is a brave and I'm sure honest account of her travails as Telecom's chief executive, but there will certainly be people who will need convincing it is worth raking over the past – Telecom's new management team included.

With that in mind, one of her most relevant claims, made while promoting the book, is that history is in danger of repeating itself, after Labour saw a political upside in succumbing to demands from the public to "castrate" Telecom.

Ms Gattung writes the public would be best served by the current Government coming to a "transparent" arrangement to partner with Telecom in its $1.5 billion UltraFast Broadband (UFB) initiative.

Speaking on Radio New Zealand Ms Gattung said the 2005 Labour government fell into the trap of thinking there was a simple answer to the broadband issue and the country was facing that issue again now.

A deal with Telecom would be good economics "but it is probably still bad politics".

Communications Minister Steven Joyce responds: "Crown Fibre Holdings will be focussed on getting the best possible partner for taxpayer funds and not on politics". But Ms Gattung isn't alone in thinking public opinion could be a factor.

She speculates in her book that the public's view of Telecom might have been different if more people had had a stake in its financial success. Without that, she believes many would have preferred it to have been a state-owned enterprise.

Widespread share ownership of Telstra in Australia doesn't appear likely to spare that company a similar fate, however, nor did it save British Telecom from the operational separation that became the blueprint for the Telecom reforms.

Margaret Thatcher encouraged "mums and dads" to buy shares in British Telecom in 1984, when she purposefully sold off shares in the company to the public at a hefty discount to their market-worth, with the added incentive that people needed only pay an instalment on the full purchase price. I well remember, as a 17 year-old, myself buying a few hundred pounds-worth of shares in BT, as did many of my school friends, and in just a few weeks more than doubling my money (earned from a Saturday job at the local Sainsbury's).

The heart of Telecom's perception problems may not be so much that people don't view themselves as having a direct stake in its success – many will have a small one through Kiwisaver, company superannuation and insurance schemes – but more basic. Because of the way it was sold off, many do not believe it to be a New Zealand company at all.

Opposition communications spokeswoman Clare Curran even expressed the view that it wasn't one during an interview with InfoTech earlier this year.

There is, though, a big difference between large listed companies like Telecom and BT, with their passive, diversified shareholder bases, and the subsidiaries of overseas-domiciled business.

It will be harder for Telecom to convince the public that it is a New Zealand business now that much of its top management hails from overseas, but they should recognise that history, and the perceptions of it, have rarely been so critical to shaping Telecom's future.

- © Fairfax NZ News