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Orcon boss trashes doomsayer rivals

19 Apr 12

A recurring theme at this week’s TelCon12 conference in Auckland was the challenge telecommunications businesses face as they struggle to cope with rapidly changing technologies, insatiable customer demands and declining revenues.

The problems were articulated best by TelstraClear CEO Dr Allan Freeth who delivered a clever and engaging speech comparing the telco industry to a frog being slowly boiled alive in a pot of water.

The sector was "characterised by seismic change in technology and social norms and behaviour,” Freeth said. 

"Our industry and its ecosystem are inherently unstable and uncertainty is its dominant characteristic.”

The onetime evolutionary biologist compared telcos to dinosaurs and cheekily showed a slide depicting a dinosaur emblazoned with the logo of competitor Telecom to make his point.

The problem, he said, was that rapid change is difficult for telcos because they have complex internal systems, large customer bases, heavy investments in infrastructure and long and material investment profiles.

As an example of the problems TelstraClear faced, the arrival of the Government-backed Ultrafast Broadband initiative will mean the company has to cut its costs to serve customers by half, or about $15 a month, in order to survive, he said.

Freeth did offer a glimmer of hope for the industry, however. Again calling on his scientific background, he noted that the evolutionary process meant that some dinosaurs eventually evolved into animals such as sharks and crocodiles which continue to survive today.

However, Freeth’s generally gloomy outlook was rejected wholeheartedly by Scott Bartlett, CEO of rival telco Orcon, in his address to the conference.

"I sincerely believe that smart people, smart carriers have an opportunity to extract significant value from their relationship with customers … I truly believe there’s a fantastic opportunity for revenue growth,” Bartlett said.

Rather than complaining that so-called "over-the-top” companies – including internet giants such as Google – were sponging off the telcos’ investment in expensive networks, the answer for telcos was to partner with OTTs, he said.

An example of how this could work was as Orcon’s recent partnership with movie internet movie company Quickflix, he said.

Such partnerships allowed telcos to "clip the ticket” on the services OTTs provided, retain customers for longer, and have a "deeper billing relationship” with customers.

Bartlett also believes carriers and telco service providers should play a dominant role in the current explosion of cloud-based services, and not leave it to ICT companies to cash in on the cloud trend.

"I think that carriers can play a unique role in brokering together [cloud-based] applications and services for New Zealand enterprises in a way that no one else can do,” he said.

The contrasting views from Freeth and Bartlett are stark and reveal two very different visions for the future of the telco industry. Only time will tell who is correct. What is clear is that some rapid evolution is required for the industry to flourish. Whether today’s dinosaurs are capable of morphing into crocodiles, or preferably an even a more nimble and future-proof species, remains to be seen.

For more information about Orcon's Fibre & Quickflix options click here.