Speaker by Various Artists

Dear Ms. Gattung

by Adam Hunt

Dear Ms. Gattung,

"The" unbundling should keep the ICT industry in gossip for a few weeks as yet: over at gen-i I am sure the walls are positively pulsing with theory and rumour. I actually want to offer a word of support and some advice, but I need to start with some criticism.

I've long had an opinion that when you get past the strategy-management-bull-speak, what (maybe through gut-feel) drove the acquisition was the recognition that the old "engineering / asset focussed" culture had to go.

Having dealt with bits of TNZ over the years (as customer and integrator) I have come to the conclusion your organisation is built along the lines of:

- Engineers build it
- Accountants invest in and maintain it (following the pleadings of the engineers)
- Marketing people package it as lines of business made of discreet service components
- Some poor bugger goes and sells it

The sales channel were always the poor cousins of the engineers. Most sales people have (need) ego's, so these were salved with quite extraordinary amounts of cash and toys. The effect was a sales channel happy to be apologists for a dreadful disconnection between the customer and what got built. I'll bet that the introduction of the "close to the customer" sales model via the acquisition of gen-i and Computerland is sending waves of fear through the legacy sales channels at TNZ as we speak: because the new model must be outperforming the old one (or there truly is no justice).

Examples of the issue include the CDMA decision, and the complete failure to grasp the cultural shift that goes alongside moving to IP, which really comes down to managing the quality of service at the application / business process layer. If you are convinced it has to be done at the network layer, and distance yourself from the edge, then you will never be able to foresee the change. One day you are simply swept away.

It reminds me of Motorola's complete failure to grasp the implications of the shift to digital mobile in the mid nineties. Remember when every analogue mobile handset was a Motorola? Why did they not make the shift to digital? Because their engineers said they wouldn't release a handset until the GSM voice quality was as good as analogue. Nokia understood that customers would trade a bit of quality for the added services digital offered in the side, and the rest is history.

Perhaps the fact CDMA offers much better voice quality than GSM is an indicator of where TNZ's thinking still lies?

Thereasa, I have some advice. I was part of a management team that had to deal with deregulation in another industry a few years ago. There's two things you must do:

1. Do it to yourself before they do it to you. This can then be on your own terms, but you have to move fast. Split off your infrastructure business within 3 months. Set the autonomous parts free (Xtra, gen-i, Mobile), they can cope while you focus on the hard stuff. They (particularly the beanies) will say it can't be done, but they've been saying things like that to you for years. They are trying to hang on to their old world. I was told we couldn't do it in a year. We did it in 6 months.

2. Change the people or change the people. Those who surround you are part of the problem. Now is not the time for loyalty. We (New Zealanders) want you to succeed, but we've been very patient so far and it's time to get on with it. There will be people in TNZ who can do this, but they won't have been around long and they will have been stifled by the comfortable layer of middle management. Find them, put six of them in a room and let them build the new Telecom.

It's all to easy for us to criticise you now, but what we all need is a strong, responsive Telecom to help us grow and move forward. We will be behind you if you are bold, but we won't have much tolerance for bitterness and foot stamping. From our point of view, whether shareholders or customers, you have a wonderful window of freedom to tackle the big issues, but it will close pretty quickly.

Good luck,

Adam Hunt
(Customer and ex-shareholder)