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To: Maurice Winn who wrote (14779)	9/10/1998 2:07:00 AM
From: Ruffian	Respond to of 152472

Maurice, Just for You; Telecom to spend $35m on upgrade; Two-thirds of local cable network budget earmarked for Auckland The Dominion TELECOM New Zealand is spending another $35 million this financial year to upgrade its local cable network, and two-thirds of the money will be spent in Auckland. The aim is to reduce fault levels by improving service quality, and to reduce maintenance costs, which will thus reduce network operating costs, says media manager Linda Sanders. The program, involving mainly copper lines, will also boost Telecom's ability to install ADSL, which allows high-speed Internet access on copper cable. Telecom's board recently approved a commercial roll-out of the technology though a date has not been released. This year's multi-million dollar spend is part of Telecom's local access renewal program which began about a year ago. Last financial year $32.4 million was spent, around two-thirds in Auckland, and for the 1999-2000 year another $35 million will be invested. Chief executive Roderick Deane said last week that there is a study under way to see whether even more investment should be made. He says fault level reduction arising from the program has been "very pleasing indeed" though in some areas "not as sharp as we'd hoped". But the project is paying for itself, he says. Defending the company against allegations that cost-cutting may be to blame for network outages, he says that network exchange reliability is well over 99 per cent and benchmark data has been supplied to government. He also says that capital expenditure, benchmarked against other telcos in a variety of ways, shows that Telecom New Zealand ranks in the mid-range to upper sector. "We do have occasional problems but if you look at the facts -- whether it be exchange outages, restoration time, directory assistance call-answering, whatever you wish . . . then nine out of 10 have either got better or are stable at relatively high levels." Analyst reports subsequently obtained by New Zealand InfoTech Weekly agree with Dr Deane. Warburg Dillon Read's Paul Richardson said on July 15 that Telecom continued to attract criticism that it is under-investing in its network and not providing best service to the New Zealand customers, while reaping strong cash flows in dividends for its largely foreign shareholders. "The fact that Telecom already has a 100 per cent digital network, and typically spends well above annual depreciation, should be sufficient to temper the criticism. But some concern lingers, especially with the knowledge that Telecom would like to upgrade its Neax switches, convert the cellular network to CDMA or other third generation digital cellular, as well as cope with the data and Internet growth." A comparison with European telcos showed that Telecom could be accused of over-investment with gross fixed assets per connection 16 per cent above average, with only Spain's Telefonica being higher. Average capex depreciation ratio showed it invested well above annual depreciation whereas the majority of other telcos were at or below depreciation level. In all other reinvestment comparisons Telecom appears more efficient, says Mr Richardson, than European telcos, earns equivalent revenue from capital employed, and shows better value given operating cash flow. JB Were's Andrew White on March 9 says Telecom is neither "a leader nor a laggard" in capital asset investment. Comparing Telecom to telcos in the United States, Britain and Australia, on average spend per line over 10 years to 1997, Telecom came in seventh out of 13. Some bigger spenders like Telstra required significant cable infrastructure spends and "pre-float capex catch- up". Last financial year, against revenue, Telecom came in 17th out of 36, and against total assets ninth out of 36. Telecom recently issued an intelligent network tender. Its [ NEC ] switches are unlikely to be removed, but will be increasingly bypassed as traffic is directed by computer servers running intelligent network software systems. Dr Deane says: "We can't do anything about the fact that we've got NEC switches but there is an issue as to whether we should buy one or two other types of switches. Every six months we rework the business case and it's just very hard to make it stack up." He says dramatic growth in ISDN and Centrex shows that Telecom can provide these services, though "there are ways we could do it more easily with alternative switches but we can't make that business case". Telecom's Network provisioning team of 271 permanent staff and 47 contractors is moving to Services. The unit's boss, John Kinloch, will report to Mark Ratcliffe, general manager of service development, who reports to Services general manager Teresa Gattung. The provisioning group works in exchanges, activating product and services requests from customers, such as 0800 and Centrex. External relations manager Clive Litt says the move is logical given that provisioning staff provide a service to customers. (Copyright 1998) _____via IntellX_____ Publication Date: September 09, 1998 Powered by NewsReal's IndustryWatch

To: Maurice Winn who wrote (14779)	9/10/1998 2:20:00 AM
From: Ruffian	Respond to of 152472

Maurice, More Telecom news; Hutchison puts $3.5b price on dual-band goal South China Morning Post Hutchison Telecom plans to spend $3.5 billion to become one of the few mobile-phone operators combining two technologies into one service. The company said its so-called "dual-band network" would effectively boost the capacity of its existing GSM and PCS networks by 30 to 40 per cent to more than one million subscribers. Marketing director Stephen Ngan acknowledged that the dual-band investment would not be in addition to the $3.5 billion committed this year to upgrade its networks. Under the dual-band network customers should be able to benefit from improved call quality as their handsets automatically search out the most effective of the services by which to deliver the signal. GSM and PCS services use the same technology but operate at different frequencies. By integrating the two, the company would theoretically gain substantial operating and investment savings. However, Mr Ngan said Hutchison did not expect "cost savings to be substantial" as the existing GSM and PCS services would still be marketed independently. "There may be some savings in the future with co-location of network cell sites," he said. The main advantage of the new service will be to allow better differentiation of prices between classes of consumers, as the dual- band service will be available only to Hutchison's higher-paying GSM customers. "We will target heavy business users - those who use more than $800 of talk time per month - with the new service, as our market research has shown us that these people are prepared to pay more for a better service," he said. Mr Ngan said tariffs would scale from about $1 per minute for the PCS service to $2.87 for dual-band. Customers using the dual-band network would also have to purchase a special dual-band phone, although its price will be partly subsidised by Hutchison. Mr Ngan said he expected up to 50 per cent of Hutchison's GSM and PCS customers would switch to the new dual-mode service by the end of next year. He said at the end of June the Everday network had 50,000 customers while the GSM service had 400,000. Its CDMA network - not affected by this merger - has more than 240,000 subscribers. While Hutchison is still the only local mobile-phone firm to commit to dual-band technology, it is likely that its move will be matched by Hongkong Telecom and SmarTone. Both have GSM and PCS networks and have said they planned to integrate the two. [ Motorola ] , which is providing the technology, is a 30 per cent owner of Hutchison's mobile-phone arm. (Copyright 1998) _____via IntellX_____ Publication Date: September 09, 1998 Powered by NewsReal's IndustryWatch ...back to top