Facing the BIG GUNS

Mark Callander, who became chief executive of CallPlus earlier this year, is taking on the ‘big three’ – Telecom, Vodafone and TelstraClear – in both the business sector, and with its consumer arm, Slingshot. He has some strong views on the state of the competitive telco market, and TR invited him to share them.Q: So, how are things at CallPlus just now?A: Things are going very well and the business has gained some really good momentum. All key management positions have now been appointed, which is crucial as the business focuses on the next phase of its evolution. There are some exciting times ahead.Q: You’ve separated CallPlus and Slingshot. Take us through the rationale for this, and tell us what each of them is concentrating on.A: The rationale is simply to create highly competitive standalone business units that are focused on the specific needs of the markets they serve. Internal cultures have a significant impact on the perception of a company’s brand and ultimately the customer experience, so we have structured the business to deliver the best possible outcome for our customers.CallPlus remains focused on the specific needs of the business market. Along with offering traditional services, CallPlus has developed a leadership position on SIP and IP based solutions for medium-large sized businesses. This capability, combined with our mobile services that launched at the end of last year, has uniquely positioned CallPlus to deliver solutions that the market has been waiting for.Slingshot continues to focus on the consumer market and the brand has now become a common household name. The launch of mobile services has also been very well received by the market, and has enabled the creation of more value for our customers through bundled services.Q: You were quoted recently saying you aimed to be the No.3 phone and internet provider. What’s your major focus in terms of business development?A: In the business market, we will continue to take a leadership position on IP data and voice solutions, with further enhancements scheduled for release in the second half of this year. Business mobile services will continue to be an increasingly important part of our proposition to offer the ‘one stop shop’.In the consumer market it is about continuing to build the Slingshot brand, spreading the word through Manny (the stick figure in our ads) and providing a full range of services. The rollout of our nationwide LLU network will enable us to provide innovative voice services and an improved broadband performance for consumers throughout NZ (plus some mobile thrown in there as well!).Q: How is your LLU programme progressing? Where do you expect to be at this time next year?A: Hamilton is now complete with nine exchanges live and the deployment of the next 15 exchanges is underway in Napier, Hastings, Gisborne and Palmerston North. Over the next 12 months the CallPlus LLU footprint will double in size again. This is an exciting development for the business and we will have a small business offering under the CallPlus brand available in the next few months.Q: What were the benefits of your unbundling agreement with Orcon and Compass?A: Quite simply, it is to use our combined customer scale and capital investment to maximise the size of the LLU network. It does not make economic sense to overbuild, and ultimately we can extend the reach of the network by working together – this benefits the end-users. It is a very good outcome for our businesses and will provide increased competition in these regions.Q: How is cabinetisation progressing, from your perspective? Could anything be done better?A: Cabinetisation is a failure from a market perspective. The current pricing of subloop is prohibitive to access seekers such as CallPlus; it’s essentially re-created a monopoly position for Telecom in these areas. This is bad for competition and customers who will not benefit from the innovative services that companies like CallPlus can deliver. The government needs to ensure competition can occur within these footprints and previous decisions made need a serious review.Q: Are you concentrating on areas outside of Auckland for now, or is that likely to change?A: We have an LLU agreement with Vodafone to access their Red Network in Auckland, so from a Slingshot perspective we are focused on the rest of New Zealand for now. However, we are developing a range of business data and voice services in Auckland for CallPlus business customers, and this will require investment in selected Auckland exchanges.Q: Are you sticking with ADSL2+ for now, or is VDSL2 on your radar?A: VDSL2 is on the roadmap and will be a key component of the CallPlus offering to consumer and business customers.Q: What are you offering to lure customers from other networks?A: Quite simply, great service and continuous innovation! CallPlus is well known for providing some of the best priced, market leading services in the market. However it is the service layer that often drives switching decisions. There has been a lot of media coverage regarding some of the larger players moving contact centres offshore, which hasn’t gone down well with customers, and fair enough. We pride ourselves on being 100% Kiwi owned with all of our staff based in NZ – this is important to us and important to our customers.Q: Has data banking been popular, or is it too soon to say?A: Data banking is very popular because it takes away the risk and guess work about whether to buy additional data. More importantly, it ensures customers can enjoy a real broadband experience all the time instead of getting slowed to dial-up speeds like many of our competitors force their customers to do.Q: How are things looking in the mobile space? Has your deal with Vodafone proved successful?A: Mobile has been a big learning curve, a great experience and a success for CallPlus and Slingshot – it was a big gap in the product portfolio that needed to be filled, particularly as we aim to become number three in the NZ market.Q: Any thoughts on mobile termination rates?A: Yes, why has it taken so long – from memory investigations began in 2003. Needless to say this has been a well debated topic, but quite simply the drop in MTR will drive further competition and lower prices in the short-medium term, which sounds like a pretty good outcome for the customer. In the longer term it will force telcos to innovate and find ways of maintaining ARPUs, along with an increased focus on service to keep customers.It is important that momentum on MTR continues and if it takes more than 6-9 months for the regulation of the new rates, it is too long. There needs to be zero tolerance for tactics to delay and defer the final outcome.Q: How are your WiMAX interests developing? Is the government’s auction programme for spectrum working satisfactorily in your view?A: We have been doing WiMAX for a few years now, so it no longer feels new, but it continues to be an exciting part of our business. The one thing we have learnt over the years is you can’t wait around for things to happen in this industry; to survive you have to make things happen. Having nationwide WiMAX spectrum gives us options and adds another ‘string to our bow’. The process for spectrum auctions has worked reasonably well. The spectrum caps prevent larger players monopolising a scarce resource, and the ‘use it or lose it’ principle creates the right behaviour.Q: Does the high-speed fibre rollout interest you particularly at this point? Do you think there are any prospects there for you?A: Yes, it sure does. This initiative has the potential to significantly change the telecommunications landscape in this country if Crown fibre Holdings (CFH) get it right. As an innovative, fleet of foot challenger with some big ambitions, we back ourselves to prosper through times of change (again!). Our key role in the fibre initiative will be as a significant retailer, wholesaling as a customer of the Local Fibre Companies. We are in dialogue with all key players to share our views and experience on what is required to be successful.Q: Telecom is seeking more variations to its separation undertaking. Do you think they’re just dragging their feet or do you understand their concerns?A: We operate in an industry where change and uncertainty is part of the norm. In my view they just have to get on with it. The UFB initiative is not strong grounds for their delay, and it is hard to believe there were no contingencies factored into the initial planning. It is interesting that there is no delay to cabinetisation plans, which you would assume is the large investment that is most impacted by UFB. Anyway, it will be interesting to see how it all unfolds throughout the year.Q: Where do you think the biggest opportunities lie now in the telco field?A: Many businesses are looking to avoid large upfront investments in technology and for ways to effectively manage their telecommunications costs, but also wish to retain their flexibility. In this respect, managed solutions that offer scalability and cost efficiencies still provide plenty of opportunity. Looking ahead, it’s the solutions that help our customers improve their customer service and make productivity gains that will be a focus. Online customer service voice technologies and the convergence of mobile and fixed line using SIP are a couple of examples. Of course, any solution that helps businesses serve their customers better, while not increasing their costs, is going to be a winner. In the consumer market the content game will start to heat up over the next couple of years as players look to leverage existing infrastructure investment and eye up the future opportunity of initiatives such as UFB – increased ARPUs for telcos will have to come from somewhere! There will also be an opportunity to differentiate through in home devices to deliver content, provide security services and leverage the convergence of fixed and mobile services in the home.Q: What are the biggest demands facing telco providers?A: The industry is still dominated by two players, so it’s imperative that we continue to innovate, to challenge pricing models and to maintain growth.Q: Are there any areas where you think NZ consumers – business or domestic – could be better served?A: Yes, all areas could be better served with ongoing improvements in the competitive environment. Competition forces both incumbents and players like CallPlus to win and retain customers based on the services and relationships developed, not because there are no other options. It also ensures there is investment in new technologies, which will ultimately drive service innovation to benefit the end-users. This can only have a positive impact on New Zealand as a whole, and that can’t be bad.