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Is the TCF a Big Boys Club?

01 May 2010

There have been a number of opinions expressed lately, by people who are outside the TCF; that the TCF is no more than a mechanism for the Tier 1 members (Telecom, TelstraClear and Vodafone) to browbeat and bully the smaller members of the industry into submission and “paste a veneer of respectability over their immoral behaviour”.  This allegation is unfounded, but it is easy to see how those not involved with the TCF and who remember the bruising encounters of the past, could form this view.

The TCF was formed in August 2002. The industry was different back then and the behaviour of industry participants was significantly worse than it is today. However the TCF was established in this environment, and its structure and constitution reflect that environment.

This was an era in which there was much less regulation and in which it was more difficult to get the incumbent players, particularly Telecom, to the table.

When the TCF was set up, the funding was allocated on the basis of Telecom paying 40%, TelstraClear and Vodafone each paying 25% and the balance of 10% shared equally between the Tier 2 and Tier 3  participants (but capped at a maximum of $5000 each per annum).

For their greater financial contribution, the Tier 1s are each given a seat on the TCF Board (and indeed the constitution currently provides for a fourth Tier 1 seat). The Tier 2 and 3 members (also known as the Group Members) have two Board seats for which they elect representatives. The representatives are required to obtain a specific mandate on each issue from the Group Members and are therefore not able to directly represent the views of their organisation, unlike the Tier 1s. (In addition the Board has two non-voting members, the Independent Chair and the Consumer Representative – currently TUANZ).

Additionally the TCF’s constitutional requirement that most decision making, at least at Board level, be by consensus has created the impression that the Tier 1s each have a power of veto over any TCF decision. The reality is that each Board member has this power, but it is seldom used by the Tier 1s (I can only recall one instance of it being invoked in the past three years) although it is frequently invoked by the Group Members. Group Members are concerned that they will be swamped by the volume of material that the Tier 1s can generate, and so the Group Members take advantage of this power to ensure that they have adequate time to analyse and become comfortable with any proposition put forward by Tier 1s. This gives the Group Members substantial voting and negotiating power within the TCF.

The view within the TCF is that this voting and funding structure and the levels of representation that go with it, rooted as they are in the imperatives of a past era, are not sustainable in the future. If the TCF wants to remain relevant and effective and attract more members, it needs to reform.

Work is under way to consider options for how the TCF can be funded in a fairer manner and how representation and voting can be improved.  Any changes will need to increase the level of representation of the Group Members and remove the need for consensus decision making. Once these and other changes are implemented, there will no longer be any structural basis to suggest that the TCF is merely a Big Boys Club.

The real test, however, is the behaviour of the members, and within the TCF we as an industry are much better behaved than we used to be.  There is a strong and growing tradition of working together.

Ernie Newman of TUANZ is uniquely placed to comment on behaviour and has this to say: “From my observation as user representative on the TCF Board, the Board goes well out of its way to engage and involve smaller carriers. Certainly they feature in debate significantly. The dilemma is that often they just don’t have enough resource to get properly involved in the myriad of new issues in such a fast-paced industry.”

While the Tier 1s have more resources to apply to issues, the TCF is looking at ways it can provide analytical assistance to all members to ensure that all can be comfortable with the work the TCF does.

It is these behaviours that determine that the TCF is not just a Big Boys Club.