And Another Thing

At just 2% margin, reselling landlines in NZ is hardly a profitable activity. Any company embarking on this must be using it as a trojan horse to acquire other related business. TelstraClear are doing just this with call services such as voicemail and internet. But are they taking full advantage of their opportunities?

Take Telecom's Go Onebill plan, where the customer designates up to two Telecom prepay mobile phones to be billed to their landline account, obviating the need for topups, and calls between these phones and the landline receive a small discount. TelstraClear, by offering both landline and (resold Vodafone) mobile services, is uniquely positioned to provide a similar plan and dramatically increase their mobile phone uptake.

TelstraClear's mobile plans - work it out!

So TelstraClear's not bluffing on building a mobile network, despite analysts claiming it would be a financial disaster. All Allan Freeth has been prepared to say is the business case is viable and "It won't be conventional mobile", which so far has been interpreted to mean that TelstraClear would piggyback on Vodafone's network using the 10% rule. However this would still require an expensive buildout and years of gaining approval for cell towers.

But there's another way for TelstraClear to leap the 10% hurdle. Another company already has enough cell sites to cover 700,000 Aucklanders - that's nearly a sixth of NZ's population for starters. What's more, they're haemorrhaging money despite recent promising initiatives.

I reckon the business case is on ice, waiting for Woosh's backers to finally admit defeat. At which point the deeper-pocketed TelstraClear could swoop. Cell sites, a highly competitive voice service and the interconnect agreement are up for grabs.