Clear View From the Shower

By STEEMAN, Marta

Telecom kingpin Bruce Parkes has played a major part in the New Zealand communication giant’s development. MARTA STEEMAN engages his interest.

Some people do their best thinking in the shower. It did the trick for Bruce Parkes who was doing just that when the idea of a capped $5 weekend toll deal came to him.

It proved to be a hit in 1995 and helped arrest Telecom’s loss of toll customers to new player Clear, owned by British Telecom, the first real competitor for Telecom.

At the time he was working in Telecom’s sales and marketing division run by Theresa Gattung, now Telecom’s chief executive. He says capped calling was unique in the world then because it did not charge by the minute.

By that time he had already done two years at the near-monopoly telephone company. And he had been marked out as an ideas and strategy man by those who held sway.

He was “shoulder tapped” in 1993 by New Zealand’s most powerful businessman, Dr Roderick Deane.

Deane had recently moved to head Telecom from heading the Electricity Corporation (ECNZ). Parkes had joined ECNZ in 1986 on a graduate recruitment programme and had worked there in strategy and on the reforms of the huge electricity company.

He counts as one of his achievements for Telecom the introduction in 1999 of the 0867 code for dial-up internet users.

The code triggered a wave of accusations of bullying against Telecom.

Telecom threatened dial-up internet users they would have to pay 2c a minute for internet use after 10 hours on the internet or they could shift to using an 0867 code for free.

No contest really.

Internet service providers (ISPs) in the end had to use the code. It illustrated the power of Telecom’s dominance.

The Government was left floundering and the Commerce Commission threatened to take Telecom to court for anti-competitive behaviour, but seven years later that case is still gathering evidence.

Parkes defended the code as a management tool because the flood of internet users was straining the voice network. The code diverted the traffic to another network.

The real reason was that it saved Telecom tens of millions of dollars in interconnection charges to Clear.

Clear had set up cunning deals with ISPs to bring internet traffic to its network and that required Telecom to pay Clear interconnection charges of 2c a minute.

Telecom argued the 0867 code was outside the interconnection agreement.

Parkes had been assigned to come up with a solution. His team tossed dozens of ideas into the pot over that problem, then the 0867 idea came to him, he says.

“I dreamt it up walking from this building (Telecom’s headquarters on Jervois Quay in Wellington) to that building.” He points to the green building in Manners Street about five minutes away that can be seen from HQ.

“One of the advantages of working at Telecom is you have to walk between buildings. And I find it quite useful to come up with ideas.”

But, “$5 weekends was in the shower”.

This is vintage Bruce Parkes. Low-key, ironic, non-aggressive.

It’s a disarming style with a light and humorous touch. It has served well Telecom’s war to keep as much of its business as possible.

His counterparts describe him as a clever strategist and not to be underestimated, even though he is one of the most pleasant men in the industry.

Gattung phoned him one morning in November 1999 and asked if he wanted the job of general manager of Telecom’s regulatory and industry relations division.

The new Labour Government had made it clear Telecom was in its sights.

In that role he is responsible for Telecom’s relations with government organisations such as the Ministry of Economic Development, with the competition watchdog the Commerce Commission, and with industry competitors and industry bodies on regulatory matters.

In a nutshell, he and his team of nine are Telecom’s chief lobbyists.

They write most of its submissions and presented the case to the Fletcher Inquiry into telecommunications in 2000 and now to the Commerce Commission on regulatory matters and competition issues.

In 2001 he headed the renegotiation of the Kiwi Share agreement with the Government.

It resulted in Telecom accepting dial-up internet calls were to continue to be free, but extracting from the Government agreement to spread the Kiwi Share obligations to other companies. That has seen eight other companies fork out in total millions of dollars each year to Telecom.

He is easily spotted at industry gatherings.

At 6ft 6in tall (exactly two metres), his height helped him land a part as an extra in The Fellowship of The Ring alongside four hobbits. It was a chance to indulge a life-long love of J. R.R. Tolkien’s work.

For the record, he was in a scene outside the Pony Inn in the village of Bree, the same scene in which Peter Jackson played a cameo role. He is wearing a long haired wig. Jackson is the one chewing on a carrot.

When he’s not on the front line for Telecom, he’s at home with his wife, Mary Kate, and four children aged between nine and 15, or on his mountain bike with mates or indulging, when he has time, in another love, reading.

Although he is knee-deep in commercial and regulatory matters most of the time, he is not a trained accountant, commerce graduate or lawyer. He holds a first class honours degree in English Literature from Canterbury University, gained in 1986. His favourite author is Charles Dickens. “I only did at university what I wanted to do. I didn’t do it with any planning on career.”

In late 2003 he repelled Telecom’s most serious regulatory threat. He and his team put a deal, at the eleventh hour, to the Commerce Commission considering whether to further regulate Telecom via “local loop unbundling”.

Unbundling would require Telecom to give competitors access to its exchanges and to rent them its local copper lines.

Competitors can then attach electronic equipment called DSLAMS to the copper lines which enable data to be transmitted at high speeds over the lines.

Through DSLAMS, its rivals could offer different services to Telecom’s, at much faster speeds and with various bells and whistles, rather than the one-size-fits-all wholesale service being offered by the incumbent.

Parkes offered the telecommunications regulator, Douglas Webb, an alternative, called “unbundled bitstream” or UBS.

It is essentially Telecom wholesaling high- speed internet connections to competitors rather than giving them access to the network.

“We were reading the signals from the commission and trying to understand where they were coming from,” Parkes says.

Webb picked up the offer and did a U-turn on his earlier draft decision to recommend unbundling to the Government.

Telecom’s rivals, especially TelstraClear, were gutted. The dominant telephone company had slipped through the regulatory net.

He maintains UBS has been a better deal for all concerned than full access to Telecom’s copper lines. Telecom and competitors would still have been arguing about implementation of access if unbundling had been forced on Telecom. And unbundling would only have been used by Telecom’s rivals in main centres where there is already plenty of competition, he says.

He may have had a good run, so far, limiting the impact on Telecom of regulation, but the war is not over.

The unbundling debate has been reignited by competitors Ihug and Slingshot hoping to capitalise on the stock take of the telecommunications sector being undertaken by new Communications Minister David Cunliffe. The noises from the Government seem to suggest Telecom will face more regulation but whether that is full local loop unbundling, as has happened in most other developed countries, is the $64 million question.

“It makes it immensely difficult for Telecom to make investment decisions,” he says. “In my time at Telecom it certainly feels this is one of the most challenging times, without a doubt.”

Ever the company man, he goes into bat for what Telecom’s achieved for New Zealanders.

“My company has got broadband out to almost all of New Zealand. We’ve got 300,000 customers growing like topsy. We’ve got the best 3G network money can buy.”

He says the broadband debate is “sorely lacking in facts”.

“I think we have done a great job for the country in terms of rolling out broadband, the speeds we’ve delivered and the prices we have now in the marketplace. They all stack up, more than well, against other countries.”

Competitors throw titbits into the debate, he says, that internet connection speeds of 24 megabits a second can be obtained in Australia, but Parkes says that’s only in the big cities and the average top speed in Australia is 8 megabits a second which Telecom will match in a few months.

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