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Spark stokes controversy on its push to wireless broadband

Spark stokes controversy on its push to wireless broadband over copper

By Fiona Rotherham

Nov. 4 (BusinessDesk) - Spark New Zealand managing director Simon Moutter has reinforced its push to steer customers away from copper broadband at the company’s annual meeting today, after earlier trading insults with Chorus over the issue.

“As you might have noticed, there has been some controversy between us and Chorus on this issue around the future of copper network,” he told shareholders. “We’re driving both a fibre and wireless broadband story today and rapidly shifting our customers off the copper network."

A row has broken out between the two companies over the issue with Chorus accusing Spark of selling its customers short by misrepresenting the reliability of the copper broadband network.

But Moutter said the facts for Spark, as a service provider, was that it took about 30,000 calls a month from customers having issues with their copper network and broadband performance and in the winter that rose to nearly 70,000 calls a month.

“We are having a great deal of service problems with it and we are highly driven now toward moving customers off that network.”

Fixed wireless delivers fast internet to homes via a 4G network commonly used for mobile phone. Its use cuts Chorus out of the revenue mix.

Moutter told shareholders the company had long felt the day would come that wireless was an alternative for customers both with voice and broadband technology.

"That day has come,” he said. “The cellular network today is capable of providing extremely good fixed broadband services running on the cellular network and we are running to scale now on wireless broadband.”

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Spark customers are being steered to wireless broadband if they are low volume users and to fibre broadband if they are high volume users. Spark this week announced it and Ultrafast Fibre were trialling a new deployment method to make it quicker and easier for homeowners to install fibre broadband, by upgrading all homes in the same street in just one week with customers able to select which day that want the installation done.

Moutter said fifth generation mobile, a breakthrough technology where wireless truly becomes an alternative to fixed networking, should be in the market by around 2020 at scale. In the interim, it was progressing 4G and 4.5G into the market as a pathway to 5G.

The Spark board told shareholders that short-term incentives for management, including sales staff on commission, had been changed to make customer service account for half of those payments, with the other half centred on earnings.

It has also introduced a Net Promoter Score to measure customer satisfaction by comparing the net score of detractors who would not recommend the company to others against those who have had a good customer experience.

A couple of shareholders used the annual meeting to vent their displeasure with customer service with one saying it was the “worst he’s had”.

Moutter said after the meeting that it had had a “tough time” this winter on customer service, particularly with the copper network, and it was working hard to improve on that.

Net promoter scores had been improving in recent weeks, he said. “I’m not going to give you the number because it can be radically different in different parts of the business. The good news is that all are rising.”

Spark affirmed its earnings guidance for the 2017 financial year of a 2 percent rise in earnings before interest, tax, depreciation and amortisation from the previous year.

Chairman Mark Verbiest said it was looking to achieve modest earnings growth. When questioned by one shareholder why the ambition wasn’t for higher growth, Verbiest said the company was serious about creating long-term value and didn’t want to “do anything stupid”.


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