17 Apr 2012

Telco profitability being undermined - TelstraClear boss

12:53 pm on 17 April 2012

TelstraClear is warning that the telecommunications network sector is in danger of becoming extinct.

The phone company's chief executive, Allan Freeth, says Government-mandated changes and rapidly evolving technology is undermining the industry's profitability.

Dr Freeth told a telecommunications industry conference in Auckland on Tuesday that revenue is declining and costs, in the hundreds of millions of dollars, are rising.

He says the accepted theory outside the industry that demand for data, films and other services will offset falling voice calls is not working.

Dr Freeth said YouTube, Google Amazon and Trade Me and millions of other such providers have made money for their shareholders by exploiting networks others have built and run.

"The inequality of investment and return will find a solution in either competitive actions or commercial outcomes."

Dr Freeth predicts there will be more regulatory changes to make the uptake of ultra fast broadband compulsory, and that Sky Network Television's dominance of content will be challenged by other players or by Government persuasion.