Sky TV’s Rugby Rights Dilemma, Crypto Safety and the Future of Telecommunications

Episode Transcript (computer-generated)

Paul Spain:
Greetings and welcome along to the New Zealand Tech Podcast. I’m your host, Paul Spain and it’s fantastic to have Bill Bennett, tech and telecommunications and business journalist, joining us again. How are you, Bill?

Bill Bennett:
I’m good, Paul.

Paul Spain:
Maybe you can remind listeners where you fit into this big wide world of media and tech.

Bill Bennett:
Well, I have a website where I write it mainly about telecommunications, but also broader technology stories. I’ve been writing tech stories off and on for 40 years and most of that time I’ve been writing business and so on. I tend to be more at the business end of technology than the consumer end and I also write business stories for the heroine, particularly business features.

Paul Spain:
Well, we’ve got a lot to delve into today before we start. A big thank you to our show partners One NZ, Spark, 2° HP and Gorilla Technology. Look, I guess the big one that we’ve just learned about, just really before recording, is that Sky TV could potentially be losing All Blacks rights depending on how things play out. Now for those that have been following this, rugby, New Zealand rugby have been under some pressure. They’ve lost their main sponsor and the reporting has suggested that the amount of revenue that would be coming from rugby bot rights in New Zealand is expected if they were to re sign a deal with sky to be significantly less than what they’ve been on for the last few years. I think $111 million a year in the current agreement which covers 2021 to 2025. But for this next 2026 to 2030 period, the suggestions that have been reported that the sky offer would bring that down to $85 million a year. Now when sky doesn’t have any competition, they’re a little bit in the driver’s seat.

Paul Spain:
But the latest coming through is that Dazn, which is a big streamer and sports company, UK based, but I think they’ve recently taken in a billion dollars investment out of Saudi Arabia. They’ve, you know, they’ve got a lot of financial backing and you know, they’re pretty significant. They’ve been around for a good period of time. They seem, you know, pretty, pretty stable that they’re entering the fray. And you know, this is one of those things that if it went that way, would cause significant disruption for sky, wouldn’t it?

Bill Bennett:
Yeah, but it also, it’s not great from a consumer point of view either because if you’re a rugby fan and you want to watch say the Super Rugby and the All Blacks games, you’re now going to have to have two subscriptions. It’s exactly what’s happened. The same company, Dazn, has done that with, they have the rights to UEFA matches now for the soccer. And until a couple of years ago, if you had a Sky subscription, you could watch Premier League football and FA cup football and so on, and the European games and the world games as well, the FIFA games as well, all on the one subscription. Now you need, I think if you want to watch everything for your British club, you have to have three subscriptions. Now, given that sky is more expensive than it was back then anyway, that means that your bill for watching, if you’re a soccer fan, your bill would have gone from $400 a year to roughly $400 a year, depending whether you pay annually or monthly, up to around about double that. And rugby fans can probably expect the same to happen if this goes ahead with that. So it’s going to be a lot more expensive.

Bill Bennett:
And it also kind of undermines the viability of sky as a business anyway, because sky is not, it’s not traveling well as a business. It’s not in desperate position, but it’s not traveling well. And this is its, its main product.

Paul Spain:
And they’ve been through a pretty rough period with the, with the satellite changeovers. Yeah, yeah, lots of folks. And they were not getting a signal. Right.

Bill Bennett:
And they, they. I think investors have been looking forward to a dividend from Sparksport not being in the frame anymore and, you know, back, basically it’s the same thing all over again. So it’s, you know, from Sky’s point of view, it’s not great. It’s not good news, but it’s not great news from the consumer point of view. It’s great news from New Zealand rugby because they’ll get more money. But it’s, you know, it’s, it’s, it’s a bit of a concern.

Paul Spain:
Look, I guess we look back a few years, it was, it was Sparksport that was hurting Sky. You know, they, they had the Rugby World cup as a cricket 2019 and cricket, yeah, of course that was, you know, that was a pretty big step for Spark to do that. And in the end they decided to exit that. Now, you could argue a whole lot to do with timing and so on. I guess my general feeling was, if I recall correctly, that sometimes it’s good for things to be stirred up a little bit for the bit of competition here where we’re now in a different period. And of course, this would still be about a year away. We look at a year from now, the percentage of people that would be Struggling with broadband access in their homes and so on compared to 2019. Night and day difference.

Bill Bennett:
Yeah, definitely. But that’s the other thing is that Spark Sport, when it came along and they got the rights to the Rugby World cup, that accelerated the, the fiber build was already being completed at that point. But what chorus did is they beefed up the network so it could handle much larger amounts of data. And the, I think there was some work done to beef up the fixed wireless broadband as well.

Paul Spain:
And sparc and the other, you know, the other Internet service providers worked really, really hard to make sure that they had a capability. Now we can all recall there were some challenges.

Bill Bennett:
Yeah, but here’s the killer, right? They got all that fixed in time. I mean pretty much. I mean the day one wasn’t great but after that it went pretty well. And you know what that was like October, November that year. What happened in February the following year? We had lockdown, so. Yeah, so. And we had, and New Zealand was one of the few countries in the world which was actually ready for that. You know, everything was ready in terms of the technology.

Bill Bennett:
So these things have a, you know, it’s just the same as the thing about, you know, the space shuttle is gave birth to non stick frying pans. It’s the same thing that sometimes when these, when something happens in one area like this, something happens elsewhere and it.

Paul Spain:
You know, now I don’t know the numbers and I don’t know if I can easily, easily find them but I, I’m curious, are we entering this, this, you know, this next five year period for sky, is this when they kill off satellite service or is the cost of it come down so much and the cost of maintaining and so on that actually you just keep that running for a longer period because when everyone’s got good broadband and so on, that’s part of what sort of reduces the barriers to entry. But there’s also a point in time where sky has to just be an Internet delivered service. You would imagine.

Bill Bennett:
You would imagine. But here’s the thing, right? Fiber goes to 87% of the country. There’s some fixed wireless broadband in the remaining part of the country. But rugby’s heartland is the rural, rural New Zealand. And that’s the particular, that’s the area where the, you know, the connectivity is weakest. So there is an issue there. I mean to be fair, the wisps do a wonderful job and there are some good options now and of course there’s Starlink. But it’s still, I think for the moment we still need to have the sky satellite, at least for the, you know, the next few years.

Bill Bennett:
We need. It’s going to be necessary.

Paul Spain:
Yeah, I’m really, really curious around that.

Bill Bennett:
But I think, I think it’s one to watch and I think, and I think something can come along, disrupt that.

Paul Spain:
At any moment, a time when. Yeah, I would imagine it’s sort of this second half of the decade where a decision gets made on that and maybe it’s later on in the decade, but we’re seeing our mobile speeds get better and better. The mobile networks for fixed wireless, the plans, I noticed the plans that for myself and my team Gorilla, where everyone got bumped to. I think it’s 150 gigs worth of data on your mobile. Now, of course, these more expensive plans that are full unlimited and that’s kind of the cap for high speed and then the speed drops off a little bit and yeah, you’ve mentioned, of course, Starlink and there’ll be whatever the competitors.

Bill Bennett:
And you’re quite right, you’re quite right coming through that the, not the fixed wireless broadband but mobile networks, the mobile data networks, at some point they start to kick in and compete with people’s broadband. So you’re quite right that it’s getting better, but I still think that we’re going to. New Zealand’s quite conservative about switching things off. I mean, when the Australians built their fiber network, fiber came down the street and copper went out that day, you know, they switched it off here.

Paul Spain:
It just weren’t that many that actually got. That got actual fibre.

Bill Bennett:
But they were brutal about it. Whereas here, I mean, here it took 10 years after the fiber build for them to start pulling out copper lines and we tend to do that in New Zealand. We tend to be a little bit more conservative and we’re a little bit more concerned about the people that are following and struggling perhaps a bit. So.

Paul Spain:
Yeah, yeah. All right. Well, this is gonna be a really, really interesting one. It’s gonna impact a lot of families if there’s a change, but I think probably easier for us to deal with in sort of 20, 26 ERA than 2019 now. Lots of other things going on. We’ve seen that MP on MPs phones, Deep Seek, WeChat, RedNote, Cap Cut. These are being banned from their devices or from their, from their, from their phones now. Of.

Paul Spain:
Of course, I’m not sure exactly how this plays out. The level of detail I’ve, I’ve seen on it is pretty light.

Bill Bennett:
Well, can I just jump in here? Right, how many MPs will have deep Seek on their phone. It’s not that they’re not going to be many. These are pretty obscure apps. I mean, we’ve heard of them, but they’re quite obscure. And my experience of MPs is they are not the most advanced tech users in our society. So we’re talking of a handful of people that are going to be affected here. It’s not a big deal. And the other thing is that, in a sense, this is the second part of what happened a few years ago when Huawei phones suddenly went out of fashion because they happen to be a Chinese company.

Bill Bennett:
These are Chinese, these are largely Chinese apps.

Paul Spain:
I think it’s probably a little bit more than just that they were a Chinese company, Bill.

Bill Bennett:
Yeah, yeah, but, I know, but, but the, but other Chinese, I mean, you can, you can still buy other Chinese phones here. And the, there’s no, there’s no, I mean, there’s no debate about the fact that, that, say, for example, Oppo, which is the other Chinese brand, is just as close to the Chinese Communist Party at home as Huawei was. You know, so, so it’s, Some of this is performative. I think some of this is for, it’s sending a message rather than anything. I mean, I’m not saying that there’s, these things should be on people’s phones, but I’m saying that this is more about a message than the actual denying. I mean, really. I mean, do you think Some of these MPs out there are using Deep Seek to get advice?

Paul Spain:
Yeah, well, when, when, I mean, Deep Seat got a lot of, a lot of attention. And of course, you know, it’s not that they just appeared, but they suddenly got a lot of attention because of, you know, how capable their, their, you know, AI was. In the last few days, it’s been.

Bill Bennett:
We know what Shane Jones does with his downtime.

Paul Spain:
Phil, I don’t want to think about that.

Bill Bennett:
Entertainment. Yeah. Can you imagine, Winston? Look, I, I, I think, I think there will be some. But there, but there will be a tiny minority of them.

Paul Spain:
Yeah, yeah. No, look, it’s, I think, important that, you know, at a government level these things are thought about and considered. How does this play out for, you know, politicians who are, I mean, you know, capcut, that’s used for editing videos and putting it online, isn’t it? So this is the sort of stuff for making your Tik TikTok videos. So what does that do? Does that hurt the Prime Minister? Does this mean he’s got to find a new tool I have no idea what he uses but yeah, I’m not quite sure how this sort of plays out on some of the other broader devices. Anyway, onto other topics, got news through that Robotics plus have signed a deal to be acquired by Yamaha Agriculture which is US based entity that’ll sit under Yamaha Motors. And yeah, this is, this one is interesting. I’ve actually, I’m not sure if we’ve ever reached out to them but I think we’ve, I’ve considered in the past, oh, that’d be a really interesting company to, to, you know, to, to chat with because of their work in robotics, you know, particularly when it comes to the agriculture sector which is where they’ve tended to focus. So yeah, we might be able to get a chat lined up there for the future and hear a little bit more about this.

Paul Spain:
But they’ve got a team of about 130 people I think if I recall correctly. Largely based. Plenty. So yeah, another, another I guess six. Presumably a pretty successful, you know, exit for Robotics Plus. But yeah, maybe not your, not your traditional sort of startup. I know they’ve been around, you know, quite a, quite a long time.

Bill Bennett:
Yeah. I think the thing when these stories happen like this, the big question of course is how much capacities they retain in New Zealand over the long haul. I mean quite often these deals go through and nothing happens for a while and then one day you wake up and there’s been a bit of restructure back at HQ in wherever in California or wherever and suddenly the New Zealand branch closes down and perhaps a couple of people get a job in California and that’s the end of it. That’s the fear with these things and.

Paul Spain:
That certainly does happen. But I think, you know, there’s, there’s a good capability here. Value for money to a degree compared to doing research and development and other roles out of the US So yeah, I’d be pretty upbeat on this one. I would, you know, I would, I would think they’re. Yes, yes, they’ve been doing international, you know, business for, for sure. But you know, from what I can tell they’ve largely, you know, been, been operating from, you know, Tauranga, plenty of areas.

Bill Bennett:
So the flip side of that, the flip side of that positivity is that often when this kind of thing happens, the money is recycled into new and even more exciting ventures and quite often they can come back. I mean, you know, in effect that’s exactly what happened with Rod Drury and Zero. He came back from flipping a couple of earlier businesses and had the necessary to Start what became a billion dollar organisation. So I think that’s the positive side of this and I think there’s plenty in there. The Bay of Plenty by the way is actually really good on this kind of thing. I’m into a visit site, visit to a number of Bayer Plenty technology companies probably, I don’t know, probably about 10 years ago now. But I was actually amazed at just how much was going on around that area.

Paul Spain:
Oh there’s some, there’s some amazing innovation. I was in Taurango last week in relation to some cyber security work that our team are doing with a really impressive company down there and there’s, you know, there’s just a lot going on and you don’t always realise it until you, you know, get in and, and have a look.

Bill Bennett:
Yeah, and I think the Bay of Plenty politics pretty good as well. I think so. So I think there’s, there’s a lot going on it, but it’ll be good to see some money going into the tech sector in that city.

Paul Spain:
Now from a New Zealand front. Little bit of a, I guess a, an AI shortcoming here really in this one. So Google have been caught out with their AI breaching New Zealand court name suppression orders. Now I’m not sure how much testing has been done on other AI systems but I would imagine if Google haven’t got this right, probably not everybody else has got this completely right either. And you know, of course the way that they get a name is they found it somewhere online and then the AI isn’t kind of following the, you know, the legal rulings for New Zealand that bans them from disclosing names. And so this was one I was discussing last week on the news and yeah, it’s quite, I guess just a reminder that as new technology comes along it often takes a while for you know, all the doctors slots to join up and things to align properly. So this has probably been going on, you know, since as soon as AIs have had especially access to the latest data.

Bill Bennett:
Well, what’s the difference? I mean in this case I think it was as you say it was a data leak. It was in effect the AI found that piece of information. But if it wasn’t finding that information, if it was putting two and two together, you know, if you was to ask, if you was to say to your AI, you know, a prominent political figure in New Zealand has been accused of doing xyz who’s the list of candidates?

Paul Spain:
Yes, right. And could help you deduce it. Yeah.

Bill Bennett:
And that’s a perfectly Legitimate use of AI.

Paul Spain:
Yes.

Bill Bennett:
Right. And it wouldn’t be breaking, I don’t think that would be breaking the law to do that either. So I mean it would be breaking the law if it gave you an answer and then you went out, publicised it.

Paul Spain:
Yeah, forgive. If it gave one, you know, one. But if it, if it told, if.

Bill Bennett:
It told Paul Spain. Well, it happens to be, you know, this, this person. I think that’s probably kind of, it’s, it’s certainly an area for lawyers to debate. But our, our name suppression laws are pretty weird in, in, you know, by international standards and they’re much stricter than in most other countries.

Paul Spain:
They did get an overhaul a few years ago and so my understanding is that they’re not used to the same extent that they, that they previously were. However, we see it all the time, don’t we, in these scenarios?

Bill Bennett:
Basically, you get it if you’re rich enough to afford lots of lawyers. Yes.

Paul Spain:
Oh dear.

Bill Bennett:
Oh yeah.

Paul Spain:
That doesn’t fit with New Zealand society.

Bill Bennett:
No, it doesn’t. And it seems a bit out of sync actually.

Paul Spain:
I guess that, yeah, the challenges for people that, I mean it’s not just well known people, but the challenges when names aren’t suppressed and people jump to all sorts of conclusions before, you know, before the trial. But, you know, that’s, Yeah, I don’t know, I don’t know how you get that. Right. And obviously New Zealand’s taken a different approach to other countries and some countries don’t, don’t have any name suppression, so.

Bill Bennett:
No. And in some ways, some countries, it works a bit differently anyway. But look, I think that it’s something that, it’s something that legislators and lawyers are going to have to look at and work on.

Paul Spain:
Now the next item on the list, it is a little bit of a follow on from a story we talked about a few weeks ago with Darcy Ungara from the NZ Everyday Investor podcast. And this what that was a case where the, one of the founders of, I think it was Ledger who make, you know, digital wallets for cryptocurrencies. He had been, he’d been kidnapped and you know, the French police, you know, put dozens of people on the case and they were able to rescue him, but not before he lost a finger. In this case we’ve got Bernadette Rari who was sentenced to six years and two months in prison for her role in a 24 day kidnapping and torture of Kayla Power. And I mean, this one, just reading through it, it really, really, it was really, really shocking and I think it’s, you don’t have to read too many of these things if you’re invested in crypto for you to really think seriously about do you want to be invested in crypto when these are the consequences. And yeah, I guess I never had a lot of crypto, but it’s a few sort of stories like this and even just the consideration that it could happen, that said to me, no, I don’t, I don’t want to have, you know, I don’t want to be sitting on that sort of thing and create that risk of some sort of iron bar attack. And this kidnapping story, which has been, you know, covered in the, across the New Zealand media, probably not given massive prominence, you know, fortunately, but I think it’s gotta be a cause for concern within that sector. And, you know, it highlights the challenges of being your own banks.

Paul Spain:
You know, banks have a lot of security and a lot of money goes into security and, you know, nobody wants to have to pay for private security to stay safe unless you are very, very rich. So, you know, I think this is gonna really cause a stir.

Bill Bennett:
I’ve upset lots of people in the past talking about crypto. And I say that, and I’ll say this, I’ve said this, I said this on the podcast previously that crime is the killer app for crypto. It’s, you know, same as producing a newsletter was the killer app for PageMaker when it first came along and so on. And it’s, whether you like it or not, it’s, it’s just tied up with the criminal world. And whilst I would never say that people that are involved in crypto are necessarily criminals, I would say that an awful lot of criminals are involved in crypto. And that means, and so what it means, it’s the risks you take are the same as the risks of going down to certain parts of town late at night. It’s on a par with that. And it kind of, I mean, horrible as this is and as evil as it is, and it’s wrong and everything, it comes with the territory.

Bill Bennett:
Willie Sutton was a famous bank robber back in the cowboy days in America. And a newspaper reporter said to him, willie, why do you keep robbing banks? And he said, that’s because the way the money is. And you know, why. So criminals, why are you still doing all this stuff with crypto? Because that’s where the money is. It’s, it’s that simple.

Paul Spain:
Yeah. Should give people some, some pause to consider or if you are, yeah, be, be serious around crypto. You’d want to you’d want to either, you know, find some way that ensures it’s clear that you don’t have control over it. If, you know, if you’ve got some sort of a custody system that requires sort of, you know, multiple people sign off or you want to keep it, keep it pretty quiet. So. But I’m not sure that’s ever something that you could guarantee either. So it has really made me think in the last, you know, probably in the last sort of six months around these things and then seeing these two quite recent cases that are really serious. Yeah, I’m glad that’s not something I’ve got to think about the safety of myself and my family and look, I hope this sort of thing doesn’t happen again.

Paul Spain:
I’m pleased in that they’ve given a reasonably chunky sentence here, but I don’t think it’s gonna put, I don’t think it’s gonna put, you know, put everyone off.

Bill Bennett:
No, I was gonna say it would be the same if you were dealing with like really large amounts of banknotes.

Paul Spain:
Keeping gold in your basement at home and so on. Right, yeah, same sort of risks, right? Yeah. Someone’s at some point might turn up and demand you hand it over.

Bill Bennett:
Yeah, just keep it in the bank.

Paul Spain:
And I guess that’s where these crypto type funds and so on, you can get through the likes of sharesies and so on come into the picture because it means you can invest in those but without having to hold it. Now there’s a flip side to that though, in that you are no longer the bank, but then you are hoping that, that the, the entity that you’ve, you know, you, you’ve bought this, say a crypto, invested in a crypto fund that they’re going to be able to hold on to, onto your crypto. And of course, we had another one in the news over the last week or so and I think it was north of, I think, $1.5 billion hack bybit. So this is sort of USD and I think some headlines saying this might well be the largest crypto heist ever. It depends. Sort of the lens that you use, you look at it through. But yeah, we’re in a difficult place. If you are in that crypto world.

Bill Bennett:
Paul, if you go through, if you really want to invest in crypto and go through one of those shares funds, then you’re not going to be worrying about suing a council so you can dig up the landfill to look for an old hard drive which, that story.

Paul Spain:
No, but the fund that you Buy into may lose all their crypto if they get hacked. So it’s like, you know, it’s none of, none of these, none of, none of the options. And maybe I’m in a pessimistic view.

Bill Bennett:
About smart thing, spread it around a number of the funds because they’re not all going to be hacked or better.

Paul Spain:
Yet, invest it into, you know, into the tech sector, the New Zealand tech sector, and then it’s actually, you know, working, helping our economy and so on. So anyway, and we probably need to have a chat to Janine or one of the crew from EasyCrypt Crypto again, because I’m sure they’ve got some more perspectives that I haven’t considered in this short chat. But it is an area that’s really giving me a lot more pause than it has done in the past. Now, just thinking in terms of other things going on, Microsoft have signed a deal with Spark in New Zealand to accelerate Spark’s AI services, which is interesting to see. We’ve had Spark and Chorus announce their financial results. Anything that you wanted to touch on there? We were talking before the show and you were sort of, I guess, sharing your thoughts on, you know, what’s going on and how much of, of, you know, Spark’s, you know, challenges from a, you know, financial perspective are a mirror to what’s going on overall in the, in the New Zealand economy.

Bill Bennett:
Yeah, both Spark and Chorus are very closely tied to the performance of the economy in general. I mean, the economy does well, they do well. Economy does poorly, they do poorly. But there’s a. There’s definitely a. Certainly in the case of Spark, there’s a kind of multiplier effect on that. It goes down much faster because Spark had quite a large number of government accounts. So when the government starts making cuts, that digs in quite sharply.

Bill Bennett:
And the other telcos, 2 Degrees and Vodafone, they don’t announce results in the same way. Although Vodafone, sorry, not Vodafone 1. New Zealand results do turn up in the infratil result. Sure, they actually did. They’ve been doing reasonably well, but their exposure to. Is to a different. Almost to a different sort of customer base.

Paul Spain:
But they’ve all been impacted in, you know, in various ways and they’ve had to do layoffs and.

Bill Bennett:
Well, they. Well, one has been. One has been probably been more aggressive doing that than Spark has. But I think Spark will catch up. In fact, that’s pretty clear that Spark will catch up with that. But in general, that sector is tied to the economy. What’s interesting is that Chorus’s result has been seen by the market as being quite negative. The share price has dropped something like 10%.

Bill Bennett:
The Spark price dropped at one point, I think it was 30%. So, so both have been perceived as negative by investors. But the thing about the Chorus result is that Chorus’s result is actually quite flat. I mean there was, I think there was a loss of 5 million but it’s a loss of a half year loss of 5 million but that’s on a revenue of half a billion. So you know, 500 million. So as a percentage it’s tiny and in effect Chorus’s result is flat. Chorus is down because people have been trading down a little bit. So some people that have had gigabit plans and so I would have gone for the slower form of broadband and there’s been less of the new builds which is, which would help Chorus’s result.

Bill Bennett:
Spark’s result is again people try, there’s been, there’s been trading down as people running out of cash thinking, well what can we cut this month? Let’s cut, let’s have a little bit less broadband, a little bit less data or mobile data or whatever. Multiply that across tens of thousands of people and you’ve got a, you’ve got a problem. So yeah, basically it’s very much a reflection of where the economy is. And I think the thing is sitting here in, in Auckland and in our particular sector we’re not perhaps seeing the worst of it that some people in other places are. I mean, you know, in other parts of New Zealand things are probably a lot tougher than they are here.

Paul Spain:
Yeah, look I, I think if you, if you sort of look, look more, more broadly as well, sort of, you know, looking, looking internationally. So Chorus’s price under 4% down on what it was a month ago, spark 21%. But looking out internationally, Tesla are down, you know, nearly the same, just under 19 or around 19%. I think rocket Lab of seen their shares dropping as well. So yeah there’s, there’s, there are challenges kind of, you know, all, all around the world. Yeah, see, yeah, significant drop for, yeah for, for Rocket Lab but it’ll be a whole different story in another, in another, you know, 12 months or so. But one of, I guess one of the, concerning bits of feedback and Jolie Hodson, the chief executive at Spark did an interview with Chris Keel that’s up on the Herald and you know she was saying they’re not really, they’re not really seeing the, you know the signs of, of, you know, any immediate kind of changes in the, in the shorter term anyway. So we’ve, we’ve got a, you know, we’ve got a bit of a hard period still, still ahead.

Paul Spain:
And so, yeah, it’s under, it’s understandable, you know, some of these drops.

Bill Bennett:
The other thing about Spark and Chorus is, remember they, you know, it’s not that long ago they were one company. I mean, it was what, it’s about 15 years, I think, since they were first going to Demerge. But I think they actually Demerger took place, I think 12, 13 years ago now. And at that time, Sparks, Spark saw that as a sort of liberating thing. It was still called telecom at that time, but it saw it as liberating and it meant that they could go over, they could chase what was seen as high margin, things like digital value add and so on, which is where they invested in things like Spark Sport and so on. And none of that. Well, not none. Very few of those, what looked like great opportunities at the time of Demerger, very few of them paid off.

Bill Bennett:
The IoT investment paid off and has paid off really well, but that’s actually relatively small part of their business. Their investment in data centers appears to be paying off, but it requires so much investment and it’s not high margin. So it turns out I, I think that the two companies had their paths since that time. Chorus has become, in effect, a utility. It’s very heavily regulated. I mean, the, the Commerce Commission decides how much they can spend each year. It has to approve their, their spend, their operational expenditure. So I think what you’re seeing is Spark’s ride is gonna, is, is going to be quite bumpy, whereas this Chorus is right, it’s going to be quite smooth in comparison.

Bill Bennett:
And Spark’s probably the bumpiest of all the big telcos in this country for that same reason.

Paul Spain:
Well, I’m, I’m hopeful that, yeah, things bounce back sort of sooner rather than later. Just looked at Rocket Lab, they’re down around 26% over the last, over the last month. But of course they’ve gone through some meteoric rises and they’re still up nearly, nearly 400% over the past year, if you look back sort of 12 months. So, yeah, there’s an interesting story in that one. And for all those investors, all those invested, I’m, I’m hopeful they’ll head back in the other direction. And I’m, and I’m. And I’m picking. They will with, with what’s going on neutron wise.

Paul Spain:
But yeah, all, all of these, you know, scenarios, I guess impacted, you know, so, so heavily by the outside factors of, of the economy, of what’s going on politically. And, and then, you know, there’s, there’s the, you know, the factors and the moves that they’ve made within their businesses. And you know, in some ways you could say that Spark has worked really, really hard over the past 10 to 15 years to innovate and to try new things, you know, probably more than anyone else in that space from varying perspectives because they’ve really pushed the boat out in terms of, they’ve taken some real risks in terms of that, that risk taking, which, you know, I think is important to do. But you know, unfortunately that, you know, those things haven’t landed as is kind of normal with new innovations as it is for startups and so on.

Bill Bennett:
Right. So we’re trying to. It’s been a bump, it’s a bumpy ride for Spark. I mean, whereas Corus’s ride is quite smooth. There’s an upside as well. I mean, Spark, if Spark has an upside, the upside can be really good as well. So it’s, it’s, I mean, it’s still there, it’s still potentially there. But I do think that this, the, one of the things that happened in that period after the demerger was that Spark decided to focus very much on New Zealand and so it had investments in Australia and internationally and so on, which it just got rid of them.

Bill Bennett:
Telecom Cook Islands was, was owned by Telecom New Zealand at one time, got rid of it, got rid of everything outside of New Zealand to focus on the home market. The problem is you then become, you know, much more vulnerable to the conditions in the home market.

Paul Spain:
Although, yeah, those things, you know, clearly were distractions. Oh yeah. And probably in the, in the light of day, I wouldn’t be surprised if, you know, if you, if you looked at how could that have played out, they kept them versus getting rid of them that, you know, they could well have, have ended up on the, on the better side.

Bill Bennett:
My, my only, the only thing I’ve got just in the back of my mind, and I’ve been writing about telecoms for a long time, is I’m still not 100% convinced that the way that the towers are sold off and when the towers are sold off is the best way to do that. It’s something that telcos have done across the world. Yes, it’s, you know, supermarkets don’t own the buildings and most big retailers don’t. Own their buildings. It’s because it’s tying up capital that can be used elsewhere. So it’s not an unusual thing, but I just think that that might not have been done. I mean, right now Spark’s result might be looking a bit brighter. I haven’t sort of gone back and looked across the figures, but I just got this slightly uneasy feeling that.

Bill Bennett:
I just think that New Zealand telcos just a bit too quick into that and. But that’s a gut feeling. It’s not, it’s not a piece of analysis. It’s just that sort of somewhere in the back of your head it’s telling you that could have been done better.

Paul Spain:
Interesting. I actually thought they did. They did very well on that front and in part because people keep raising with me, are we going to be in a position and the not too distant future where cell towers are no longer required because satellite Internet will be, will be so good? Now when I think about that, I think, well, hold on. I was on the phone from, you know, driving into the car park which is surrounded with concrete, when I jumped in the elevator and I had, you know, largely, you know, pretty good connectivity, you know, up to here on level 13. And so, you know, there’s a scenario there where I see, well, I’m not sure satellite’s going to be able to do that. So there’s an element where. I’m not sure if there’s any credibility to this idea of, you know, completely getting rid of cell sites at some distant point in the future at all. But I do see people keep sort of asking that question and if there’s any likelihood of it, then, yeah, the quicker that Telco’s sold those things off, the better.

Paul Spain:
But I just, I can’t.

Bill Bennett:
On that front, yeah, on that front it probably, if they’d left it longer, they might have not got the same price. Yeah, you’re quite right. But look, there’s all kinds of problems with switching from a terrestrial network to a satellite. One not least of which the sheer number of satellites that would be required to provide the level of bandwidth. Satellite backhaul is not as, as fiber backhaul. That comes from the cables. The. When you have vast numbers of satellites in orbit as opposed to, I mean, off the top of my head, there’s probably between 8 and 10,000 right now.

Bill Bennett:
I think the last time I looked there was 6700 Starlink, but that was two weeks ago and there might be more today. Once you start getting those kinds of numbers of satellite in orbit, other things happen. Right. The first one is, is they have to maneuver out of each other’s way a bit more than they otherwise would. There’s a problem emerging with satellites re entering the atmosphere, burning up and destroying the ozone layer. That’s only just become noticeable because when one or two satellites are reentering orbit every year that wasn’t really being picked up. Now it’s hundreds are coming down every year.

Paul Spain:
Is it, Is it though? Because, yeah, the thing I read 6,000 satellites, but the bits I read on it said it may be an issue. No, I haven’t read anything to say. Well, actually the measurement is that actually the ozone layer is now, you know, going the other, the other way. I think, you know, there were some.

Bill Bennett:
Predicted dates of when ozone layer, not ozone layer. Right. There’s a lot of chemicals that are now in the atmosphere at that level that weren’t there before. Right.

Paul Spain:
That’s certainly not my area of expertise.

Bill Bennett:
No, it’s not, but we, but that’s it. We don’t know, do we? Would we have, I mean, we probably would have gone ahead and burnt coal if we knew that it was going to be global warning, industrial revolution, but we don’t know. We can’t see that. But that could become an issue. That could yet become an issue. The fact that sovereignty is an issue if you happen to. I mean, there’s already been talk in the last week of the US using Starlink to put pressure on Ukraine over politics and negotiations and so on. Do we want to be in a position where we have to cut the price that we get for our milk or we lose our Starlink satellites? I’m not saying that’s going to happen, but I’m saying it becomes a possibility that isn’t a possibility when we own our own networks.

Bill Bennett:
So there’s all kinds. So what I’m saying is this is a whole raft of issues that go beyond the technology of whether satellites can do this or not. And I’m not saying it’s not possible. I’m saying that it brings around problems that haven’t even been thought about yet. And, and one of the other things I think which we haven’t really addressed in this space is that at the moment you have Starlink, there’s going to be Amazon’s network, there’s going to be OneWebs network, there’s going to be a Chinese network, there’s going to be a Russian network, there’s going to be probably a couple of other international networks and there won’t be a New Zealand network, there won’t be a New Zealand satellite constellation. So we have to give up that degree of sovereignty over it. I think the first candidate for doing that could be Apple and its Global Star investment. I suspect that’s probably in the back of Apple’s mind that they could sell you a phone and a connection using Global Star with, if it becomes a constellation on that scale.

Bill Bennett:
They already do it with their emergency satellite phoning and emergencies and so on. But I think there are more questions than the ones I’ve mentioned as well that come when you start things.

Paul Spain:
There’s a lot of complexity around spectrum, you know, reaching areas that a satellite sort of can’t, can’t, can’t reach and so on. We, you know, I drive through the, the tunnel here in Auckland and others drive around through different tunnels in different parts of the country. And you know, a lot of cases we’re able to get, we’re able to get sort of coverage in the, in these things. So, yeah, lot, lot, lots of bits and pieces and not to mention the bandwidth that you, you know, you’ve, you’ve highlighted. But I think this will become a topic that will be coming up again over the years ahead as the technology develops. Of course, we’re in a position at the moment where we’re still. It’s a very, very, very tiny percentage of the world’s population has access to a satellite phone. But of course, as these new offerings sort of come into the market and develop and different companies start building out their, their, their, their satellite networks, then that will change.

Paul Spain:
And actually I saw AST Space Mobile also in the news over the last week. They were testing with AT&T and one of the other US mobile networks, Verizon, and they were testing out video calls.

Bill Bennett:
I think ASC is one that’s got the really big satellites, aren’t they?

Paul Spain:
Yeah, yeah. So they’ve, at the moment they’ve got, I think, five satellites covering the US and, and they’re, they’re, they’re gigantic.

Bill Bennett:
I think they’re size of tennis from.

Paul Spain:
From what I can see. And yeah, look, that’s, that’s a really, that’s a really interesting company to, to watch. And you know, there’s, there’s the potential that they become a major player, but do it in a very, very different way to what we’re seeing from Starlink, where they don’t have to have anywhere near the same number of satellites, but they can still deliver a capable result. But these are all things where there’s a fair bit of maths and science to kind of Figure them out. And I don’t know how it plays out.

Bill Bennett:
And economics. Right. Because one of the fears with Starlink, and there’s been places in the world where this has already happened is you know how Uber came in, right. And it was 30% cheaper than catching a cab and everyone thought Uber’s wonderful. Now suddenly Uber is actually as expensive as catching a cabin. If you’re unlucky and you want to get home from Eden park after a test match or something, it’s like a lot more expensive than getting a cab. Right. Because they’ve wiped out enough opposition to be able to hike their prices.

Bill Bennett:
Well, Starlink has, is, you could argue that Starlink is in that same sort of subsidy phase, heavily subsidized phase. And there are parts of the world now where Starlink’s hiked its prices because it has a virtual monopoly that could take on big time. So those. It’s going to be interesting to see whether the economics of terrestrial mobile can compete with the economics of satellite mobile. And the problem with satellite networks is that no one in the world has more money than the owner of the Starlink network. And if you’ve got like a trillion dollars that you can invest to wait while the competition dies, then you might want to do that and build a monopoly that way. So I’m not saying this is, I’m saying this is purely hypothetical, but I’m just saying we need to think about all those angles.

Paul Spain:
Yeah. And really, really important as a country to be, you know, taking a big picture view, putting our futurist hats on and thinking through it for those who are able to influence and contribute to how these things play out into the future. Now this, there’s probably a few more things we could, we could delve into, Bill, but our time is running out. So encryption is something we’ve talked about, you know, over the years. I see news there. Amnesty International have sort of leaned in on what’s going on in the uk and we saw that pressure coming from the UK government on Apple to provide access to what is currently encrypted user data in terms of backups of people’s devices, which could then provide access to messages and all these other, all their other encrypted data. And Apple, from what I was reading, was refusing and saying no, but really the government put so much pressure on that they’re no longer offering their encrypted backup service. And so interestingly, by default, Apple backups are not encrypted.

Paul Spain:
So you do have to go in and actually turn on that in your advanced settings to have them encrypted. But I think as sort of, I guess, technology users these days, we, our expectations have largely moved to my data will be encrypted in one way or another. But this leaves really a loophole open for the government. And I guess looking back at some of the sort of past discussions on this topic, whichever way you go, there are shortcomings. Right. If you go the way the UK government are going, then it gives some room for law enforcement to be able to get access to data and to solve crimes. But the general tendency over quite a period of years now has been, look, if people’s data is encrypted, then governments and police forces, as a general rule, shouldn’t have automatic access to that.

Bill Bennett:
Yeah, look, one of the groups of people that uses this the most are journalists. Now, I don’t need to because I write about business and technology and, you know, frankly, no one’s going to be looking at my encrypted notes. But if I had been talking, unless.

Paul Spain:
You got a tip off from somebody tomorrow, Bill, that you needed to keep secret.

Bill Bennett:
Well, it happens, but it does happen. I mean, I have, over the years, I have had some stories like that, but I still think that it’s, it’s, it’s more likely to be used if you’re dealing with things like, you know, talking to, you know, people that are in hiding or, or whistleblowers and so on. And yeah, it could happen.

Paul Spain:
Or maybe those that are anti government. Right. And, and you know, we’ve, we’ve seen varying states where the government aren’t necessarily too friendly and necessarily too trustworthy.

Bill Bennett:
Yeah, yeah, yeah, that, that, that too. Look, it’s, it’s a, it’s a very fraught subject. I mean, we, we’re coming to the end of the podcast. I don’t think we need to go on for another hour discussing this. But my, my, my thinking just two.

Paul Spain:
Bill, just two hours.

Bill Bennett:
But my thinking on this is that, you know, governments actually, they can back off. They should, they, they should be backing off. I don’t think this is, I don’t think this reflects well on a government. It starts to look a bit totalitarian. It starts. And it starts to look a bit like, you know, what’s going on in your bedroom or what’s going on in your house. And it’s definitely a Big Brother aspect to it. And the argument that if you’ve got nothing to hide, you know, you know, that’s nonsense, A nonsense argument.

Bill Bennett:
There are all sorts of things you Might not want people to know if you happen to be. I was talking to someone else very recently about the, the whole, believe it or not, the whole Ashley Madison story and how there were stories about people who outed in certain countries who died as a result of, of, you know, having their affairs become public. And I, and it’s that serious, you know, it’s, that’s, that’s what can happen. It’s not happening at the moment with any Western governments, but I think there are probably other governments where you could, you know, there could be things that would be life threatening.

Paul Spain:
Well, we have a massive, you know, if you look, if you look around the world, a massive grid of surveillance and, you know, certainly around New Zealand and you know, most of our towns and cities in terms of cameras, you look at London as, you know, the UK is at the extreme end of that. And then the more sort of totalitarian regimes, you know, tend to lean even more in that sort of direction. So there are some things here, you know, beyond just the, you know, the encryption story that are in differing ways connected and especially when we look at just how poor governments and organisations often are with how they store and secure and keep data private. So there’s some areas here, I think, that need, you know, continued consideration. We shouldn’t just say, well, I’ve heard these sorts of stories for so many years, I’m not going to read them anymore.

Bill Bennett:
No, but look, here’s a story. It’s very real, it’s very narrow. Apparently in the US at the moment, Elon Musk’s team are going through encrypted data in government databases as we speak. That’s happening in the US now. They’re probably looking for people to sack, quite frankly, but they could be looking for something else in there and it could be stuff which is legitimate encrypted, you know. So I look, I do think we need to defend encryption. I think that’s quite important. You know, they can’t have everything.

Paul Spain:
Yeah, well, yeah, the US politics there would be another hour or two.

Bill Bennett:
I don’t think we need to go.

Paul Spain:
Any further, but thank you, Bill. It’s been great to have you back on the New Zealand Tech podcast again and always fascinating to hear your insights and opinions. So, yeah, thanks for joining today. For folks who are wanting to tap into some of what you’ve been writing, they go across to billbennett Co nz.

Bill Bennett:
Yeah, yeah, yeah. And you’ll find me there.

Paul Spain:
And you’ve got a newsletter as well there. Yeah, weekly newsletter.

Bill Bennett:
It’s free, it’s not. I mean, and actually one of the things I do with my newsletter is I make a point of not collecting any data. So probably about a quarter of the names in there are things like Donald Duck and so on. I’m not interested. I don’t want your data. I want you to read it.

Paul Spain:
Oh, that’s great. Well, thank you, Bill. And of course a big thank you to our show partners, guerrilla technology, HP, 2 degrees Spark and One NZ. And we appreciate them sort of coming on the NZ tech podcast journey with us and supporting us through the years. They’re amazing contributors to, you know, to our tech and innovation ecosystems in New Zealand and do a great job. But I always like to speak my mind, so that’s kind of how we do it. So we.

Bill Bennett:
But I think we’re also concerned about their health as well, you know, of course we are.

Paul Spain:
The health of our, you know, there’s that two sides of if our businesses are, you know, disrupted or impacted by international things, by the economy, then that has a flow on to many of our listeners. So, you know, all of us are impacted in one way or another. So, you know, I guess what I’m always looking for is to the hope that they all achieve their best.

Bill Bennett:
We want good tech companies.

Paul Spain:
We do, we certainly do. Awesome. Well, thank you, Bill. Thanks everybody for listening in. If you’re listening to the audio, then make sure you’re also following us on video platform. We stream probably the majority of episodes, not every episode online. You can get those by following myself on LinkedIn or X and also NZ Tech podcast across most of the channels like YouTube and LinkedIn and Facebook and so on as well. So if you follow from both perspectives, you’ve got a reasonably good chance of keeping up to date with our episodes.

Paul Spain:
And also I’ll tend to post, you know, last week I was interviews on TV3 and TVNZ and I’ve shared one of those on some of those channels. So that’s another way of sort of keeping up, up to date with my bits and pieces and yeah, definitely get in there and get on Bill Bennett’s email list. Good stuff. Cheers.