The new role for TelstraÕs former marketing chief Ted Pretty is anything but a demotion. Two months ago, Telstra created a division for technology, innovation & products headed up by former marketing chief Ted Pretty. Pretty held the role as group managing director of the Telstra consumer & marketing division for just nine months, so many saw his most recent move as a demotion. CEO Ziggy Switkowski moved quickly to quell the insults with a statement to staff reading: ÒAny assertion that [PrettyÕs] appointment is in any way a change of status within the company completely fails to understand the importance I place in the new division.Ó It looks like Telstra is serious about its technology, innovation & products division, which controls network technologies, IT systems and product development. Nonetheless, Pretty is an unusual choice for the job. The division is highly technical in nature, yet Pretty entered the telecommunications sector as a lawyer. As head of its business and international unit, he was responsible for several lacklustre dot-com and overseas investments, and he moved into a marketing role in January this year, with responsibility for the companyÕs brands, advertising and sponsorships. Analysts are divided on whether the new division is genuinely committed to product innovation. Pretty is charged with bringing a commercial focus to research and development, and it remains to be seen whether this will actually translate to improved products and services for consumers. Paul Budde, telecommunications analyst at Paul Budde Communications, says PrettyÕs commercial approach will have a negative impact on the growth of the Telstra network if he focuses more on revenue than on infrastructure development. ÒThe technology, innovation & products division is essentially the old network division renamed. It is responsible for the national infrastructure that is so desperately needed in this country. But you canÕt have a totally commercial focus on networks, because then it would only focus on infrastructure that generates revenue,Ó says Budde. ÒTelstra has huge problems with its broadband network, it has wasted money on dot-com investments and in overseas markets. But it has a monopoly, so there is no one forcing them to do better. ÒIf you look around the world you see some clever things, like Voice over IP, which can reduce Internet costs by 80%. But Telstra earns half its revenue from analogue voice, so there are instances where new technologies may benefit customers, but they wonÕt benefit Telstra. Fantastic innovations happen in countries that have competition,Ó says Budde. But Tim Smart, senior telecoms analyst at Macquarie Equities, says the division is critical to TelstraÕs long-term profitability. After investing in infrastructure, TelstraÕs next challenge is to produce products that customers are willing to pay for. It has the infrastructure, now it needs to provide the innovation. ÒIn the past couple of years Telstra has struggled to generate substantial revenue growth Ñ most growth has been achieved through cost-cutting. It has built a lot of networks, now the challenge is to use the pipes itÕs built to develop more compelling products that customers are prepared to pay more to use.Ó Telstra has invested in its broadband and mobile networks, now it needs to develop products to use these investments. Its first challenge, however, might well be one of morale Ñ TelstraÕs habit of reshuffling staff is taking its toll. ÒItÕs not a good thing for morale at Telstra. Every time they reshuffle it creates a lot of disruption and lobbying for positions, itÕs a waste of valuable time and resources,Ó says Budde. And is Pretty the right man for the job? ÒSome people indicated that his new role was a demotion, but thatÕs not necessarily the case. Pretty doesnÕt sit well in the high-tech area, but heÕs a creative person, so perhaps he can handle it,Ó he says. ÒTed Pretty has held a number of roles at Telstra. He did a good job with the fixed line business, but as for the new division Ñ weÕll have to wait and see,Ó says Smart.
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