Griffin on Tech: 111 outages, Datacom turns 60, and Microsoft cuts deeper

Nelson, Tasman and Marlborough are going into the weekend in a state of emergency for the next having been hit by a week of wild weather.

The fibre optic cable link that goes over Takaka Hill to supply the Golden Bay area with phone and internet services, including connecting cell towers in the area was taken out for much of yesterday, meaning residents weren’t able to make 111 calls.

This is gonig to be an increasingly common scenario as we face more extreme weather events as a nation and we aren’t adequately prepared for it. But as Telecommunications Carriers Forum and former Tech Blog editor Paul Brislen explained on RNZ this morning, there isn’t really a viable backup for a severed fibre optic cable in parts of the country - if it also takes out backhaul connectivity to mobile towers.

It’s just too expensive to set up and maintain a redundant system to switch over to. But satellite will increasingly be the answer. I’ve been using One NZ’s satellite-to-mobile service to send text messages this year from mobile black spots and it works very well. One NZ has offered customers of other telcos the option of trialling ther service by activating a One NZ e-SIM. So that’s an option in future for people to maintain connectivity when the terrestrial infrastructure goes down. Power remains an issue. If I lived anywhere remote, I’d have a small generator and lots of charged-up lithium batteries on hand for these types of outages. Any business that cares about business continuity and the ability to continue to run payment systems etc, should have a Starlink modem and generator in reserve.

The interim solution for anyone living in a remote area is to have access to a satellite-to-mobile service, which Spark and 2degrees also have plans to deliver, with SpaceX the logical supplier once its exclusive arrangement with One NZ expires. At the moment, it means you can get a text message out to alert someone to an emergency situation, allowing them to call 111 on your behalf and relay the message. 

Why can’t you text 111 directly? That would be great, as well as WhatsApping or FaceTiming the police, fire or ambulance contact centre. But that’s a layer of complexity few emergency services around the world are set up for yet. 

Brislen mentioned a need to account for new technologies, such as alerts issued by smartwatches and phones that indicate when a person has had a fall or crashed their car. But the false positives (and false negatives) from those devices would likely tie up a lot of emergency services’ time.

I recently called 111 on behalf of a neighbour who had fallen over at home. The contact centre people are used to calls alerting other people in trouble. Now mobile to satellite services at least allow you to get a message out to a friend who can alert emergency services on your behalf. That ability didn’t exist when Cyclone Gabrielle struck in 2023.

Datacom at 60

Datacom, New Zealand’s oldest and most established tech company founded in 1965, turns 60 this year and yesterday revealed improved financial results. It always surprises me that such a big company operates on relatively tight margins - revenue in the last year was $1.48 billion up from $1.47 in the previous year. Profit was $37 million, up from $34 million.

You’d expect this to be a more lucrative business. But its a sign of how competitive (and commoditised) IT services are these days, particularly in contact centres, payroll, and private cloud, which are all large parts of Datacom’s business. But there are some positive signs in the financials that Datacom, always a well-run and fiscally conservative organisation, is setting itself up to improve its bottom line. Overall, the results are reasonable given how tough the New Zealand market has been, with Australia facing headwinds too.

Operating cashflow rose to $164m from the year-ago $139m while net debt reduced from $82m to $45m. Datacom’s headcount is down to 5,375 from 6,131 a year ago, a 12% reduction. It has followed other tech companies in restructuring itself for the AI era and has introduced AI agents into its software development business.

“As part of our broader transformation, we have taken every opportunity to apply AI and automation techniques to make our business more efficient and productive,” group chief executive Greg Davidson told the Herald.

“In some cases, natural attrition has not been back-filled,” he added.

He sees another challenging year ahead for businesses but points to AI adoption as an area of growth for Datacom and its customers.

“AI is becoming fundamental to being efficient and competitive these days, so customers are needing a lot of hand-holding as to which tool to use for what job and where to do the processing to avoid the costs eroding the benefits,” he said.

Microsoft cuts deepen (thanks to AI)

Meanwhile, US tech giant Microsoft may have beaten analysts' forecasts with its most recent financial results, but the Redmond giant is forging ahead with more cuts to its workforce, set to shed 9,000 jobs this year, or around 4% of its workforce. 

A round of layoffs in May affected 6,000 Microsoft employees and was hardest felt in the company’s product and engineering positions, according to Bloomberg.

Again, industry observers put the job cuts down to the impact of artificial intelligence. After all, if Microsoft is pitching its Copilot services as productivity boosters, eventually the payoff has to come in the ability to reduce headcount, including in its own shop. 

AI is indeed at the heart of the considerable reorganisation of Microsoft’s workforce, which was 228,000-strong as of June 2024. But US tech entrepreneur Noah Berkson put his finger on the real reason for the headcount reduction in a LinkedIn post yesterday:

“Everyone’s blaming AI for layoffs. But here’s the truth,” he wrote.

AI itself hasn’t caused mass layoffs (yet). What has? Infrastructure. Companies are spending millions (even billions) on AI cloud compute, data engineering pipelines, new tooling and integrations, redundant internal systems to ‘prepare’ for AI,” he added.

“And the budget for all that? It’s coming from mostly headcount. This isn’t an AI apocalypse.

It’s a corporate restructuring exercise masked as “innovation.”

So AI isn’t yet replacing workers, but workers are being sacrificed to pay for the infrastructure that will power the AI revolution when it really gets going. That adds to growing evidence that we are set for major disruption to the workforce, which will really arrive when the tech giants have the means of delivering AI agents at scale. It’s another reminder for all of us: the window to reskill and upskill for the world of AI is closing.

Photo credit: Yunus Tuğ