Nokia ringing Vodafone bells

By RICHARD PAMATATAU

Nokia is close to signing a $397 million deal to provide Vodafone Australia and New Zealand with third generation cellular networks, in one of the biggest telecoms deals expected in the region for the next two years.

The figure relates to the New Zealand project, but will be substantially more for Australia.

Documents obtained by the Herald reveal Vodafone has ambitious targets over the next few years as the company uses its head start in 3G to try to widen its lead from rival Telecom.

Vodafone spokeswoman Sarah Williams would not discuss the selection of Finnish company Nokia yesterday, saying only that a contract was still to be signed and that staff had been advised by email that negotiations for the deal were being finalised.

The deal would make Nokia the builder of one of the largest 3G networks in the Southern Hemisphere and could prove a boon for local IT integrators, application developers and telecoms site owners such as Government-owned Broadcast Communications.

But New Zealanders expecting to be able to make video calls and surf the web at high-speed from their mobile, will have to wait as the projected roll out shows only limited cover initially.

The company expects to have 78 per cent of the population covered by March 2009, according to Vodafone New Zealand's 3G "Build and Launch Business Plan Draft" written a couple of months ago.

Nokia's plan outlines five phases of building which will be completed by March 2009, with a commercial launch in October this year.

By October, Vodafone expects to have 50 per cent of Auckland and Wellington covered, excluding "water" areas.

By next March Christchurch, Hamilton and Queenstown would be on the 3G map.

By March 2007 Vodafone expects to have extended coverage to 62 per cent of the population.

During this period Vodafone will expand the network's capacity to cater for growth in traffic volumes.

"All GSM/GPRS traffic in New Zealand will be fully consolidated on to the selected vendor's core network equipment by the completion of this wave," according to the plan.


Aligned with the network rollout are several other integration projects including "SAM" - the replacement of the customer-care, billing and provisioning system.

This deal, managed by IBM, is worth about $168 million. Spending on SAM will be about $40 million.

Vodafone is also addressing "revenue leakage" due to issues with its billing systems.

It is understood that its recent free picture messaging offer came about because Vodafone's systems were unable to recognise PXT traffic. The problem has apparently been solved.

Sydney-based telecoms commentator Paul Budde said a decision to choose Nokia made little difference to the challenge Vodafone faces in making 3G work.

The move by mobile companies into 3G still lacked a sound business case when voice is the "killer application" on a mobile phone, he added.

"I would think that Vodafone would move very slowly on this. Making a decision has more to do with positioning and jockeying rather than rapidly installing new infrastructure.

"But it has nothing to worry about from Telecom because that company is all over the place with its mobile strategy," Budde said.

Vodafone had out-maneuvered Telecom constantly and while the 3G roll-out would take time the company was still well positioned, he said.

All the different networks Telecom ran in New Zealand and in Australia with Hutchison made things complex from both a management and field position.

Budde said the key for Vodafone would be to take traffic from Telecom's fixed network - and 3G had the potential to do that.

The deal might help Vodafone in Australia where it is limping along as the third carrier (with 2.5 million customers) after Telstra and Optus.

Vodafone needed to strike a balance between owning customer "mind space" and true service delivery. It said it must not "imagine - just for fun space" like its competitors and must be communicating to mass markets even though delivery would "not be available to the masses" for more than two years.

Vodafone also had to maintain faith in its existing network.

The mobile operator would strengthen its Vodafone Live! platform by pushing the message: "Share better in more ways".

It would also focus on email and video and picture messaging as key drivers for the service.

Certain new features such as animation and background images, while capable of being delivered on Vodafone's current network, may be held back for the 3G launch, according to the plan.

Vodafone said its 3G roll out was a year behind the global strategy and the subsequent launch of video PXT in November and video streaming next February could be used to help "substantiate and show progression towards" the new network.

Local content was also identified as important and the plan stated Vodafone needed to develop New Zealand content relationships.

The company regards the business market as critical and would be looking to use the "Mobile Office" data card system. This technology would be used to claw back a position in the business data market, particularly as data targets made up 12 per cent of the business segment revenue targets, growing to 15 per cent this year and in 2005.

While high speed email with attachments was touted as a 3G network service, until coverage was extended it would "not be a meaningful proposition", the plan said.

Vodafone said the battle against Telecom was on a perceptual rather than a factual front in the plan.

Siemens Vodafone account manager Charlie Boyd said the auction process indicated that partnerships and culture were not so important in the end.

Siemens had a team of 30 working on the bid for both countries, he said.

While Nokia may have the edge in handset hype, the plan said on a global basis, Vodafone was looking at the Samsung Z100, Sony Ericsson Viola, LG U8150 and the Sanyo SUP7000 as key handsets.