Spark can hit its 5G targets without Huawei, Simon Moutter says

Spark boss Simon Moutter says the GCSB decision to block the "terrific" Huawei from its 5G upgrade is a setback, but that his company can hit still hit its July 1, 2020 target. Photo / Dean Purcell.

Spark MD Simon Moutter, who spoke passionately in support of Huawei at his company's annual meeting late last year, downplayed the controversy today in comments that seemed designed to reassure investors.

On his company's first-half results conference call, the telco boss stressed his company could still make its July 1, 2020 target date for its 5G mobile upgrade - subject to the government running holding a spectrum auction in time.

The upgrade would be within Spark's existing capital expenditure guidance, even if the keenly-priced Huawei remained sidelined by the GCSB.

"We have a multi-vendor setup. [So] while the Huawei decision is a setup back for us by removing a vendor that has terrific technology, it does not alter our plans or timeframe," Moutter said.

"We've never had any cause to suspect them [Huawei] of anything inappropriate, Moutter told analysts.

"That said, we have a Cisco/Ericsson core," he added in a reference to the US and Swedish companies who supply the core or "brains" of Spark's 4G network today, and also play that role in its pilot 5G network on Auckland's waterfront.

For commercial purposes, it was Spark's strategy to "Never to be trapped by a single vendor for commercial purposes so it would have been foolish for us not to prepare for that outcome," Moutter said of spy agency's GCSB ban.

"We can today put other vendors into our RAN," he said.

The RAN or radio access network is the celltowers on the edge of a network - the territory inhabited by Huawei on Spark's 4G network today.

In November, Huawei said it would only bid for Spark's RAN 5G business and take a pass on the core in an (ultimately unsuccessful) effort to help the telco smooth things over with the GCSB.

This week, with the UK poised to clear Huawei, Prime Minister Jacinda Ardern has underlned her that there is no ban on the Chinese company per se.

The GCSB's vetting of telco network upgrades was project-based. The ball was in Spark and Huawei's court to mitigate the (never-made-public) security risks identified by the spy agency.

A spokesman for Spark re-iterated today that it has yet to decide whether to submit a revised 5G upgrade proposal incorporating Huawei gear. Spokesman Andrew Pirie said Spark was still assessing information forwarded by the GCSB, "some of which is security classified."

But Moutter's comments to the investment community today indicate the Spark boss has already reconciled himself - or at least readied his company - for a post-Huawei future.

What is 5G?

5G mobile network technology offers more bandwidth than today's 4G networks, allowing more people (or gadgets) to connect to a cell tower and at much faster speeds.

The exact increase in bandwidth is a bit "how long is a piece of string?" because, as with 4G, it will depend on how many other people are on the network at the same time, distance from the nearest cell site and other factors. But 5G should make it easier for telcos to offer true unlimited mobile data plans.

5G also has far less lag (or slight connection delay) of 4G in a two-way mobile connection, such as a video conference or online gaming session, making it more competitive with fibre.

Our government will have to auction spectrum before Spark, Vodafone and 2degrees can upgrade their mobile networks to 5G.

It's yet to give a timetable, but says the auction will be in time for early 2020 rollouts.

To take advantage of a 5G connection, you need a phone that supports the technology. Apple, Samsung and other smartphone makers have yet to add 5G as a feature, but are expected to incorporate the technology into new models over the next year or so.

The Telecommunications (Interception Capability and Security) Act 2013, or "Ticsa" requires network operators to run proposed upgrades past the GCSB for clearance.

2degrees is an almost all-Huawei shop for the 4G network it runs today, using the Chinese company's technology at the core of its network as well as the RAN (celltowers and cellsites).

Spark uses Cisco and Ericsson for its core, and Huawei for its RAN, while Vodafone NZ has only a limited amount of Huawei electronics on its network, with Nokia Networks its main technology partner.