Telecom fires big digital shot in mobile war

By RICHARD BRADDELL utilities writer

At the launch of a new digital network, Telecom Mobile chief Mohan Jesudason exudes gung-ho and gusto.

If all the technical promises are met, and there seems a good chance that they will be, he has a product to outgun rival Vodafone and stop the slide in mobile market share.

Mr Jesudason talks of a "whole new revelation in mobile telecommunications."

Those who have experienced CDMA (code division multiple access) during its pilot phase talk of voice quality close to fixed wire.

In six months, the network should be capable of data and internet services close to that promised by those behind the still-futuristic third generation networks.

The CDMA network has cost $200 million to bring in, and it should be cheap to operate compared with the three other mobile standards used in New Zealand (Vodafone's GSM and Telecom's existing analogue/digital).

It gives Telecom much-needed roaming capability to Australia, as well as the United States.

Roaming will be important for business users, who will be the main target of the network.

But the mobile war will increasingly be fought in data markets, where people on the move will want to access their company's networks and e-mail.

CDMA's data speed should make it a formidable contender.

Its data speed of 14.4 Kbps (kilobits per second) is 50 per cent faster than its Vodafone equivalent. When Telecom's high-speed 1XRTT service starts this year, it is expected to run at between 70 and 100 Kbps, or more than double Vodafone's GPRS.

GPRS has yet to fulfil its promise. Mr Jesudason is scornful of his rival's product, which is hampered by a lack of handsets and applications.

"I think you will be very hard pushed to find a customer who's using it and happy with it," he said.

Telecom's CDMA launch has generally been well-received.

Merrill Lynch said: "In the short-term, Telecom would appear to have advantages over Vodafone in mobile data.

"1XRTT seems more advanced than GPRS and Telecom seems very confident of having phones available by the end of this year."

Telecom has tackled questions of its lack of global reach through links with Hutchison Whampoa and Norway's Telenor.

Analysts say CDMA is a premium product aimed at big customers.

"At the consumer end of the market, there are no real incentives for the mid to low-value prepaid accounts to come across to CDMA," said broking firm JBWere.

But the analysts warn that there will be a hard fight ahead.

Telecom has to woo customers from other networks but if mishandled, they could defect to Vodafone when re-investing in handsets.

If CDMA proves superior to Vodafone's existing GSM technologies, that will be a strong incentive for Vodafone to make an early move to third generation mobile.

That would force Telecom into a new round of spending to keep up in the mobile race.