Telecom's $40m wins 3G race

By PAUL BRISLEN

Telecom will have a third-generation (3G) cellphone network up and running by Christmas, giving it a huge leg-up in the battle against Vodafone.

The company said yesterday it would spend $40 million to extend the capacity of its 027 cellular network in the main business markets of Auckland, Wellington, Christchurch and "key holiday spots" by Christmas.

Telecom's current network offers maximum speeds of 155kbps with an average connection speed of around 40-80kbps.

Its general manager of mobile, Kevin Kenrick, says the new network will offer a maximum speed of 2.4mbps with an average of 500kbps.

ABN Amro analyst David Boyce said the announcement, coupled with Telecom's purchase of systems integrator Gen-i this month, meant it was developing a formidable portfolio for its Advanced Solutions division.

"It enhances Telecom's offering to the top-end New Zealand corporates."

Vodafone has been making a concerted effort to boost its market share in the lucrative business market.

Vodafone's branding and marketing has traditionally been targeted at the consumer market but its "Mobilise" campaign is pitching the multinational telco as a capable business service.

Boyce said the speed of the new Telecom service would be a strong incentive for business customers.

"Even if they find the average rate drops to 300kbps, it is still more than competitive with data speeds on Vodafone's proposed 3G network."

Vodafone's proposed network will not be operational in New Zealand until the middle of next year and is budgeted for around $400 million.

Vodafone has to build a completely new network rather than simply upgrading its existing infrastructure.

Telecom's new service, to be called "T3G", will initially be data-only while the company sources voice-capable handsets.

Kenrick says PC cards, which act as wireless modems for use within laptops and handheld devices, are already available in the market and customers are able to use them today on Telecom's current network.

Telecom's strategic partnership with US cellular giant Sprint will help with buying handsets for the New Zealand market.

Telecom has had trouble in the past because of the relatively small number of handsets needed to service a market of this size and has been working with its technology partners to piggy-back off their handset buying.

Kenrick said the ageing 025 cellphone network would not be switched off any time soon. "We're working with customers to encourage them to move to the new network but we don't envision switching it off before the end of 2007."

Vodafone head of business Russell Stanners says he's pleased to see the competition. "It proves the 3G proposition really." He is not concerned that Telecom will launch its network before Vodafone or that Telecom claims its network will be so much faster.

"With these things you're talking about a 10-year investment so we're not worried by a couple of months."

Stanners said the difference in technologies meant comparing speeds was not very helpful.

"It's a bit like the difference between a turbo-charged car or a V8. Both go fast but do it in a different manner. We want to focus on the customer and customer needs rather than the technology itself."

As of March this year, Telecom has 587,000 customers using its 027 network with a further 745,000 on its 025 service. Vodafone has 1.61 million customers on its network.