TelstraClear eyes mobile offer

By PETER GRIFFIN

TelstraClear is considering becoming New Zealand's third mobile network operator, and is talking to mobile equipment vendors.

The company resells Vodafone's mobile services under its 029 number, but it is keen to boost its mobile presence, either through a more expansive deal with Vodafone or by building its own network.

The do-it-yourself idea surfaced again yesterday when Telstra chief executive Ziggy Switkowski was quoted in The Australian newspaper as saying an option being considered was to build a third generation network for retail and wholesale mobile services.

TelstraClear's chief executive, Rosemary Howard, said the relationship with Vodafone did not give it the "seamless" integration with its fixed network that Telecom could offer in competition.

"We don't particularly want a network," she said.

"What we want is the intelligence that sits on top of it and the ability to integrate it with our fixed network."

But Sydney telecoms analyst Paul Budde said talk of building networks was merely TelstraClear's way of putting pressure on Vodafone for a better wholesaling deal.

"This is scaring tactics rather than the end game. They'll use this to negotiate better prices."

"It would be to their advantage to use the Vodafone network, but obviously they haven't come across a lot of co-operation there."

Budde estimated that building a national network would cost between $500 million and $1 billion.

But TelstraClear has no intentions of spending that sort of money.

Like Econet Wireless, a South African company that two years ago said it planned to start a low-cost second generation mobile service in New Zealand, TelstraClear will be able to take advantage of Telecommunications Act provisions that allow it to roam on the networks of rivals and base its equipment on their cell sites.

TelstraClear would have to build a network covering only 10 per cent of the population - a small area of Auckland - to take advantage of the legislation.

The cost of that is much lower - $50 million to $150 million by some estimates.

Vodafone managing director Tim Miles said building a mobile network was very expensive, "and you can see their financial position here and abroad".

Vodafone had already invested $2 billion in its New Zealand business.

Miles said Vodafone did not make a lot of money from TelstraClear.

He said Econet had also consulted equipment vendors, but had yet to begin building a network.

Budde said TelstraClear's prices would have to be 15 to 20 per cent cheaper than Telecom and Vodafone if it were to make any headway.

A TelstraClear move could be a boon for equipment vendors.

The main suppliers of third generation equipment are Nokia, Siemens and Ericsson, all of which operate in New Zealand.

TelstraClear has radio spectrum capable of supporting a third generation service.

It is yet to be seen which technology path the company will take in roaming, but the spectrum is suited to the "wideband cdma" standard.

Spokeswoman Alison Crosbie said Ericsson would be interested in building a mobile network.

Ericsson was a major mobile equipment supplier to Telstra in Australia and was involved in the region's first third generation system with Hutchison.

Siemens was also interested in working with TelstraClear.

But Howard says any mobile move is some way off.

"We're going to be a Vodafone reseller for the next year or 15 months."