Vodafone plots broadband path

Russell Stanners plans to provide an alternative to local free calling. Picture / Martin Sykes

Vodafone is stepping up its assault on Telecom's revenue streams with a plan to offer broadband services by the end of the year - and, ultimately, home phones.

The company said yesterday that it would launch a broadband service over its third-generation or 3G mobile network with a top download speed of 1.9 megabits a second.

Although chief executive Russell Stanners stressed the service would focus on broadband, it would also be used to offer internet-based phone services.

"Down the track, there's opportunities for voice-over [internet protocol], but that's probably not where it is at today," he said.

"But take a place like Auckland, there is no alternative to local free calling. We think we can provide one."

Voice-over internet protocol, or VoIP, is a phone service over the internet.

The company said it had been laboratory testing the service for the past six months, but would not comment on commercial pricing or roll-out plans.

Vodafone also separately plans to introduce a local call service using dual-mode cellphones that act as home phones. The plan is contingent on the Commerce Commission's forcing Telecom to offer fixed-line pricing rather than mobile pricing on the service. Vodafone has applied for a ruling.

The broadband plan is thus being seen as an interim workaround.

"This is part of their fixed-mobile substitution strategy. It's a dominant theme within Vodafone worldwide," said IDC telecommunications analyst Chris Loh. "Vodafone has a massive vested interest in this strategy."

Vodafone, the world's largest mobile provider, is looking to poach traditional revenue from telcos around the globe. Telecom last year posted revenue of $1.3 billion in calling and almost $1 billion in data and internet.

The company did not disclose how many customers it is hoping to gain or the prices it intends to charge.

Vodafone's planned service is slow compared with Telecom's new 3.5 megabit offerings, coming next month. Much faster speeds could also be on the horizon with Telecom and other internet service providers promising upgrades to the DSL network.

But Stanners said 3G speeds were set to rise quickly, with up to 14.4 megabits a second becoming theoretically possible in the next three years. The Vodafone service would also offer the benefit of full mobility.

He said he was on the anti-regulation side of the broadband debate. Telecom's rivals are urging the Government to unbundle its network so that they can control speeds and pricing.

But the only way to get real competition was through building infrastructure - something Vodafone had done, he said. "If we want true broadband, we're not going to get it by regulation alone. We need investment."

Stanners said Vodafone had brought mobile competition to New Zealand and that the company could do the same with broadband.

Loh said it was vital for Vodafone to get its wireless service off the ground before wired broadband - or DSL - really took off. "If you're using a fixed line to get broadband into the home, then that forms an impediment [to get cell-based services in]."

NET GAINS

* Vodafone says it will offer broadband internet access with a download speed up to 1.9 megabits a second over its 3G mobile phone network by the end of the year.

* Access will be easy, with the user simply plugging a mobile phone into the computer. Data cards and routers will also be available.

* The company will then be able to offer calling over the internet, eliminating the need for a home phone line.

* Data usage on 3G phones is still expensive, but the company says costs will drop enough by roll-out to make the service competitive with fixed-line offerings.