Competition spurs Telecom upgrade

By Richard Braddell

SYDNEY - Telecom is expected to announce within two weeks plans to implement a new digital network that could result in the phase-out of its existing analogue and digital networks.

At a conference on third-generation cellular services in Sydney, speakers said that it would be a relatively simple matter to overlay Telecom's existing analogue network with a new generation of cellular technology.

A consultant with Azimuth Consulting, Harvey Calder, said Telecom needed a new digital network to complete its vision of bringing New Zealand online and because it needed to be able to match services provided on Vodafone's digital GSM network.

According to the conference organiser, Perry LaForge of the California-based CDMA Development Group, the digital AMPS standard currently offered by Telecom had been regarded as doomed to fail when it was developed in 1990, and that had spurred the development of digital CDMA (code diversion multiple access).

Although cdmaOne, the standard likely to be implemented by Telecom, is regarded as second-generation technology, it would have some of the multi-media capabilities expected in the third generation through an add-on technology that would be available later next year, he said.

At first glance, a decision by Telecom to go for second-generation technology would seem surprising given that third-generation technology suited to full motion video over the Internet is expected within the next two or three years.

But conference speakers said there were considerable uncertainties regarding third generation, not least whether there was a market for it and whether it could be done cost effectively.

Meanwhile, analogue AMPS services which embrace the bulk of Telecom's customer base, are coming under capacity pressure in many countries.

Mr Calder said CDMA would help to drive costs down, while potentially filling a hole in Telecom's repertoire by allowing roaming to Australia.

Australian carrier Telstra is to deploy a nationwide CDMA network at the end of the year in compliance with an Australian Government directive to close down its analogue AMPS network.

Rather than opting to extend its GSM network, Telstra decided to take advantage of CDMA, and will run CDMA and GSM side by side, operating CDMA from existing AMPS towers.

Mr Calder said that in spite of New Zealanders' record of being early adopters, growth of the cellular market here had been mediocre. New Zealand penetration of around 20 per cent compares with 32 per cent in Australia.

In part, the market had been sluggish because of BellSouth's reluctance to be in New Zealand but growth was accelerating since Vodafone took over BellSouth.

While Mr Calder anticipated a surge in growth, he said the evidence was that it really only took off when there were three carriers in the market. Whether that would happen as a result of the 2 GHz spectrum auction starting at the end of the month was anyone's guess.