Telecom plans $200m digital network by 2001

By Richard Braddell

WELLINGTON - Telecom is to spend up to $200 million on a new digital cellular network that will become its staging point for an expected explosion in demand for the next generation of high speed mobile voice, data and video services.

Intended to go live in the first half of 2001, the network will use the same cdmaOne technology adopted by Telstra in Australia for its new national network.

Because of its high quality voice and data capabilities, cdmaOne is being increasingly deployed in the United States as the successor to AMPS networks similar to that currently operated by Telecom, although European countries are heading towards another CDMA standard.

cdmaOne has also become the choice for new networks in Australia and parts of Asia, in part because of the seamless route it offers to third generation cellular that will deliver data speeds to rival fixed wire.

Declaring yesterday that the CDMA rollout was positioning Telecom for a new era, Telecom's network group general manager, David Bedford, said the rollout was "not for now but for going forward". He said: "Virtually all cellular paths lead to CDMA."

Telecom expects to complete negotiations with equipment suppliers within two months and the likely vendor has been narrowed down to a shortlist of Lucent, Nortel and Motorola. Telecom's purchase arrangements stipulate that the successful bidder will not get paid until quality standards have been met. Then payments will be linked to customer uptake.

While the cost of the new network is estimated at between $160 million to $200 million, the financial impact will be cushioned due to its substitution of existing facilities, with the net impact being somewhere between $70 million and $120 million. Savings will be substantial, with ongoing costs falling from $100 million a year at present to between $20 million and $30 million.

Mr Bedford also said CDMA's superior range would reduce the number of additional cellsites needed to cope with future demand from 80 to 30. While its technical partner in its existing AMPS and D-AMPS networks, Ericsson, will continue to support those networks for a remaining operational life of "many years", it is excluded from the new contract because it does not supply cdmaOne.

Telecom's group general manager services, Teresa Gattung, said that although Telecom's existing networks had large customer bases, CDMA customers should grow quickly given the rate at which handsets were upgraded, particularly by premium business customers who tended to upgrade every two years.

Also, expected rapid growth in cellular traffic would provide the new network with plenty of business anyway. From 23 per cent penetration now, Ms Gattung forecast that cellular use would rise to 50 per cent of the population within 18 months.

Nevertheless, the choice of cdmaOne had been a fine one involving assessment of the benefits of adopting the EDGE technology which forms the upgrade path from GSM, the technology used by Vodafone, to Ericsson's third generation wideband CDMA standard, Mr Bedford said. One advantage of CDMA was that it should enable roaming to Australia, and discussions are taking place with Australian telecommunications company on this.