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T3G Network (Telecom Corporation), New Zealand




Key Data


Telecom Corporation (TC) of New Zealand rolled out a new 3G service in New Zealand (branded as T3G), which it has since expanded to customers in regional cities. The new system required an investment of NZ$40m, which in 3G network terms is very inexpensive. TC already had a CDMA2000 1X system, which was installed under a contract agreed in July 2002 by Lucent Technologies. TC hired Lucent Technologies again in June 2004 to upgrade to the new EV-DO technology by December 2004 (service launched in February 2005).

The upgrade was within TC's NZ$650m capital spending forecast for the year to June 2005, but the company is aggressively pushing forward with its system to obtain superior coverage. In June 2006 TC contracted Lucent to upgrade its T3G network to 1× EV-DO Revision A technology to enable faster lower latency connections for data and a range of new services such as multi-player gaming, laptop-based video conferencing and Voice over Internet Protocol (VoIP). The upgrade is expected to be completed by the first quarter of 2007.

RIVALRY WITH VODAFONE

By the fast installation of the new T3G network TC hoped to steal a march on the company's main rival in New Zealand, Vodafone, who installed a W-CDMA (Wideband Code Division Multiple Access) network costing NZ$400m that was ready in the middle of 2005. Figures from 2006 show that TC has a 46% market share with 1.6 million subscribers, against 1.9 million subscribers for Vodafone.

March 2004 figures show TC as having 1.34 million mobile customers, compared with Vodafone’s 1.61 million, giving Vodafone 54.6% of New Zealand’s mobile phone market. Therefore TC has made slight gains against Vodafone since 2004–2005, but nothing really substantial.

EV-DO NETWORK CONNECTION SPEEDS

TC's new EV-DO rev A service will be faster than the current 027 network. The upgrade of the current Lucent Flexent® CDMA2000 base stations will provide a peak data rate of 3.1Mbps (downlink as compared to 2.4Mbps previously) but also 1.8Mbps in the uplink as compared to 0.15Mbps previously. Connection speeds will obviously still depend to a greater or lesser degree on factors such as cell site size and proximity, and the number of users per site.

The EV-DO rev A system will have the necessary data rate to run a much wider range of services for TC customers. The new service is expected to offer video messaging, download of clips from films, music, sports, news and video conferencing, as well as push-to-talk services and internet/intranet services and even a real time TV service.

XTRA WIRELESS

Xtra is the largest ISP in New Zealand, a subsidiary operation of TC. Internet traffic is transmitted from base stations situated all over New Zealand and picked up at the subscribers computer via a special set of equipment, much like an aerial and modem (which costs around NZ$1,000).

The service seems to be in direct competition to Woosh, a wireless data service operated by the company formerly known as Walker Wireless in partnership with Vodafone. The standard Xtra wireless equipment includes the SIU (Service Interface Unit), coaxial cable, antenna and ethernet cable. The service costs between NZ$100 and NZ$200 per month. This is another indication of TC's aggressive stand in the market, particularly toward Vodafone.

CONTRACTOR

The current network was installed and is managed by Lucent Technologies. It is based on Lucent Flexent® CDMA2000 base stations installed by Lucent's Mobility Solutions Group and managed by Lucent Worldwide Services. Lucent has again been asked to upgrade the network it installed between July 2002 and June 2003 to the newer EV-DO rev A standard.

Lucent will provide project management, network planning, design, installation, integration, testing and optimisation services for the new network. Following the full installation of the network TC hopes to have network coverage for 78% of New Zealanders by 2009. Sprint is providing handsets.

TELECOM CORPORATION PROBLEMS

TC has had several problems during 2005–2006 and has found itself not only at loggerheads with its long-term rival Vodafone but also with the New Zealand government over its relative monopoly over broadband services across the country.

"In a decision by the New Zealand Government in May 2006 TC will be forced to unbundle the local loop."

The general consensus is that because of high charges, TC is hindering the take up of broadband services in New Zealand. In a decision by the New Zealand Government in May 2006 TC will be forced to unbundle the local loop. This will allow competitors (such as TelstraClear and Ihug) to offer broadband and other communications services throughout New Zealand by installing their own equipment in the same exchanges and thus break the data monopoly.

The company has since been hit by a series of other negative news. Firstly, the Commerce Commission announced that it would rule on the issue of mobile phone termination charges; in June 2006 it announced that calls between a landline and a mobile phone within a geographically defined boundary could be connected free of termination charges. This ruling allowed Vodafone to establish a mobile phone product which can also provide free local calling, in direct competition with a product for which TC has long had a monopoly.

Finally, the Commerce Commission granted two of Telecom’s competitors, CallPlus and iHug, access to an unrestricted, Unbundled Bitstream Service, which would allow them to provide competitive broadband services. TC has now announced the voluntary separation of its business into wholesale and retail divisions to help resolve any conflict of interest.