TECHNOLOGY SPECTATOR: Vodafone's 4G comeback

Technology Spectator

Vodafone Australia's beleaguered customers should take some heart from the news that the telco is about to enter the 4G fray next year as its network improvement strategy enters the final phase.

The telco confirmed yesterday that it is on schedule to complete its $1 billion investment and two-year roll out of its new mobile network by the end of this year. While Vodafone was always expected to enter the 4G race, its customers will really welcome the fact that the imminent completion of the network upgrade will see the introduction of higher speed Vodafone 3G (Dual Carrier - High Speed Packet Access ) capabilities later this year. After all, 4G makes great headlines but the real value for Vodafone still lies in the 3G space.

Vodafone intends to start switching customers to the higher speed Vodafone 3G (DC - HSPA ) network, which putatively offers speeds of between 1Mbps and 16Mbps and average download speeds of 8Mbps on compatible devices, in selected metropolitan areas from September 2012. The 4G (LTE) network will start rolling out in selected areas from 2013, although the exact timing of the 4G rollout hasn't been confirmed.

For those fed up with Vodafone's patchy coverage, the enhanced 3G offering means faster and more reliable coverage. For Vodafone, its pledge to deliver better services and the promise of 4G could be just what the mobile operator needs to finally cauterise the wounds of the network disruption in late 2010. The meltdown has cost Vodafone over 550,000 customers and saw chief executive Nigel Dews mercifully replaced by veteran turnaround specialist Bill Morrow, who has evidently hit the ground running.

Vodafone says it has already completed its network rollout in Western Australia, the Northern Territory, South Australia, Tasmania and Canberra, with significant improvements in the performance. Customers in Sydney, Brisbane and Melbourne are yet to feel the full effects of the 3G upgrades, but should do so by the end of this year.

Vodafone's latest announcement was prefaced by a deal with Optus in May, which saw the two operators join forces to enhance coverage, and is a critical plank in rehabilitating Vodafone's fortunes.

The deal will see the telcos build 500 new regional and metropolitan base stations over the next four years and share existing resources to build coverage. As part of the five-year deal, Vodafone will gain access to 400 of Optus' base stations.

Optus will be granted access to around 1000 additional sites around the country (460 Vodafone sites plus the 500 new sites that will be built during the course of the agreement) and will become the exclusive roaming partner for Vodafone customers in selected regional areas.

Vodafone Australia boss Morrow has also highlighted the operator's interest in adding more capacity to its network and plans are underway to install new transmission equipment and upgrade thousands of connections to its base stations to the latest Internet Protocol technology, another sign that the 3G network is still very important to the operator.

The overall message from Morrow is clear, Vodafone Australia isn't just on the mend it's ready to return to the game. By lifting the lid on its 4G plans the operator has at least managed to reassert its presence in the local mobile sector and there is a good chance that Morrow will keep spruiking the 4G message every chance he gets.

The newfound network ambitions, a closer alignment with Optus and the possible deal with Telstra in New Zealand would all indicate that Vodafone Australia's parents – Vodafone Plc and Hutchison Whampoa – aren't interested in cutting ties with their Australian unit anytime soon. Rolling out 4G isn't going to be cheap with another one billion dollars destined to go to the pockets of Ericsson, Huawei, Ericsson or Nokia Siemens.

There is no doubt that Vodafone is still a long away behind Telstra, and even Optus, in the 4G race. The recently announced delay in the spectrum auction will be a gladly welcomed by Morrow and his team. Although, just how much spectrum Vodafone Australia can afford and more importantly, what it can do with it is the real question. Vodafone and Optus have both paid the price for sleeping on the wheel and letting Telstra take a head start in the 4G space, however, given their recent alliance, perhaps a stronger 4G partnership may well be on the cards.