Vodafone has hit back at Telecom's statement that its new $574 million, 850MHz 3G network will cover the country a year ahead of its rival's.

Both telcos are now committed to WCDMA networks.

While Telecom won't offer any 3G service on its new network until mid-way through next year (with a limited pilot from November), Vodafone external communications manager Paul Brislen says his company's 3G upgrade is available to two -thirds of the population now.

"We're 67% through building out New Zealand's largest and fastest network, offering our customer more speed in more places. All the things Telecom says you’ll be able to do in the future sometime, our customers can do today."

Vodafone has always been on the SIM-card-friendly WCDMA track; Telecom has had to switch technologies after betting – incorrectly, in hindsight – on CDMA, the cellular spec still used by all phones on its domestic network but now abandoned by Telstra and other former CDMA supporters around the world.

Last year Nokia, the world's largest phone maker, said it would no longer develop CDMA models.

Vodafone says it is spending $500 million on its own network upgrade (2100MHz in urban areas, which Vodafone says is better at penetrating buildings, and the longer range 900MHz in rural area) which will cover 97% of the country by April 2010.

Telecom is looking at an extensive rollout by June 2009 but by its own statement says it will be two years until there's full national coverage. For those outside the main centres, it looks like a draw.

Telecom’s new, higher-spec plans involve rolling a new wideband WCDMA network using a frequency of 850MHz and HSPA+ (Evolved High Speed Packet Access).

This will add $391 million to the cost of building a new network to replace its outdated CDMA technology, from earlier estimates based on a different 850GSM technology.

The total project is now set to cost around $574 million.

The extra cost involved brings the benefit of faster internet services on mobile phones.

It will take just 14 seconds to download a song to a mobile phone, for example.

Telecom investors didn’t take the news that positively, marking the shares down 5.4% at the close of trading yesterday.

Mr Brislen says Vodafone is also upgrading its network to HSPA (aka 3.5G or 3G Broadband) which is currently available only in central Auckland but which will be expanded around the country over the next 18 months.

Telecom has countered with support for the newer, faster HSPA+, but Mr Brislen notes that while most high-end cellphones today support HSPA, there are none that support HSPA+. Once such handsets arrive, Vodafone will upgrade to support the revved up spec, Mr Brislen says.

Telecom will partner Alcatel Lucent to build the new network, with Brightstar to buy mobile phone handsets, and with Yahoo for internet features.

Telecom estimates its new plans will lower earnings (EBITDA) by $26 million for the 2009 financial year.

But it has forecast an upturn in average revenue per user as clients take up data and internet extras on their phones.

Telecom will raise money from a discounted dividend reinvestment offer to help pay for the project.

But Mr Reynolds says the company has “very adequate” debt cover in place and has already raised other funding for the project through bond issues through the middle of this year.