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Gen-i steals Fonterra’s mobile business from Vodafone

Telecom’s ICT division Gen-i announced today that it had signed a three-year mobile services contract with Fonterra.

The move will see the giant dairy co-operative move from Vodafone kit to using Telecom XT cellphones and data cards.

The deal involves 3500 mobile connections, including 600 to 700 data cards.

2000 of the connections are pinched from Vodafone and "net new" to Gen-i, NBR was told; the remaining 1500 are upgrading from Telecom's old CDMA network to XT.

A spokeswoman for Gen-i refused to put a value on the deal, but characterised it as one of New Zealand’s largest mobile contracts, and said Fonterra had been a flagship global customer for Vodafone.

In January, Gen-i displaced Fonterra’s incumbent Telecommunications infrastructure services provider, EDS (recently bought by HP). While not attaching a number to the six-year deal, a Telecom insider indicated the six-year deal was on a par with its massive four-year deal with ACC, signed in May 2008 and worth $125 million, and its May 2007 ANZ/National Bank contract, worth $100 million.

Gen-i's spokeswoman told NBR the mobile contract announced today comes on top of the January contract, which was centred around landline network services.

More by Chris Keall

Comments and questions

Good to see Vodafone getting a kicking - for too long poor service and a perceived cool brand has been accepted by their clients.

If Fonterra thinks that Telecom /Gen-i will offfer a better service they must have rocks in their head. Undoubtedly the deal has been discounted hugely to get the free this that and the next thing ....poor Telecom shareholders ...won't be any money in it for them !

In case it was missed in the article fonterra have more than 1000 connections already with Gen-i and a considerable amount of non mobile business to boot ... i expect the already fully understand the relative service experience

@Anonymous Uh let me get this straight - you think voda offer better service? Just jump on the vodafone forums, ask anyone who's called 777 or look at the number of businesses jumping ship away from voda and the answers pretty damming for voda.

Sounds to me like anonynous works for voda?

Firstly I agree, the customer service from Vodafone via the overseas call centre is complete rubbish and I would move if I could. Unfortunately the Telecom XT network has limited coverage by comparison with Vodafone, and drops calls as it has no fallback to reliable GSM if the 3G coverage is lost. Fonterra will discover this as they go along....

Voda & XT both have 97% population coverage so this comment is flawed. Voda only have the GSM fallback as they don't have a 97% coverage of population with 3G UMTS superior mobile service. You need to do some research dude

I think Gen-i has learnt NOT to over-discount to get business. They effectively declined to renew the CBA business in Australia for exactly that reason. They wanted to get out of an unprofitable client. I *assume* they have learnt that lesson.

Vodafone won 1000s of connections off Telecom just very recently

Gavin fall back to 2G has been resoundingly proven not to work - Look no further than the recent Auckland wide 3G outtage on Vodafones network. Their much vaulted 2G "fallback" had also fallen over.

XT knocks spots off Vodafones coverage in many cases simply because XT uses one network technology and one radio spectrum. Vodafones ad-hoc mix of 2G and 3G causes handover failure between 2G and 3G sessions more often than not and then there's the issue of 900Mhz 3G being mostly in the regions and 2100Mhz 3G being mostly in cities. This creates an ugly situation where some devices bought from voda give 3G in one setting but not the other. I suspect this might have been a big issue for Fonterra

2100Mhz is the default frequency for 3G world wide. The only reason the US went 850MHz was because 2100 was already in use by the military and emergency services. Why Telecom NZ would choose that frequency is clear - to maintain the gap in handset compatibility it had during the 025 v GSM and CDMA EVDO 1xRTT v UMTS era. They are anti-competition and untrustworthy in my opinion.

I have no doubt that XT is better at present in some places with under 200K subscribers on board but that will change because Vodafone are known for their innovation in services and handsets while Telecom is only known for perpetually playing catch-up.

And no Vodafone don't pay me, I pay them.

The 2100MHz band was the first frequency band commercially used for WCDMA. Other frequencies defined in these standards include 1900/900/850MHz.

Telecom used 850MHz as it's primary coverage frequency for the XT network as this was the only low band spectrum it owned. 2100 & 1900 are classed as high spectrum bands, while 850 & 900 are classed as low bands.

One of the principles of physics is that the higher the frequency the smaller the coverage area of a cell site. this is why 2100 is never used for nationwide coverage as the number of cell sites requried compared to 850 or 900Mhz is 3-6 times as many.

This is the reason that carriers around the world use low band frequencies (900 & 850) for coverage while they use high band frequencies (1900 & 2100) in high density areas to augment capacity.

The other aspect is that each country around the world uses the available radio spectrum in different ways. e.g. in the USA 900Mhz is not available for cellular networks as this is being used for military applications. This is why the USA uses 850MHz as it's primary frequency band for CDMA, GSM and WCDMA.

One of the benefits of the XT network using a single technology with two frequency bands (850 + 2100MHz) is that handoff between cell towers is always within the same technology. The same protocols are used which means that hand off is what is called "soft". Soft handoff is where the call is passed to the next cell site BEFORE it is released from the previous cell site. When two technologies are used (i.e GSM + WCDMA) the handoff is called "hard" where the call is released from one cell site before it is established on the next cell site. This is often the cause of many call drops while customers are moving.

Telecom have made no mystery about some of the focus for the XT network was to improve the customer experience for roaming and increase the number of handsets available for customers.

From a capacity perspective the XT network has been dimensioned to handle considerabley more than 200K customers.

We all have our favorite brands and sometimes this clouds our understanding of technology capability.

Yes, Telecom pay me and I am proud to work here.

When we shifted our comms to Vodafone they stuffed every aspect of the transfer. Despite the Vodafone branding they use ihug which is at best a hobby group. They are run as separate entities so the promise of integration was a lie!
Our inter-branchcall quailty sounds like dial-up VOIP, they failed to manage our Exchange server and we were off-line for almost a week. Never again!!!
People want service that works and not a brand that is bland.

I for one would like to see the real declaration of interests here - I suspect that more than one person here has vested interests...

Fonterra has simply made a realistic assessment of the technology propositions on offer and what suits their business. Telecom with its new XT network is now actually able to offer a better product in terms of call quality, coverage and data speeds. Whether it is able to provide a superior level of service, support and pricing remains to be seen. I suspect failure to deliver in this respect has resulted in Vodafone losing the business.

Yes, you are correct that both Vodafone & Telecom XT have 97% coverage to where Nzer's live, work & play.

Vodafone ALSO have 97% 3G Coverage, using the 2100Mhz UMTS frequency in the cities & large towns & 900Mhz UMTS in rural areas, this rollout was completed the day before XT went live, read about it here:

Some well informed comments posted - thanks. Vodafone have lost it with their evil customer service. It is completely hopeless. The worst I have ever had. I am a chilled out bloke, but a simple call to VF had me angry, telling the plonker his service was f**ked and hanging up. Once a good package offer comes up I will be moving 4 cells, home phone and broadband.

after 6 years in voda space I have become very disillusioned with the company
constant billing issues ,crap customer service that pre pay users have to pay a dollar for
much higher rebates applied to a new connection porting across instead of looking after the people that faithfully pay the bills to voda
disgusting !!! Signs of a company just looking after its overseas shareholders