Vodafone: Telecom gambled on filter-less network to hit May launch date

Vodafone landed some good jabs in its High Court case seeking an injunction against Telecom’s new XT network, claiming interference is about to get five to eight times worse. But ultimately the case could hinge on a smoking (or not-so-smoking) gun letter from the MED, interpretation of a seriously arcane law, and the - still unknown - terms of Telecom’s April filter agreement with NZ Communications. Justice Venning will rule on Vodafone's application at noon tomorrow.

Overall, it was a trying day in Courtroom 12. A technically thorough Justice Geoffery Venning often asked lawyers to repeat points of argument multiple times as both sides stretched to tie elements of their modern-day mobile dispute - already complicated enough in itself - to sections of an Act that pre-dates the cellphone era.

Neither side gained an obvious advantage by the close of the session.

Justice Venning will rule on Vodafone's application at noon tomorrow.

Making the case for Vodafone, Julian Miles, QC said that Telecom had deliberately forgone filters in a “gamble to get its network up and running by the end of May”.

After reiterating Vodafone’s accusation of XT causing dropped calls and other interference, Mr Miles claimed the situation was about to get a whole lot worse.

The QC said Telecom had been testing XT on just 15% to 20% power ahead of its May 13 launch, due to the small number of trial customers and testers on the new 3G W-CDMA network.

But after May 15, as customers come on board en masse and Telecom fires XT up to 100% power, interference will get “five to eight times worse” said Mr Miles.

Telecom's lawyer, Pheroze Jagose, replied it was "unsound to suggest that all hell will break loose after May 13" on the basis that a gradual power up had gone fine since March, but Justice Venning did not seem completely convinced of his argument.

Tip of the iceberg
“This is a nightmare for Vodafone, your honour”, said Mr Miles. Vodafone’s network is being degraded, by Telecom, at the very point its rival is spending millions to lure customers toward XT.

Mr Miles said around 350 Vodafone customers had defected to Telecom as a direct result of dropped calls and other symptoms of network interference, allegedly caused by XT.

“But that could be just the tip of the iceberg” said Mr Miles, given that Vodafone has no way of gauging what causes any given pre-pay customer to stop topping up their account.

Customers get so fed up they leave without letting Vodafone know why, said Mr Miles.

In quantifying evidence of interference, Mr Miles cited evidence from Kordia technician Ian Goodwin, some of which was collected from three cell sites in Wellington only yesterday.

Mr Miles said that Telecom had to have been aware of the filter issue, given that its Australian roaming partner, Telstra, installed filters on its own 3G network.

Black and white ... or not
Mr Miles said that at 10 cell sites where Vodafone experienced interference during March and April ("back when the two companies were cooperating"), it asked Telecom to power down its XT transmitters. Telecom did so, and the interference stopped. When Telecom turned XT back on, the interference came back.

Mr Pheroze said such unwanted emissions were an expected part of network operation, and that it was Vodafone's responsiblity, as much as Telecom's to make sure its network was sufficiently isolated.

He also said that not all Vodafone interference is caused by unwanted emissions. A recent a major outage was caused by "a failure in Vodafone's core systems" said Mr Pheroze. Handset issues can also be to blame.

Filters installed for NZ Comms will work for Vodafone, too
The QC also cited the settlement reached between Telecom and soon-to-launch third mobile operator NZ Communications during April - which Mr Miles says was arrived at after NZ Comms threatened legal action.

The commercial terms of the Telecom-NZ Comms settlement, which involved Telecom agreeing to install filters for NZ Comms, are still confidential, but if revealed will be very telling.

For Vodafone, Telecom’s acquiesce to NZ Comms on filtering is an admission that XT does cause disruptive emissions.

For Telecom, it’s an illustration of a how an interference dispute should be resolved outside the court system.

Presiding over the case, Justice Venning asked if the filters being installed for NZ Comms would also solve the interference being suffered by Vodafone.

Mr Miles said they would, but noted that NZ Comms is only building its own cell towers in Auckland, Wellington and Christchurch. In other centres, NZ Comms customers will roam on Vodafone’s network.

Justice Venning did not ask Telecom’s lawyer about the deadline for Telecom installing filters for NZ Comms. But NZ Comms has previously told NBR that Telecom’s filter installation would be complete by the end of May.

Mr Jagose said that a blanket solution like filters would not be the answer. Rather, interference must be addressesed on a cell site by cell site basis.

Mr Miles said in terms of equipment, it would cost Telecom around $1000 per cell site to install filters. Telecom has around 900 cell towers throughout the country and Vodafone 1069. NZ Comms is in the process of building around 400 (in most countries, mobile operators co-locate transmitters on the same cell tower, but in New Zealand the Resource Management Act keeps masts 10m too short to allow co-location in all but a couple of dozen cases).

MED letter puts Vodafone on the back foot
Without access to the full range of charts and technical reports put forward by Telecom and Vodafone’s legal teams, it’s difficult to assess how Justice Venning is weighing their respective claims.

However, it is notable that one of the first pieces of evidence that Justice Venning raised himself was a Ministry of Economic development letter, dated April 9, in which the ministry confirms that its Radio Spectrum Management division found XT’s emissions in compliance with those permitted under the terms of Telecom’s spectrum license.

Both sides agree that aiming emissions at an operator’s band is tricky, and would be uneconomic and aesthetically unpleasant to achieve - cell towers spaced like parking meters would be needed to achieve such perfect transmission, in the words of  Mr Jagose.

Thus, “unwanted emissions”, or spillage into a neighbouring band used by another telco, is a fact of life for mobile operators, and can be measured quantitatively under Radiocommunications Act (1989) guidelines.

However, Vodafone is alleging that Telecom has gone a step further - deliberately, by not installing filters - and is now causing “harmful emissions”, which are not allowed under the Act.

But here’s the rub: “harmful emissions” are only defined qualitative terms, or the effect they (allegedly) have in everyday life - leaving huge scope for technical debate about the definition of a harmful emission in technical terms, and in everyday customer experience.

Mr Jagose says that under Vodafone's proposed solution - an injunction while an independent engineer checks XT's emissions - would require a technician to make qualitative legal decicions.

Vodafone says it has suffered a 150% increase in customer defections to Telecom since January, which it says are likely caused by harmful interference from XT.

When “harmful emissions” occur, a mobile operator should address them with “special measures” the act says, without detailing what would constitute a special measure.

Telcos must also take “all economically and technically justifiable measures” to reduce unwanted emissions.

Justice Venning suggested to Telecom’s lawyer that this could include filters.

Mr Jagose replied: “It could include filters” but that both the transmitting and the receiving mobile operator had responsibility for reducing interference. H also noted that filters dampen interference (and also the reach of a cell tower) but not eliminate it.

“Vodafone went into this with its eyes wide shut,” said Mr Jagose. As the world’s largest mobile operator, it should have been aware of interference issues, and constructively engaged to solved them.

Mr Miles, speaking earlier for Vodafone, said the Radiocommunications Act’s out-of-court disputes procedures only applied if a party was acting legally, which Telecom wasn’t.

Vodafone alleges that Telecom new that all its XT transmitters would cause interference, but in email exchanges between the two companies’ technicians, would not reveal this knowledge, preferring to speak to each interference issue on a cell tower by cell tower basis.

Telecom’s lawyer reiterated that Vodafone should have been fully aware of possible unwanted emission issues, and had calibrated its network monitoring equipment at such a level that it could not detect interference. He equated this practise, “by an overly comfortable incumbent” as akin to a home owner leaving batteries out of a smoke alarm.

Vodafone to replace duff amplifiers
In an interesting aside, during Mr Miles’ submission it became clear what Telecom chief executive Paul Reynolds meant by his Monday comment that “Vodafone’s problems are of its own making” (see also Mr Pheroze's outage comments above).

Vodafone conceded that new signal amplifiers, fitted atop 24 of its cell towers, were overly sensitive to interference. But Mr Miles said Vodafone was replacing the amplifiers, and was focussing on the larger issue of its remaining 560-odd affected cell sites, about half its total.

Gagged Reynolds makes an appearance
At the beginning of the day, the gallery was near full, with lawyers and PRs for both camps filling a lot of seats; along with a lot of casual dressed onlookers who seemed curious about events; a trio of hardcore geeks who resembled The X-Files Lone Gunmen; and industry personalities including Tuanz Ernie Newman and Telecom chief executive Paul Reynolds.

Dr Reynolds, who on Monday called Vodafone's suit "desperate" was uncharacteristically quiet, and left court before the first morning break. An insider said Justice Venning had warned both sides about making any direct comments to the press while the case was before the court.

Vodafone has stuck religiously to the Justice's edict and, arguably, lost the PR war becuase of it.

One moment of levity in an otherwise dry day came when a cellphone chirped as its owner fired it up to access m.nbr.co.nz.

"At least someone's got reception," quipped Justice Venning.