Telecom 4G launch in October; chooses Huawei over long-time network partner Alcatel-Lucent

Telecom will launch a 4G mobile service in two-thirds of Auckland in October, and parts of Wellington and Christchurch by Christmas.

Notably, Telecom's long-time mobile network partner Alcatel-Lucent has been displaced by China's Huawei, which will build the 4G network.

Both Alcatel-Lucent and Huawei were involved in Telecom's 4G trial.

Vodafone launched 4G in Auckland in February, with plans to expand to Christchurch by May and Wellington by September. The carrier's standard 4G plans top out at 2GB (meaning that although you could theoretically stream a high def movie to a 4G iPad by cellular, you would blow monthly data cap within two hours). Outside of its ads, Vodafone says it doesn't recommend 4G for such big downloads.

All eyes will be on whether Telecom will charge extra for 4G (Vodafone has a modest $10 a month premium) and, more, whether it will be more generous with its data caps - remembering 4G can be just as fast as many fibre connections (a theoretical top speed of 150Mbit/s is claimed for Telecom trial 4G network), and Telecom's smallest fibre data allowance is 50GB a month.

Pricing and plans won't be released until closer to the October launch.

Today, Telecom Retail Chris Quin has been talking about data-intensive apps such as video, shared education and shared working - activities that would quickly chew through a 2GB cap, or anything in single digits.

2degrees tells NBR it plans a 4G upgrade, but will not real a timetable.

Although Vodafone offers 4G-capable smartphones from Apple, Samsung and others, it is not offering 4G data stick. Telecom trialists have been using 4G data sticks made by Huawei - indicating that should be an option at launch, too.

Telecom's initial 4G service will use 1800MHz spectrum the company. It anticipates picking up a chunk of 700MHz spectrum in the government's auction of spectrum freed up by the digital TV switchover. The auction is due in the third quarter.

Huawei expands NZ footprint - again
Huawei already has a substantial footprint in New Zealand through being 2degrees primary network partner (and through a $100 million credit line, the Chinese company has also emerged as one of 2degrees' main financial backers).

In the landline world, Huawei supplies gear for Vodafone's "Red Network" around unbundled Telecom exchanges.

The company also won a contact to supply and provide management services for Ultrafast Fibre, the winner of the UFB contract in Hamilton, Tauranga and other central North Island areas. Huawei is also supplying some of the fibre kit for Chorus' leg of the Rural Broadband Initiative. It has also landed business with Christchurch UFB winner Enable.

Alcatel-Lucent's relationship with Telecom was strained after the bungled XT launch. An un-named supplier - widely presumed to be Alcatel-Lucent, paid Telecom $41 million in compensation over the two years following the outage, according to Telecom annual reports.

At the same time, pundits say Huawei is offering carriers keen pricing as it seeks to build market share.

Today, Telecom chief technology officer David Havercroft said Huawei was 18 months ahead of competitors in 4G technology.

Asked about security questions raised around Huawei by some governments, Telecom said it the Chinese company's gear would undergo testing and certification. The process would be no more or less rigorous than that applied to any other vendor.

Telecom will address capital expenditure implications at a separate briefing on May 16.

Shares  [NZX:TEL] were up 0.63% to $2.42 in midday trading.

Telecom 36-month NZX performance. Chorus spin-off Nov 2011. S&P Capital IQ. Click to zoom.


RAW DATA: Telecom statement

Telecom 4G LTE to go live in October 2013

Telecom New Zealand announced today that it will have 4G LTE live on a large part of its Smartphone Network in Auckland by October.  The company will then extend 4G LTE coverage to Wellington and Christchurch by Christmas, and expects to have 4G LTE live on close to half of its nationwide Smartphone Network during 2014.

Telecom Retail CEO Chris Quin says that 4G LTE will add to the quality, real-world mobile experience offered by Telecom’s Smartphone Network.

“This is another way we are helping Kiwis get better connected. We are very pleased with the current network’s performance across both voice and data and the feedback from our customers has been very positive. 4G LTE will build on our steady programme of investment – taking our customers’ experience of the Smartphone Network to the next level.”

Telecom has increased the speed, coverage and capacity offered by the Smartphone Network over time.  Its programme of investment has included installing dual carrier HSPA+ on more than half of mobile sites, having fast backhaul to 90% of mobile sites, and - from mid 2013 – rolling out state-of-the-art Optical Transport Network (OTN) technology to the network core or ‘backbone’.

Mr Quin says, “Telecom is also continuously extending our network coverage.  We’re co-locating on all of the Government’s rural broadband initiative (RBI) sites where we don’t already have coverage, and we’ve completed a trial over summer of free public wifi, which involved more than 140 ‘hotspots’ rolled out to holiday destinations across the country. We have had a very positive response, and are looking at how we can make this service available to customers more widely.

“If we are successful in the 700MHz spectrum auction, 4G LTE will also allow us to significantly improve coverage in rural areas.  We intend to install 4G LTE on RBI sites that we build from early 2014.”

Gen-i CEO Tim Miles says, “This investment will build on our existing network capabilities, ensuring we continue to enable New Zealand businesses to find new and better ways of engaging and serving their customers in an increasingly mobile and data-centric environment.

“Together with Gen-i mobility services and the flexibility to deliver applications and services across our Smartphone Network, the rollout of 4G LTE will support our clients in doing business anytime, anywhere in the coverage areas and via a range of devices.”

Exciting future possibilities
Telecom also announced today that it has selected Huawei to build its network of 4G-capable mobile sites – known as the eUTRAN.

Chief Technology Officer David Havercroft says, “Huawei’s selection was based on two main factors. The first is that they have extensive experience, having built 73 LTE networks in 42 countries.  The second is that they are truly pushing the boundaries of LTE technology.

“Over the past 3 months we have been trialling Huawei’s 4G LTE technology in Auckland and Rotorua.  Our testing has encompassed some very exciting new developments like ‘carrier aggregation’.  Carrier aggregation allows us to use two different spectrums simultaneously, and in our trials it produced maximum peak speeds of up to 250Mbps.

“While such technology is some way from launching commercially, it is very exciting to be working with a technology partner who has this level of capability, and a massive commitment to research and development that we can bring to New Zealand.” Mr Havercroft says.

Cisco Systems will build the ePC (enhanced Packet Core), which processes and transports data through the network. Cisco is a global leader in mobile IP and core technology, with best in breed technology, which offers inter-operability between different vendor technologies.

As previously announced, Ericsson will build the new HSS (Home Subscriber Service) and the replacement HLR (Home Location Register) the central ‘brains’ of the network, a database that holds all customer profile information.

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