TELECOM CHANGES TACK ON MOBILE

UPDATE: A more in-depth Herald piece looking at the implications of Telecom's shift in mobile strategy and my cHerald comment piece here. The Sunday Star Times business editor Tim Hunter explains the mobile roaming revenue Telecom can expect to tap into when it has a foot in the GSM/UMTS camp.

Juha's scoop gives some interesting details of Telecom's decision to spend $300 - $400 million on a GSM/UMTS network, confirming rumours that Telecom has been looking to extricate itself from CDMA.

I blogged about it in detail my Herald blog early this morning. So far, no official confirmation of the leak from Telecom and its shares are not on a trading halt, which is unusual given a development that is so material to Telecom's business has been revealed. There'll be lots of angles to this story. For instance:
- What will it mean for the newly flush New Zealand Communications which is set to build a GSM network itself? Maybe it's a good thing as it will open up GSM roaming options.
- What about TelstrsClear? Will it exit the 029 arrangement with Vodafone in favour of some wholesale deal with Telecom?
- What about the hybrid network model Juha talks of, where CDMA is kept for high-speed data. How will this work for customers? Will they need dual-mode handsets to talk and use data? Will
EV-DO be restructed to PC data cards?
- What will Telecom do with its Hutchison 3G partnership? How will it leverage H3G services over here?

A few comments via the Herald:

From Keith:
Interesting comments about Telecom going GSM. I have been a Telecom mobile customer since 1989. I take a bit of an exception to your comment about CDMA being a bad choice. I have found call clarity and connections generally to be better with 025/027. In the early days 025/027 was far superior. Admittedly that may have changed in more recent times. Equally, my reading of the mobile data situation was that the Telecom products have offered better speed. Perhaps the only bad part of the decision is that the rest of the world went with a different standard. Had they gone CDMA then Telecom's choice would have looked inspired!

As for a better selection of handsets. So what! It may be important for geeks and fashionistas but the rest of us get by with the Telecom selection (currently I have a Treo 600). I also have a work 021, a very nice and expensive Nokia, which I like. As for the Motorola RAZR phones, my previous experience with Motorola phones and modems including cable modems is that they are hopelessly unreliable. This was confirmed very recently when the boss "upgraded" to a Motorola RAZR which managed to die just prior to his overseas trip. I wouldn't touch Motorola gear, no matter how nice it looks. I've also managed to persuade my kids to avoid it as well.

Telecom didn't really have much choice by the looks of it, but for most of us it comes down to price and service, not technology.

Of course, with number portability maybe none of it matters. Not that the networks are saying much about that. Where is it at?

From Mark:
Interesting story on Telecom NZ move to GSM. I left NZ in April 1996 and went to work in Vietnam, where GSM mobile phone connections outnumber landlines by a considerable amount. I quickly realised (as you do when you work outside NZ) that a good proportion of the rest of the world also used it, and on my first trip back six weeks later gave my 027 phone to my wife and have been a Vodafone customer ever since. Interestingly, at the same time a good friend of mine owned (and still does) a Telecom franchise in New Plymouth and had no qualms telling me that CDMA would take over the world and texting would never take off. I could never convince him at the time that I thought Telecoms was a poor choice and that the rest of the world was moving in a different direction. I now own a triband Smartphone and use it in the US, Europe, the Middle East and SE Asia, roaming all of the time on Vodafone. It even worked in Brazil!

From Olga:
Your article is interesting but to share another aspect with you, as it happens Vodafone are erecting a tower & base outside my house today. This is despite my cries to Auckland City and Vodafone to move over it over the road where there are no houses.

So possibly this explains their hard stance with me.
There are bigger more powerful reasons, e.g. Telecom using the same facilities? Who cares about the safety (traffic concerns as base box obscures road & frequencies of units etc) of people when theres more profit to be made. Maybe the next time we read the glowing reports in the business section of the papers, you can highlight that the real price is being paid by a handful of affected people sacrificed for the sake of profit. What do you think??

TELECOM WILL GO THE BT WAY

Here's my Webwalk column from the Herald about the lack of interest the NZ telco industry and politicians have expressed in Telecom's alternative plan to structurally separate its business division to avoid a more complex and intrusive form of regulation.

The main sticking point with Telecom's competitors is that the telco's proposal falls outside the scope of current legislation and would therefore require a change to legislation, which could take a year or more. If Telecom had proposed a structural separation plan a couple of years ago, we could today be looking at a separate "Netco" organisation opening for business and willing to treat Telecom the same as any other customer in the market.

NATIONAL ON TELECOMS REGULATION

Here's an interview in the Herald I did with National deputy leader Bill English in which he fleshes out National's view on Government investing in broadband infrastructure. He said National was looking at the Australian Labor Party's proposal to spend up to AU$4.7 billion on a national fibre network for the country if it comes to pwoer next year. But he's skeptical of such investments, which makes it unlikely that National would support and Government buy-back of Telecom's network if it was put on the block.
National has a lot of work to do to come up with some credible policies in the area of telecoms and IT, but at least they're finally talking about the issues.

Some additional views from Bill English:

On Government subsidisation of broadband infrastructure

“There’s a growing expectation among the public that they’re going to have access to higher quality broadband. It’s obvious there are parts of the country where that’s uneconomic for investors. It’s not clear the extent of that problem.”

On the Government’s proposal for operational separation of Telecom

“It has to be done in a way that doesn’t stop the evolution of technology.”

“It should be consumer driven, not producer or investor driven.”

“Too much of the talk about broadband is driven by the people who want to sell the technology. It’s still unclear what the average household is willing to pay for broadband. The killer applications are not obvious.”

“We don’t want to see public investment competing with private investment.”

“There’s no lack of fibre in our big cities and no lack of people trying to do it another way, like electricity lines companies who have the expertise to sling fibre through their networks. They’ve got piles of cash.”

“We want to signal to those communities at the end of the network we’re not going to abandon them.”

“It shows the difficulty Government gets into when it tries to make business decisions as opposed to regulatory decisions.”

“That big issue, which has been a big issue for six or seven years, has been cleared off the table. Now the issue is whether enough people have access to this new infrastructure.”

“Telecom is signaling correctly on behalf of its shareholders that it can’t wait around.”

“The Government and its officials may not have the understanding of the dynamics of investment that’s required.”

“We don’t mind the debate about it, as long as it doesn’t drag on.”

“Lobbying has no risk, investing has huge risk.”

“What’s going to matter is whether the regulatory regime gets the balance right between risks and return, in a way that makes investment worthwhile.”

On the Government’s digital strategy:

“I think it’s a bit overblown. The basics are straightforward. How does a Government get the rules right for this market?”

“[The digital strategy is] not a replacement of dealing with those tough issues and the one before the Government now is a pretty tough one.”

On National’s low-key approach to telecoms policy.

“Sounding off about it doesn’t always earn much, particularly when the issues have got so technical. “

“We’re signaling that is has increasingly become another infrastructure issue. That means the Government is going to have to pay attention to who has got it (Telecom’s network).”

On attracting more IT multinationals to base operations here:

“We’re a bit skeptical of bolt-on and buy-in businesses. The track record is that if they can’t get good roots down, they don’t hang around.”

On the local IT industry:

“It’s a tough industry, it’s competitive, it’s risky and New Zealand capital has tended to stay away from it.”

“The problem is access to local capital. They end up sourcing so much of their capital from overseas, it’s a natural progression that their ownership goes overseas.”

“I don’t think [the IT sector] should be looking to the Government to leverage other people’s capital into their business. If you’re perceived as risky, maybe investors are right. Maybe it’s pretty risky.”

“The Government is more inclined to some strategy to fix a problem. We’re a bit more inclined to pay attention to the basics. There’s a lot of capital sitting around in New Zealand.”

“[IT entrepreneurs] would regard the current issue around Telecom as probably the most critical issue.”

On listed IT stocks:

“I don’t think there’s any doubt there’s going to be a lot more IT capital on the market. In ten years it’s going to look almost completely different.

“There’ll be more and more [IT listings] as the market adjusts to the new economy.”

On setting the regulatory framework for telecoms:

We don’t have a role in it, but we hope to after 2008.

THE BEST AND WORST MOBILE PHONES

My Herald on Sunday story looking at where mobile phone technology is going.

A good indication is the Nokia N95 (pictured left), which goes on the market here next month for $1599.

The paper asked me to make a call on what I though were the best and worst phones on the market here at the moment. It was a hard list to assemble. I only considered handsets I've actually had a decent play with and that are sold through the main chains - not through Parallel Imported, for instance.

I balanced things such as price, features and
design to come up with the list. Hardly scientific, but then look at the ho-hum list the Consumer's Institute comes up with when it gets all technical and ignores aesthetics? You'll need a subscription to browse their best-of list.

My list:

THE BEST

Nokia 6275 (Telecom)

A fairly plain looking Nokia, but about as good as they come for Telecom customers – the Consumers Institute agrees, it’s their top pick in CDMA handsets. The 6275 packs the features in – mp3 player, FM radio, two megapixel camera, which actually takes decent photos, an expansion slot for loading up with music. There’s no mobile broadband and it’s a tad on the expensive side but Nokias are built to last. It’s also got a cool GPS feature that lets you measure your location and find out what direction you are going in.

Price: $699

Motorola RAZR V3 (Vodafone)

An absolute classic. It’s the iPod of the mobile phone world, changed Motorola’s fortunes and launched a line of phones with similarly bizarre names. It’s all in the looks with the RAZR, which is a little anaemic when it comes to features. The camera isn’t up to much, but it handles calling and texting well. A nice metallic keyboard and large, bright screen are revealed when the slim-line clamshell is opened up.

Price: $299

Samsung W531 (Telecom)

Samsung’s dual-mode phone wins instant credit for incorporating at such a reasonable price, chips that allow access to both GSM and CDMA networks. The W531 is the phone Telecom customers who are traveling abroad can use for roaming in countries where there is no CDMA network. The handset is also of compact, lightweight design and has good battery life and calling quality.

Price: $299

Vodafone 1210 (Vodafone)

The cheapest smartphone to support the Windows Mobile platform, the 1210 is ideal for those who want to sync their Outlook address book and view Microsoft Office documents on their phone. A fairly conservative design masks the rich functionality of this candy bar smartphone which is ideal for email and has expandable memory and Windows Media Player built in, so it can be used as a music phone too.

Price: $599

Nokia N73

The N73, as nice as it is, would be far too expensive where it not for the fact that a 1GB miniSD card is currently being bundled with it. Don’t buy a N73 unnless you get the memory card thrown in as well. The addition 1GB card makes the N73 a suitable music phone and gives you enough capacity to make good use of the surprisingly good 3.2 megapixel camera built into it.

Price: $999

THE WORST

Motorola V3XX (Vodafone)

It packs more punch than its predecessor, the V3, but not enough to justify its massive price premium. The V3XX is basically aimed at the same target market – people who want a good-looking phone for calling and texting. In that respect, the high-speed data access is of marginal value.

Price: $799
Sharp GX29 (Vodafone)

Ugly, ugly, ugly. It resembles the first generation of 3G phones we saw two years ago – too big, too chunky and it doesn’t even offer 3G services. The camera isn’t up to much and there’s virtually no onboard memory to store photos anyway. Even at its low-end price there are much better models on the market.

Price: $299

LG KU800 (Vodafone)

A good phone spoiled by its touch-sensitive menu keys which cause no end of frustrated fiddling around. The KU800 is the updated version of the LG Chocolate, which was hugely successful in the US. The sliding action of the phone is nice and there are some good features built in – a two megapixel camera and second camera for video calls, memory expansion slot and high-speed data. Pity about the touchy controls.

Price: $799

SANYO PINKILICIOUS (Telecom)

It may be popular with teenage girls but with the horrible grill on the front and that pink protruding aerial, the Pinkilicous is a design disaster. The external display is monochrome giving it a distinctly retro feel and meaning picture caller ID is out. It’s worth stumping up the extra $100 for the Sanyo Diva clamshell which is better featured and wins points for its styling.

Price: $249

Nokia 6165 (Telecom)

A strange fixture in the Nokia line-up, the 6165 is a mid-range phone that tries to do many things, but does nothing very well. The one megapixel camera is a write-off. There’s Bluetooth and infra-red connectivity but not supporting high-speed data, it’s not ideal for use as an external modem. Its design is symptomatic of the CDMA phones that carry the Nokia brand – uninspired.

Price: $399

FEEDBACK:

From Ross

Hi Peter, I really enjoy reading your stuff, and I also enjoy your blog as well. I just got a new N95 here in Australia (for AU$1200). I have only had it for a couple days, but it that time I have been unable to connect it to any wifi networks, after a long support call with Nokia they blamed my home and work networks for not accepting the device. They are going to get a tech to call me back. But after googling the problem I see many other N-series users have similar problems connecting to wifi networks- one of the best features of the phone.

ON THE PHONE, AT 20,000 FEET?

A link to my Herald on Sunday column about the move by certain airlines and companies like AeroMobile to allow passengers to use their standard GSM phones to make calls in aeroplanes. I can just imagine that when the Airbus A380 finally lumbers down the runways of the world's airfields.

I can just imagine the polyphonic clatter of chiming Nokias as 300 people turn on their phones after reaching cruising altitude over Europe, and start texting away at 50 pence a throw. No doubt people will do it, such is our all-consuming need to keep in touch these days. They're less likely to actually make calls from the air, that will be expensive and more popular with pin-striped executives who don't worry about trivial things like mobile phone bills.

Anyway, the yanks have vetoed such a plan with the FCC keeping its ban on mobile phone use on planes. I saw the pico cell technology at the 3GSM expo in Barcelona and its rather impressive. The mobile companies have made good use of pico cells to fill out coverage in confined areas that have high demand for access. They may for example put a pico cell outside the entrance of an airport terminal so when everyone walks off the plane and turns on their phones, they get their text messages and can make calls instantly - no over-loading of the network.

The mobile companies are also now adept at providing coverage to hard to reach places like under-sea tunnels and London Underground is starting a trial of mobile coverage in the tube tunnels. I recently drove through Hong Kong's cross-harbour tunnel and mobile phone coverage was strong the length of it, thanks to PCCW and others using directional antennae to beam coverage down the length of the tunnel.

Pretty soon there will be few places we'll be without coverage. Those two boys who lost their way on Mt. Peel in south Canterbury will be thankful that Telecom's mobile coverage was reasonable enough to allow them to get some text messages out to let family know where they were. There's something reassuring in the knowledge that you're always a text message away from someone... especially when you're lost and night is setting in.

NO O-JOY, UNFORTUNATELY

A link to my Herald review of Telecom's Ojo video telephony set-up. The verdict: good technology, but too expensive and too limiting in scope because every person you call has to have shelled out $749 for the unit and US$15 a month for a subscription.

Still, when I was in the US, I met one of the vice presidents of Ojo at the CES show in Las Vegas and he showed me some of the new Ojo models, which haven't been released here because they don't comply with our wireless telephony standards, or something. They look quite neat and are a lot more practical than the Ojo model on the market here. Hopefully they'll make it to NZ, though I'm told Telecom has a warehouse full of the existing Ojos, because it simply can't sell them...

TECH FUNDING, THE $100 MILLION BET

My Herald story today about a clever little company called Optima, which made good use of a $500,000 Foundation of Research Science and Technology grant and its place in the Icehouse incubator to achieve exporting success.

Also, in the Dominion Post, news that Econet has officially signed its $100 million plus deal with Huawei for construction of a mobile network, within "18 months according to the Hautaki Trust. I knew the deal was in place when I went to China, but they seem to have chosen the visit of the Chinese deputy premiere to officially announce it.

That's good news for Econet, which strangely, has renamed itself New Zealand Comunnications, but where's the business case for its entry, in reality? We've got two major players already in the market, 96 per cent mobile phone penetration and Econet with a stated strategy of competing for low end customers on price. I don't see it working out, unless it can find some way of using its 3G spectrum to deliver services that diffierentiate it from Vodafone and Telecom. I'll be very interested to see what its angle is on launch...

TELECOM'S TECHNICAL DILEMMA

Good scoop by Juha at Geekzone, who came into possession of a document advising Telecom's board to look at investing in a hybrid CDMA-UMTS mobile network to solve their problem of being stuck at the end of the world without a CDMA partner in sight.

The story broke in CommsDay in Australia just as Telecom was holding a management briefing, so the timing was perfect. As it has been pointed out to me by Telecom's PR people, the company is considering all sorts of options for its future mobile network strategy. But the reality is that it will move to GSM/UMTS. The question now is whether it ditches CDMA altogether or take this hybrid path which will be more expensive but mean it gets to maintain its existing user base and all the CDMA telemtry equipment out in the market - parking meters, coke machines, that sort of thing.

As I wrote in an earlier Herald column posted below, the Worldmode phone concept isn't the answer to the CDMA roaming problem. With Telecom giving people the choice of a GSM network at home, it means those who do travel regularly can choose from a more extensive range of handsets and have seamless roaming overseas.

The question really is whether Telecom will consider a shared build of any such network. Would it team up with, say, an Econet or TelstraClear to build a GSM/UMTS network, cutting its costs dramatically in the process?

PORTAL WARS AND CABLING THE COUNTRY

The big Telecom Microsoft online split has now happened and users going to Xtramsn.co.nz will be asked to choose whether to go to Yahooxtra.co.nz or Msn.co.nz (you'll see the screengrab to the left when you go there).

Neither look terribly inspiring, but YahooXtra looks much better than MSN which has the look of a fairly anaemic news site. I still use Netvibes as my start page and it gives me everything I need. I think I probably visited XtraMSN half a dozen times last year. There are so many better overseas services allowing you to build your own portal that these mega-merger portals have an uphill battle unless they provide some really compelling content.

My Herald story on the launch of the two new portals.

Also, a news story and my Webwalk column in the Herald today about Rod Drury's interesting idea that the Government invest in a fibre optic cable network throughout the country. The discussion paper he's written here is very high level and designed simply to spark debate. It contains some good ideas that deserve to be considered. You can download the paper from here.

THE CASE FOR TELECOM KEEPING CDMA

Last week I suggested in my Herald column that Telecom would have to bite the bullet and change its network to the GSM/HSDPA flavour to cope with Telstra's decision to shut down CDMA and the continuing lack of a decent range of handsets for the CDMA operators.

I had a lot of feedback from people who agreed, but also a few arguing the case for CDMA. None argued as convincingly as Maurice Winn. I've posted the email he sent me in response to the column and have added some follow up thoughts of my own...

FEEDBACK:

Peter, thanks for your articles which I usually enjoy reading. This one looked to me like a hook, line and sinker swallowing of the GSM Guild's line that the world is abandoning CDMA2000 in favour of the W-CDMA realm.

I have been a follower of things CDMA since 1991, and a shareholder in QUALCOMM since 1994.

In February 1996 I arranged a meeting with QUALCOMM, in Wellington, with a view to getting Telecom to adopt CDMA. Telecom listened for a day, but continued with their TDMA plans. In about 1998/99 I spoke to Theresa Gattung [phone call] when I saw that they were about to spend $700 million on a TDMA expansion, which seemed to me crazy. She didn't seem to be fully aware of CDMA developments and we had a

conversation for about half an hour on the merits of CDMA vs other options.

Telecom changed their minds on TDMA and introduced CDMA2000 a couple of years later.

At that time, W-CDMA was not available and Telecom did not have a GSM infrastructure foundation. It would have been a big shift to GSM and a subsequent wait for 4 or 5 years for W-CDMA to develop. Vodafone was already well-established, so Telecom would have been coming from behind in a big way, with no advantages, and not part of the huge Vodafone group with huge purchasing power.

With CDMA2000, Telecom had an upgrade path to 1xEV-DO and subsequent

improvements ahead of Vodafone. They didn't use their advantage due to duopoly pricing and typical telecom company ideas on charging a few people a lot of money for little usage, rather than charging a lot of people a little money for a lot of usage.

As you know, Telecom is a dyed in the wool high price merchant, so they let their advantage slip. They still have advantage in that Vodafone's cost of coverage for 2GHz W-CDMA is huge compared with Telecom's 800MHz CDMA2000 coverage. Vodafone could be ruined by Telecom if Telecom would slash and burn prices and put the network technologies to the test.

Vodafone is the one that needs to change their network plans from 2GHz to 900MHz. Telecom bought 2GHz spectrum for 3G, but they won't be using it. It's redundant. 800MHz is just fine and Telecom has capacity in 800MHz. Radio propagation at 800MHz is much greater for a given signal than at 2GHz, so far fewer base stations are needed to provide the same coverage.

Vodafone's 3G coverage is pathetic. Telecom can roll out in 800MHz far cheaper than can Vodafone at 2GHz.

You focused mainly on handset technology. You are quite right that economies of scale are vital in handset production and costs. But once up to a large enough number of devices, higher volume doesn't make much difference. CDMA2000 is now at huge volumes too. And what matters is not total worldwide sales of CDMA2000 vs W-CDMA but individual market share for phone makers. A company could specialize in CDMA2000 and have excellent economies of scale compared with Nokia, which has little market share in CDMA2000 and is one of many in W-CDMA.

Royalties are often mentioned as being a major problem in CDMA [of either variety]. But CDMA2000 royalties are 4% [overall though some are 7% such as Huawei export, and some are lower], and W-CDMA royalties are about 12% because many contributors squabble over them and want a piece of the action.

So, CDMA2000 inherently has lower costs for handsets. Many commentators claim [wrongly in my opinion] that QUALCOMM's royalty is a hindrance to adoption of CDMA in either version. Over a 2 year total ownership cost, $8 [4% on a US$200 wholesale price] is trivial for a subscriber who will spend something like $1500 including minutes and data. Even 12% = $24 isn't a big deal compared with $1500.

CDMA2000 technology is ahead of W-CDMA too, so speeds are much better and getting faster, faster. W-CDMA/HSDPA is catching up, slowly.

If you have a look at CDMA2000 devices which are now available, there are swarms of them. The CDMA Development Group shows a lot of them. Here's just one:

http://www.cdg.org/technology/product_pavilion/subscriber_device_dtl.asp?deviceid=1487

Economies of scale are now applicable to EV-DO devices as much as W-CDMA devices and GPRS devices.

Roaming overseas with W-CDMA is more problematic than with GSM. For a start, coverage is poor. And it isn't simply a matter as popping in a SIM and connecting to another network. W-CDMA is a can of worms. Handsets and networks have to match in greater detail than with GSM, in which getting the frequency right was all that mattered and multi-band handsets resolved that.

Telstra had a bunch of technologies and has decided to ditch them and go with W-CDMA, which might or might not be a good strategy. It is not a slam dunk. Nor a no brainer. It would not be a good idea for Telecom to copy Telstra and Vodafone.

I am not a Telecom fan and have ditched them in frustration for all but twisted pair over which we have a home phone and over which Slingshot provides us ADSL. I do have a Telecom cellphone. Our daughter was in tears of frustration on the phone telling Telecom to cancel their phone line and internet service, being passed from person

to person [5 on the last call]. Telecom annoys me a LOT and has been remarkably hopeless in competing with Vodafone/Bellsouth. But at least they have got a good system and technological trajectory to the future with their CDMA2000 network in 800MHz.

It would be a big blunder for Telecom to switch to W-CDMA. Selling multimode, multiband handsets enabling customers to do what they like on any network would be a better strategy. The best strategy for Telecom would be to conduct a price war against Vodafone while Vodafone is limited on coverage in 3G, and lacking speed. I don't

mean tinkering with a cent or two a minute, I mean so cheap that the network is fully loaded.

There are other issues, such as the case against Nokia by QUALCOMM for illegally using QUALCOMM technology in upgrading GSM to GPRS and EDGE. If Nokia is stopped from doing that, you might find that a lot of the GSM advantage is based on theft rather than good technology. QUALCOMM did NOT license their technology for GSM/GPRS/EDGE technology when the device doesn't included CDMA/W-CDMA.

For over a decade, the GSM Guild has lied about W-CDMA development. They continue to do so. They used to claim that QUALCOMM had no techology in W-CDMA, but L M Ericsson caved in 1999 and the GSM Guild accepted that, after all, maybe QUALCOMM does have some rights in W-CDMA.

Now they are whining about royalties although QUALCOMM charges only 5% [approximately] for a supersonic amazing magical technology which was alleged by a Stanford physics professor to breach the laws of physics and therefore wouldn't work, but which not only works, but delivers 20 times as many bits per second per bandwidth as GSM at a fraction of the price, bundled with BREW, gpsOne and other software which also does amazing things. GSM charges 16% for an obsolete voice-only technology [without QUALCOMM's technology enabling upgrade to GPRS/EDGE]. W-CDMA charges 12%.

Previous mistakes are history. What matters is where to from here. I think Telecom would make a much bigger blunder than their AAPT purchase by ditching CDMA2000 in favour of W-CDMA. It's no skin off my nose either way [other than more economic destruction in NZ which is not a good thing]. Telecom was hopeless to let Vodafone turn

Bellsouth's failed GSM into a huge success.

I'd like to see a mobile cyberphone data and minutes price war. Telecom would win it. A move to W-CDMA by Telecom would cost them a fortune to no good effect.

Some operators are moving from CDMA2000 to W-CDMA [such as Telstra], but others are moving from the GSM realm to CDMA2000 EV-DO.

KDDI's CDMA2000 in Japan, aka "Au", is defeating DoCoMo's FOMA service easily despite DoCoMo's huge advantage in the 1990s. Vodafone's W-CDMA in Japan was a total failure. W-CDMA and GSM completely beat CDMA2000 in Europe because CDMA2000 was politically excluded.

I have been trying for years to offer some competition to Telecom/Vodafone and offered to buy some 890MHz spectrum in Y2K from the government to start a city-only low-priced CDMA2000 service [the government sold it cheaply to Vodafone - by the time the auction was conducted, I wasn't in a position to bid as much as I had previously offered]. I'm still working on various ideas. I had tried to get Globalstar here too, but Globalstar wouldn't agree to my plans [in 1999]. I was a director of Globalstar Australia for 4 years until last December and Telecom now has the the service available through the Dubbo gateway. I have also invested in http://www.RoamAD.com for wi-fi which has got several networks operating and hopefully 2007 will be a big year.

There is a LOT of fun to be had in the cyberphone world. There are some thoughts for you.

Thanks again for your efforts, keep up the good work.

MY RESPONSE:
Thanks to Maurice for his well thought-out case for CDMA. I would add...

- While it could be argued that Telecom staying with CDMA gives it a point of difference from its arch rival Vodafone, we need only look across the Tasman to see that this point of difference was not enough to keep Telstra in the CDMA camp. It is faced with three major GSM/3G network operators - Optus, Vodafone and Hutchison 3G. Telstra itself has GSM and CDMA networks. It has decided to shut down its CDMA network and follow the same technology path as its rivals. The business case is more daunting for Telecom as it has no GSM network, but it has sites reserved for a switch in technology, which wouldn't be as expensive as you'd expect.

- The roaming issue is going to get worse not better with Telstra's CDMA closure. Going to Australia will be a frustrating experience for Telecom customers and Vodafone will be pushing hard to exploit Telecom's weakness by offering competitive trans-Tasman roaming deals. Anyone who travels, even infrequently, is better off signing up with Vodafone. Also, despite the CDMA operators being less numerous than their GSM rivals, they haven't been able to band together to ensure good data roaming in all CDMA countries. Telecom data roaming in Australia is very good, but outside of Australia it's virtually non-existant.

- Handsets shouldn't be underestimated as a major selling point, particularly in the consumer market. What 3GSM showed was that, more than ever, handset design is leading the developments in the mobile market. The iPhone has generated a new wave of interest in this area and the iPod is an example of hardware that has driven the growth of an industry - in its case, digital music downloads. The CDMA world misses out on the best handsets made in the world because the manufacturers can't make them economically to a subset of customers. I don't see most CDMA phones becoming worldmode phones, so those who need to roam will be forced to buy an ever smaller subset of handsets. It just doesn't make sense for the consumer.

Telecom is in an even worse bind. It's CDMA handset orders are so puny relative to other operators, that it can't afford to buy the handsets that Vodafone offer - ie: Motorola RAZR line, the Blackberry, the high-end LG models. The situation is not going to improve markedly.

- Most of the most progressive content deals are being struck by GSM operators who have the leverage to negotiate better deals because of their size. Better handsets and better services equal a better choice for the consumers. CDMA operators have to compete on price and the quality of the EV-DO mobile data technology. However, advances in HSPA technology and th emigration to LTE will reduce the CDMA carriers' advantage in mobile data.

- Qualcomm has a major stake in 3G technologies and the evolution of HSPA so is more than hedging its bets. It believes the GSM migration will be integral to its business in the longterm.

GOING WORLDMODE, YAHOO!XTRA AND TELSTRACLEAR

Here's a link to a column of mine in yesterday's Herald outlining my experiences with Telecom's new Samsung Worldmode phone which has both CDMA and GSM chips, enabling Telecom users to roam to Europe using one 027 phone. Before, they had to borrow a GSM phone from Telecom. The Samsung w531 ($299) does away with the need to do that.

One point I forgot to mention is that the Worldmode phone won't accept Vodafone SIM cards in New Zealand, so you can't have one phone with accounts for both Vodafone and Telecom, taking advantage of the best deals from the operators. What a great situation that would be. The Chinese have recently shipped a phone that allows two SIM cards to be installed in one GSM phone so you can effectively use two different acocunts on one phone - maybe one operator for voice (which ever one gives the most bundled minutes) and another for mobile data.

My colleague Simon Hendery has written about the woeful state of play at TelstraClear. Have you read that Allan Freeth memo yet? If not, I've published it here on the blog, look under the December postings.

Also, a piece about the impending arrival of Yahoo!Xtra. If Yahoo!7 plan to do as much in New Zealand as they do in Australia, Telecom's new portal may prove to be the entertainment portal XtraMSN never became. XtraMSN's problem is that it's always been too much of a product pitch for Telecom - most of the eye-catching links are to Telecom's broadband packages rather than decent entertainment features. Let's hope Telecom and Seven pull finger and deliver something that will stand up well against the plethora of web 2.0 services available for free.

Finally, Mauricio over at Geekzone reports that Telecom's CDMA Rev-A datacard now works with Windows Vista. I wasn't able to use a test card loaned to be over the Christmas period because no driver had been made available for Vista. Good to see they finally got with the program on that!

TELECOM'S NEW YEAR PRESENT

Surprise, surprise... Telecom has once again greeted the New Year with price increases, this time a $1.85 line rental increase for many people. The cost of calling 018 from a mobile will be bumped up to 75c per call.

Telecom has for years raised its prices early in the New Year in line with CPI increases. Normally the announcement drops much earlier in the year, in the hope that news of the increased charges will be lost in the mix of stories about the summer road toll and New Year rowdiness at Whagamata etc.

What it says to me is that 2007 is a good year to start looking seriously at VoIP. Use Skype to call long distance - get all your friends around the country and overseas onto it - you'll all save money and it's easy enough for my mum to operate so the bar is set very low (no offence mum).

When I was in the US, I looked at the premium-based VoIP service, Vonage. It's very good in that it takes any of the complexity out of making VoIP calls and is competitively priced. We have our own less-mature services from the likes of WorldXChange and Slingshot. They're worth checking out if you have your broadband business with those providers or are looking to change operator. I'm going to make it my priority this year to try and inform readers how best to unplug from Telecom completely. I hope some new and improved offerings from Telecom's competitors makes my job easier.

As for the extortionate 75c charge for calling Telecom on your mobile, I haven't done the figures, but I'd say it's almost cheaper now to connect to www.whotepages.co.nz on the web browser of your phone and searching the listings than it is to call directory.