Vodafone beats Spark to roll out a 5G network, which can be used to improve Internet of Things and wireless broadband services.
What will that actually mean?
“It will be ten times faster from a speed perspective and significantly reduced lag and latency,” said Vodafone’s chief executive officer, Jason Paris.
“If you are gaming you'll see a noticeable advantage. If you are downloading or sending files there will be a noticeable advantage.”
Vodafone’s speed tests, using equipment from Nokia which is building Vodafone’s 5G network, show connection speeds of up to 1Gbps (gigabit per second), which is the maximum speed for ultrafast fibre broadband connections.
But if Australia’s recent 5G mobile launches are anything to go by, coverage will initially be patchy and a limited range of handsets and 5G services are likely to make it more of a symbolic step forward than an early game-changer.
More significant is likely to be the business applications that emerge for 5G, such as in the use of Internet of Things (IoT) devices and in the fixed wireless broadband space, where 5G cell towers will increasingly deliver broadband as an alternative to fibre and copper line connections.
The surprise move by Vodafone to confirm its launch of 5G services in December in central Auckland, Wellington, Christchurch and Queenstown comes on day one of the newly re-formed company.
The London-based Vodafone Group sold its New Zealand operation in May to a consortium of investors including listed company Infratil and Canadian investment company Brookfield Asset Management in a deal worth $3.4 billion. Vodafone New Zealand gets to keep using the brand, maintain its roaming relationships and access technology from the Vodafone Group.
“We will be more than 50 per cent of their business as their biggest partner market for roaming, brand, Vodafone TV, our IoT platform and procurement services,” says Paris.
“If India is buying 5G towers, we can just add ours to their procurement.”
So separating from a global giant would seem to come with few disadvantages then. Paris said the certainty over the new ownership allowed Vodafone to kick off its 5G play after a subdued public position on the new technology, compared to rival Spark which has championed it.
Vodafone had some existing 3.5GHz spectrum it inherited from its TelstraClear acquisition in 2012, which means it can roll out 5G, at least in main centres, before the Government completes its radio spectrum auction next March, which will see Vodafone join its competitors in bidding for access to the airwaves to run national 5G services.
Its choice of partner in Finnish equipment maker Nokia also meant Vodafone avoided the Huawei factor, which is dogging rival Spark. An application by Spark to use Huawei equipment in building its 5G network was rejected by the GCSB last December and it is still unclear what role, if any, Huawei can play in the network build.
“We don't have that hesitation some of our competitors have around the Huawei decision,” says Paris.
“We can go full steam ahead with a proven technology partner.”
No 5G premium
With 120 5G base stations expected to be live in December, we may get a taste of that blistering speed, but Paris isn’t convinced it is worth charging customers more for.
“I still don't think at the moment that New Zealand will pay a premium for it,” he says.
“We intend to make 5G available to our existing mobile customers for free. We will decide next year whether new customers joining us will start to pay a premium for 5G from that point.
“If you are with us today you continue to be with us or if you join us over the next few months, you'll get 5G for free for the life of your plan.”
Instead, Vodafone will make money from new services that emerge in the 5G world. Overseas, they so far include gaming and wearable technology in the consumer space and remote surgery and factory automation applications in the commercial world.
Is New Zealand business ready to adopt the Internet of Things services that 5G will increasingly enable?
“There is still an education job to do,” Paris says. “People think IoT is about leading-edge technology, but in some instances, it is just about making old tech smarter.”
He points as an example to IoT.nxt, a South African company that Vodacom has invested in.
“It put simple sensors on automatic timers in schools on lighting and energy,” Paris explains.
“Instead of the automatic timers turning the heating and lighting on at 6am and turning them off at 6pm, it turned them on when the people were there. It halved their energy bill overnight.”
Similar IoT services will emerge here, he says. Vodafone today revealed it had partnered with New Zealand Police, Auckland Rescue Helicopters, BNZ and Waste Management, to begin developing some of them.
That’s where the real value will lie for Vodafone and customers as companies and local authorities start to create smart networks fed by sensors and remote controllers.
The other big game for Vodafone is fixed wireless broadband, which provides home users with internet access via the mobile phone network. Around 10 per cent of Vodafone’s broadband customers use fixed wireless access, says Paris.
“5G more than 4G is a genuine alternative to fibre in some instances. If we look overseas at how we think this might play out, it is not unfeasible for fixed-wireless access to make up around 30 per cent of the connections in the country.”
Paris helped lead the fixed wireless business at Spark, where 15 per cent of broadband customers migrated in the first year of the service’s operation. So Paris is a fixed wireless believer.
“It means fibre is still the majority, but it is a long way from where we are today which is ten per cent. It's a big opportunity.”
Spark and Vodafone are united in their pursuit of converting customers to fixed wireless services as they are not reliant on the ultrafast broadband network, for which both telcos have to pay network operator Chorus wholesale access fees. That makes the economics of delivering fixed wireless much better.
But Paris says the access equipment for 5G fixed wireless is so expensive, it will not debut in December.
“A hopeful date would be March next year, a certain date would be 12 months’ time. We have more than enough capacity in our network today and with what we will create with those towers being upgraded for us to scale 4G fixed wireless access over the next 12 months anyway.”
Along with the 120 5G towers to go live in December, 400 base stations will also be upgraded to 4G, which will give Vodafone scope to run more fixed wireless broadband connections on its existing network.
Being first to deliver 5G – Spark is targeting a launch date of mid-2020 – is important to Vodafone. It was first in the transition from 2G to 3G and then on to 4G services in New Zealand and has had a strong reputation for technical innovation.
Complaints piling up
But thwarted in its efforts to merge with Sky TV and challenged by a newly invigorated Spark and aggressive smaller competitors, the country’s largest mobile player had lost its shine.
Paris plans to address that through a technology revamp and addressing the area that sees most complaints levelled at Vodafone for – poor customer service.
“It is not good enough at the moment and it hasn't been for years,” he admits.
“There's no point having a brilliant network that no one wants to connect to because your service sucks.”
Vodafone would announce “something quite big” in the next few weeks to address customer service, according to Paris.
With 5G’s arrival looming and a new company to bed in, the executive who took the reins just over six months ago at Vodafone has an almighty challenge ahead to deliver on all fronts.