Vodafone goes HSPA+ before 4G launch

Vodafone Hutchison Australia (VHA) will focus on achieving "4G-like" speeds using HSPA+ before commencing any long-term evolution (LTE) services like its rivals, CEO Nigel Dews has said.

Hutchison Telecommunications Australia, 50 per cent stakeholder in VHA, on Friday reported a loss of $167.7 million for 2011, meaning that in total the company had a net loss of $335.4 million, compared to a net profit of $146.8 million in the previous 12 months.

In what was a challenging year following the company's infamous network issues, Vodafone lost over half a million customers in 2011. In the first half, Vodafone reported a loss of 375,000 and in the second half of the year, the telco shed another 200,000, bringing its total customer base to 7.2 million. The vast majority of these losses came from Vodafone prepaid, as it managed to add 16,000 new post-paid mobile customers to its base in the last half. CEO Nigel Dews said this was largely driven by iPhone uptake.

Vodafone is two-thirds through an upgrade to its network, replacing legacy Ericsson 2G and 3G radio equipment with radio access network (RAN) equipment provided by Chinese vendor Huawei. While this equipment will allow Vodafone to switch on long-term evolution (LTE) services whenever it wants, Dews told journalists on Friday that the company would focus on providing "4G-like" speeds using HSPA+.

"For us, it's very much about being LTE-ready. And our single RAN solution enables us to be very LTE-ready. And also to get the average speeds on our network up to 4G-like speeds. And that's through a series of upgrades that get us up through 21 megabits per second to 42 megabits per second using HSPA+, which, you know, in some countries ... in most countries these days is called 4G and then from there moving to LTE."

While, most notably, T Mobile in the United States markets its HSPA+ as being 4G, in Australia, the first HSPA+ network was Telstra's Next G. Optus has also embarked on a network upgrade that includes HSPA+, but Optus is not claiming this is a 4G network, instead Optus has called its LTE network "4G".

Dews said Vodafone was "less inclined to do the aggressive talking about LTE" than its competitors.

So far, more than 1000 sites are live on Vodafone's 850MHz network, with 1500 expected to go live by the third quarter of 2012. More than 4000 sites have been upgraded with the new Huawei gear. This pushed up VHA's capital expenditure for the year by 24 per cent to $373.8 million.

The company had secured a $1.7 billion loan to fund spectrum licence renewals this year, and to prepare the telco for digital dividend auctions at the end of 2011. Dews would not reveal how much he expected to pay to secure spectrum in the digital dividend, but didn't guarantee that Vodafone would end up buying any spectrum.

"We've got good spectrum holdings, we actually have very good low band spectrum with our 850 spectrum and we have very good high band spectrum holdings in the 21 and 1800 spectrum bands, which are plenty for us to get started and get very serious about LTE and about HSPA+. We will seriously go into our preparation for the digital dividend auctions and look expectantly at that process, but there's a price for everything and you don't buy anything at the wrong price."

Vodafone has 12 trial National Broadband Network (NBN) customers in Armidale, and several in Kiama. Dews said that the company plans to next offer services in Brunswick in Victoria. As a new entrant to the fixed broadband market, Vodafone had been trialling femtocells on the NBN to improve home mobile coverage, as well as FetchTV.

The integration of the 3 brand into Vodafone was 90 per cent complete, Dews said, with the company still working to consolidate the radio access network, core network and transmission. Although Vodafone had appointed a single vendor for IT managed services, IT systems and datacentres still had yet to be consolidated.

In terms of ending the 3 brand with customers, Dews said that in order to limit churn from the 3 brand, Vodafone had not attempted to migrate 3 customers over to Vodafone until their contracts were close to ending. Despite this, Dews admitted that churn from 3 to other brands other than Vodafone was higher, but did not disclose actual percentages. Churn for the entire company is at 2 per cent.

On the Optus TV Now dispute over mobile broadcast rights for sporting codes, Dews said that although Vodafone does have exclusive rights for cricket with Channel Nine, the company has opened up this coverage to any network for iPhone users to watch. He said that uptake had been huge and that this "vindicates" the company's belief that there should not be any exclusive sports broadcast rights.

"We've actually consistently said ... a world effectively without exclusive sports rights is one that is better for the growth of mobile devices and TV-like applications on mobile."