Telecom is set to hand its technology partner Alcatel Lucent a contract worth in the region of $300 - $400 million to build a GSM mobile network in New Zealand.
That's the news we've been expecting for years and it comes courtesy of the Techsploder, Juha Saarinen. You can read the full details on Juha's blog, but the deal effectively puts a nail in the coffin of the CDMA (code division multiple access) technology, which Telecom's mobile network is currently based on.
Alcatel Lucent will construct a GSM (global system for mobile communication) network to deliver voice services to its customers while keeping its current CDMA network alive for high-speed data services and also for voice calling while it switches customers across to the new technology. Vodafone currently uses GSM technology for its 021 network.
For consumers, this change is a good thing.
A greater variety of mobile handsets are supported in the GSM world, so Telecom customers will in future enjoy a similar range of handsets to that of Vodafone customers.
Finally, Telecom users might get the Blackberry, the Motorola RAZRs, high-end Nokias, everything they've been denied in the past.It also means that Telecom's international roaming options will improve.
Telstra is also preparing to shut down its CDMA network in Australia where most Kiwis roam. With GSM on both sides of the Tasman, Telecom customers will still be able to use voice and services over there, once they get themselves a GSM phone. You'll be able to roam to Europe without having to borrow a GSM phone from Telecom.
The change-over will take a couple of years at least, but the future path has been set. In doing so, Telecom acknowledges that yet another of its investment decisions has been misguided.


It took a punt on CDMA mobile technology, which does a perfectly good job, but doesn't enjoy the same penetration around the world of GSM and therefore has struggled to gain traction.
Telecom's move sheds light on a couple of things.
It explains the appearance here last month of Alcatel Lucent's Asia Pacific boss Frederic Rose, whom I caught up with a month or so ago in Wellington. He was obviously here to seal the deal.It also explains TelstraClear's ditching of its $50 million plan to build a mobile network in Tauranga.
While the second-ranked telco blamed its decision to dismantle its "Unplugged" network on the last-minute collapse of a network roaming deal with Vodafone, it likely got wind of Telecom's plan and decided it would be futile to compete with two GSM heavyweights, Vodafone and Telecom.
On the flipside, maybe TelstraClear and the other players in the market now have a new player to negotiate a network sharing deal with.
The contract is good news for Alcatel Lucent which, while beating Ericsson and Chinese vendor ZTE to the deal, always had the strongest hope of success, given its extensive existing business with Telecom.
Telecom is now likely to leverage its ownership stake in Australian 3G operator Hutchison to buy GSM handsets, in the same way it partnered with US operator Sprint to buy CDMA handsets. Telecom will likely use the 850MHz mobile radio spectrum that was freed up with the decommissioning of its 025 network to run the new GSM voice service.
It's a big investment landing in the lap of Telecom's new CEO, but one the telco needed to bite the bullet and make a call on. That Telecom needed to change tack in mobile became painfully obvious to me when I attended the 3GSM conference in Barcelona earlier this year.
Technology change can be painful, but this one will give customers more choice in handsets, roaming options and mobile services.
What do you think of this change? Looking forward to the options available in the GSM world, you Telecom customers? Or has 027 treated you well?

By Peter Griffin | Email Peter
  1. 7
    comments
  2. Grant maconaghie.
    01:35PM Thursday, 31 May 2007
    One can only hope they go with frequencies that don't require users to purchase quad-band W-CDMA/GSM handsets the most popular handsets are those that are tri-band and have all the bells and whistles the majority of the world have enjoyed for some time.

    Of course if they do this smart it also allows them to pinch customers from other networks when we get true number portability sorted ?

    They also need to choose a frequency that allows a 3G platform that is upgradable to 4G when ever that rolls out without too much cost.
  3. Andrew in dunedin.
    01:35PM Thursday, 31 May 2007
    I personally don't care what direction Telecom or any other telecommunications company is going in. What I am concerned with is getting maximum service for the least price. For that reason, I switched my land line and tolls to Slingshot, and have my broadband with them too. Cheapest price I know of, same or better service. Was using ChiTel phone cards to keep my toll calling costs down, but recently discovered I can make 500 minutes worth of calls a month for free (if both ends are members) using Jajah.com. You just enter the number, both phones ring, and away you go. There are always options for keeping prices down; you just have to know where to look. I'd like to see more competitive behaviour between local landline providers, because paying over $40 per month is ridiculous-it should be no more than $20 per month.
  4. Amy te awamutu.
    01:35PM Thursday, 31 May 2007
    I'm in two minds with this, happy because we will be able to use better phones on the telecom network, but really angry at the fact that I brought a $400.00 phone only 3 months ago and now I will have to go and buy a new one. I changed from vodafone to telecom because they have better deals, but now I wished I had stayed with vodafone because it would have saved me money in the long run.
  5. Trenty, hamilton.
    01:35PM Thursday, 31 May 2007
    Hey um I'd just like to know with the change from the CDMA network over to the GSM network will the customers on the Telecom network have to change numbers or will it be unchanged? Also is the CDMA network being completely shutdown or will it remain open for other purposes?
  6. Jason.
    01:35PM Thursday, 31 May 2007
    What we must remember with Telecom is that reception wise the CDMA network will be more reliable as with CDMA phones pick up around 3 Cellsites at once, where GSM picks up one and then moves to the next Cellsite.

    Not to mention our Cdma data speeds will still be very quick on our new Rev a network.

    What Telecom is doing is simular to what Sprint (CDMA) and Nextel (GSM) have done in the states, by becoming merged you are now able to use both networks to your advantage. For New Zealand this is a great step in a whole new direction. It was bound to happen! It's been on the cards for a little while no doubt. Good news for those of you who say Telecom's range of handsets are not good enough!
  7. A somashekar.
    01:35PM Thursday, 31 May 2007
    I think Peter Griffin omitted to mention an important point. If my memory is correct, Telecom wanted to use GSM technology from the beginning rather than CDMA, but was not allowed to by the government. The reasoning was that Telecom was already the dominant telco player on the scene, and the government wanted to facilitate effective competition. Thus Vodafone was allowed use of GSM technology but Telecom was forced to choose another option, i.e. CDMA.
  8. Goodtech (Paekakariki)
    11:19AM Wednesday, 04 Jun 2008
    Was it really the government that made Telecom go CDMA or was it an management decision?
    I am with Vodafone only due to them having GSM which means I can use any pda/phone I like.
    Dealing with Vodafone is an absolute joke in terms of their customer service. I am just waiting for the day that Telecom sort their act out and I can return as a customer.