China Business: Alliance across the spectrum

Jason Wu, Huawei CEO.

The Huawei Spark innovation partnership bears 700MHz fruit writes Bill Bennett.

When Chinese Premier Xi Jinping visited Auckland last November he joined New Zealand PM John Key to witness the signing of a memorandum of understanding between Huawei and Spark.

The agreement will see the world's largest telecommunications equipment company use its massive research and development resources to tailor mobile technologies for the New Zealand carrier.

Spark and Huawei were already working together. In 2013 the two formed a Joint Innovation Programme, or JIP, which led to the world's first commercial trial of 4G, fourth generation, mobile telecommunications using the 700MHz spectrum.

Huawei CEO Jason Wu says the memorandum of understanding will help Spark catapult into the next generation of mobile technology: 5G.

He says the first 700MHz site, in the Waikato, was running almost immediately and despite there being almost no compatible equipment at the time, they noticed it was being used within weeks.

Since then Huawei has rolled out 700MHz sites for Spark in Auckland, Wellington and Christchurch along with many rural sites. It was a fast rollout taking just six months.

Wu says the network already covers most New Zealand customers.

Spark's investment in 700MHz spectrum band is strategic. When the government auctioned the frequencies freed up by switching off the analogue television broadcast network, Spark managed to win four of the nine frequency blocks on sale.

It meant a huge investment, but owning the lion's share is potentially lucrative. That's because 4G is all about data, unlike previous generations of mobile technology. The more frequencies a carrier owns, the more data can be transmitted through the airwaves at the same time. So a carrier with more bandwidth can offer customers faster mobile broadband and that gives them a competitive edge.

Wu says 700MHz is particularly well suited to 4G. It is also easier for carriers to use, it reaches further than other frequencies and can mean fewer sites are needed to provide the same amount of coverage - that makes it cost-effective for mobile carriers.

The market here is innovative and New Zealand is ahead of the curve.

Jason Wu, Huawei

David Havercroft, Chief Operating Officer of Spark Connect says the theory of 700MHz is all very good in the physics laboratory, but things change when you get out into the field. "We had the bandwidth, but we wanted to get the best out of it, that's where we joined with Huawei".

One of the initiatives to come from the Huawei-Spark JIP is carrier integration. This helps mobile companies make better use of their radio spectrum investments. It means Spark can bundle together all its 700MHz spectrum along with its holdings in other frequency bands, including 1800MHz and 2600MHz.

"We wanted to bring all our frequencies together and combine them into a single block. Huawei was doing something similar elsewhere so it was the obvious partner," says Havercroft.

Carrier integration means fat internet pipes in the airwaves capable of fast speeds. Wu says Spark has sites in the Auckland CBD capable of operating at 300 Mbps. Though this is the kind of speed found on terrestrial fibre networks, wireless bandwidth is shared so, while users will rarely get this level of performance, they will see massively increased data speeds.

Another development of the JIP has been consolidating equipment on Spark's mobile towers. Historically each generation and set of spectrum might use different hardware and antennae. Havercroft said Huawei was able to cover everything with a single set of equipment: "That brings about economies of scale and efficiencies".

Wu says Spark is internationally recognised as a leader when it comes to 4G technology in the 700MHz spectrum band. The frequencies aren't used everywhere yet, but are important in Asia-Pacific, Latin America, the Middle East and Africa.

He says it's worth noting that Chris Quin, CEO Spark Home, Business and Mobile is chair of the Global 700M Industry Alliance, an industry group set up to encourage global development of 700 MHz technologies and supply chains.

Wu says: "This is how we can make sure mobile carriers and customers in these regions can get access to the best handsets and equipment. It's why all the flagship mobile phones now work at 700 MHz."

Huawei is interested in what happens in New Zealand. Wu says: "Carriers, equipment suppliers and regulators in these countries are all watching closely to see how Spark fares in New Zealand. The market here is innovative and New Zealand is ahead of the curve, there are opportunities to do things here that don't exist elsewhere.

"The JIP model isn't unique to New Zealand, we have similar programmes in a dozen or so countries. However, it was one of the first and we've taken the experience we've learnt here to other countries, it applies especially in Europe."

He says this will pay off for New Zealand when the mobile industry moves on to 5G. That's scheduled to reach mass markets in 2020, but there will be pilots first. New Zealand was relatively late to the 4G party, but that is less likely to be the case with 5G. Apart from anything else, Wu says it won't be as difficult for Spark to upgrade from 4G to 5G as it was when it made the transition from 3G.

Things start to get exciting at that point.

While the move from 3G to 4G was about moving from a focus on voice to mobile broadband, the switch to 5G will introduce ubiquitous wireless data networks with low latency. This will drive the so-called internet-of-things and will make innovations such as driverless cars a practical reality.

Wu says to make that safe you need a network that can respond fast enough to keep driverless cars safe in high-speed traffic.

Havercroft says this is what Spark was looking for when it picked Huawei as a technology partner. It didn't want to cut a deal for now and hunt around for something else when the next generation came around. "Huawei talks as if it expects to do business with us for the next 100 years. Even the context of the next 15 to 20 years is long by industry standards.

"We didn't pick Huawei because it was the cheapest - although the prices are sharp - we picked it because of the company's commitment to the long-term, its willingness to look forward and invest in research and development."