Nokia hangs up Telecom phone

Nokia will stop making phones that are compatible with Telecom's mobile phone network at the end of next year, in a move likely to further fuel speculation Telecom will have to build another phone network.

Nokia, the world's largest cellphone maker, said this week that it would stop making phones for CDMA networks, which Telecom uses. The global market for CDMA - or code division multiple access, a technology for digital transmission of radio signal - was diminishing, Nokia said.

Nokia said it would continue to offer Nokia-branded CDMA handsets in North America, but would withdraw elsewhere.

Telecom spokesman Phil Love said the company had not been informed of Nokia's decision, but "we are not too concerned".

Love said Telecom expected Nokia would still source from other phone manufacturers for supply to its CDMA markets.

"So long as Nokia phones come out with the Nokia brand and the same quality measures, then it's fine," he said.

Telecom also bought CDMA handheld phones from US company Sprint-Nextel, which sourced from Sanyo and other phone manufacturers, he said.

Nokia said CDMA was the less popular wireless technology, used by 25 to 30 per cent of mobile subscribers.

Telecom supplies CDMA phones and rival Vodafone sells phones using the more popular global system for mobile communication (GSM) technology.

Speculation has been mounting for the past few months that Telecom will make the shift from CDMA to GSM, and this will just push it further down the path, say industry observers. Telecom might eventually move to GSM, said IDC analyst Chris Loh, but the Nokia announcement would not be the only contributing factor.

The decision would further isolate Telecom's position as the only CDMA provider in the region, apart from some pockets of South-east Asia, Loh said.

"Telstra is phasing CDMA out in Australia and Hutchison may follow; that would leave Telecom a CDMA loner in this part of the world," he said.

Also, Nokia played a dominant role in the mobile device supplier market so it would have downstream repercussions, said Loh.

This decision showed Nokia was focusing on Europe and the high-growth markets of Brazil, Russia, India and China.

These countries, to a large extent, were bypassing the development of nationwide fixed-line infrastructure and going straight for mobile services, Loh said.

GSM accounted for over 82 per cent of all global mobile connections, with more than two billion users, said Vodafone business markets director Phil Patel.

"We are not surprised by Nokia's decision given CDMA's lack of penetration in markets outside the US. GSM is clearly the right choice of technology for New Zealand's future," Patel said.