Telecom sees a wireless future

Telecom expects wireless to generate a quarter of its revenues - about $900 million - by 2003-4, up from 1 per cent today.

"I would suspect by 2003-2004, about a quarter of our revenues will be wireless data," said Mohan Jesudason, group general manager of mobile.

Most of that revenue will come from people using the internet, mainly for e-mailing, over their mobile phones, rather than speaking.

He expects mobile phone penetration to have reached 80 per cent by 2005, compared with just under 40 per cent now.

Currently, most cellular business is voice, but all that is about to change as Telecom and other companies gear up for second and third-generation mobile technology which allows phones to access the internet and essentially become pocket computers.

"That situation will change significantly and permanently. Voice will be diminished," said Mr Jesudason. "The killer application will be two-way e-mail."

Mobiles would become the primary tool for accessing the internet, he said. Weather, Lotto, stock prices, checking traffic, placing a bet, doing your banking and even buying a cola from a machine will all be done with your mobile.

Telecom is due to roll out its new mobile-phone network in the middle of next year, using the new generation code division multiple access (CDMA) standard which Mr Jesudason described as "2.5 generation."

Telecom did not need the third-generation (3G) spectrum now being auctioned by the Government to do that, he said.

"One driver for buying 3G is to make sure you've got insurance. Many of the applications available on 3G, you'll be able to get it on 2.5G."

The spectrum auction is divided into two parts: one for second-generation mobile phone technologies (2G) and one for third generation (3G). The total amount bid after round seven of the auction was just $34.15 million.

Telecom NZ, Vodafone Mobile NZ and Telstra Saturn have all won bids for 3G spectrum and Mr Jesudason said Telecom had sufficient to operate a network. He would not say if Telecom had completed its bidding.

The low prices in the auction might attract new international names into the game, he said. He doubted 3G would get under way in New Zealand until 2003.

Telecom plans to launch a Wellington trial of its CDMA network next week, when it will also launch its Airinfo mobile portal (the website entrance by which companies take their customers into the internet).

The portal will reroute much of the content from Telecom's main portal, Xtra.

Mr Jesudason said he was positioning Telecom for a "wireless future." As penetration rates had increased, Telecom was working at retaining its customers and lowering churn rates - where customers switch from one company to another.

Telecom has lowered its mobile churn rate to around 21 per cent from 30 per cent 18 months ago and against world best practice around 15 per cent.

Mr Jesudason said the cost of introducing the new technology was not huge and it could be run side-by-side with current technology.

Asked whether Telecom was interested in Cable & Wireless Optus' mobile network, Mr Jesudason said: "It is too early to have that discussion."

But, "we do have a definite interest in Australia."

He welcomed the prospect of a third entrant such as Telstra-Saturn into the market, saying the more credible the competitors, the faster the market grew.

- NZPA