4G wars

Telecom has announced it’s launching its LTE network in October and will steadily roll out services throughout the country using Huawei equipment.

There are several aspects to this that are worth discussing. The impending 4G war with Vodafone - data caps and the $10/month premium charge that Vodafone adds on your bill for 4G are all up in the air now.

Then there’s the choice of Huawei over incumbent Alcatel-Lucent which while not surprising is still quite telling. Alcatel-Lucent will continue to manage the 3G network (Telecom’s much vaunted “faster in more places” XT network that famously hit a wall at high speed and caused Telecom no end of embarrassment and not a small amount of money) but basically this is the end of the line for ALU’s relationship with Telecom. I put that down not only to the XT debacle but also to Alcatel’s lack of a single-RAN solution. That is, to roll out 4G Telecom will need new boxes on the poles rather than just changing out the cards in the existing boxes. That makes the deployment much more expensive than either 2Degrees or Vodafone’s similar rollouts and that’s a problem.

(EDIT: As has been pointed out, Alcatel will continue to run Telecom's fixed line network and its operation centres and has just won the contract to upgrade the optical transport layer. I'm just talking about the mobile side of things here)

This also will mean trouble for 2Degrees – it now has to spend yet more money rolling out 4G just to keep up. This at a time when it’s still deploying 3G, with a looming 700MHz spectrum auction and when pundits are suggesting it should probably look around and buy a fixed line operator (Orcon, for example) or face being marginalised.

But I’m more interested in Telecom’s promise to roll out LTE on the rural towers built by Vodafone as part of the Rural Broadband Initiative (RBI) which is very exciting news for all concerned.

Currently the RBI deployment is flying somewhat under the radar, predominantly because of the road crash that is early UFB deployments. There are no stories of customers being cut off for days, of Chorus techs standing around in clumps staring at holes in the ground, of cost blowouts because of the difficulty of digging through footpaths.

Instead, we hear very little about RBI. Vodafone and Chorus presumably are rolling out network coverage. Presumably customers are connecting and presumably they’re reasonably happy with the service.

Vodafone promised the rural broadband pricing would be on par with urban prices, and while the price points are not too dissimilar ($100 for phone and broadband being one example) the data limits are woeful. You have a choice of 5GB or 15GB a month – neither of which comes close to urban levels. That same $100 in the city would get me 100GB of data. Given we want to stimulate the rural economy, you’d hope there would be pricing for business users on the RBI, but while I can get 1TB of data for $20/month from Vodafone in Three Kings, that level of use on the RBI would require me to sell the entire South Island to pay my debt.

There’s also a lack of competition in rural New Zealand. Aside from Farmside (the obvious candidate) there aren’t too many other resellers of Vodafone’s service, nor are there partners clamouring to add their equipment to the RBI towers – or rather, if there are they’re keeping very quiet about it.

Both Telecom and Vodafone have said they will go all out on the RBI towers once it secures some 700MHz spectrum and hopefully once that starts we’ll see some actual competition for what could be a lucrative market.

Interestingly, I’d expect to see faster speeds on the rural LTE network than on the urban.

I’ve been using Vodafone’s LTE for the past couple of weeks and while my peak speed was an impressive 88Mbit/s down and 47Mbit/s up, most of the time it’s around the 15-20Mbit/s down range, with upload being slightly less.

I’m putting it down to my being forced to share the network with others, something that’s a perennial bone of contention (ha) among wireless users.

Rural customers would, hopefully, have less to worry about because there are fewer of them per tower.

Given the towers are being built under a government subsidy, they’re going in to places where commercially there just aren’t enough customers to justify deployment. That means the number of customers per site is likely to be far fewer than in an urban environment. Which should mean you’re more likely to see the higher speeds in rural areas (backhaul notwithstanding as it’s fibre-based capacity from Chorus).

When you add in some of the cool stuff Huawei showed me in China (NB: I flew there courtesy of Huawei) – things that will come up in the next round of revisions to the LTE standard – rural customers will be well placed to go mobile.

All told it’s an exciting time to be a mobile user. I’m hopeful we’ll get some decent pricing out of the two main players (and of course, 2Degrees will be there by default as it roams on Vodafone’s network) and that can only be a good thing for rural New Zealand.