Vodafone’s future – the NBN, LTE and more

  • Vodafone now trialing NBN services
  • Will attend spectrum auction, but might just be window browsing
  • 4G network slated for early to mid 2013

Vodafone CEO Bill Morrow held his first TV interview over the weekend, in which he addressed the firms rapidly declining fortunes (including a $260mn loss in the first 6 months of 2012) and the status of the firm going forward.

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Unsurprisingly, Morrow pinned the well publicized ‘Vodafail” fiasco, in which the network’s data service fell over in 2010, on the rise of smartphones. With the iPhone, the demand for mobile full browsing, video streaming and content downloads finally had an outlet. Until then, data on phones was a patchwork affair, with clumsy interfaces that made it mostly a gimmick.

Vodafone’s lack of response at the time may have contributed to the exodus of 700,000 customers to date, a rate which has begun to slow as Vodafone has invested a billion dollars in improving its 3G systems to the 850MHz standard used by Telstra Next G. Morrow has pledged that internal communications have improved, as has Vodafone’s ability to acknowledge their network woes. Vodafone currently offers a 30 Day network guarantee to new customers, as a means of demonstrating their faith in their increased capabilities.

Where to now?


Vodafone has not yet pledged to bid on the next big auction for mobile spectrum. The Digital Dividend Spectrum, scheduled for early 2013, will allow firms to bid on allotments of radio space in the 700 MHz band, previously used for analog commercial television broadcast. The band is considered the prime allocation for digital data services, as it finds the best flashpoint between speed (how much data can flow per second), range and penetration.

Morrow has said that VHA (the firm comprising Vodafone Australia and Three) will certainly ‘have a seat at the table’, but that they will not be bringing their pocketbooks. Morrow is personally excited for their 1800MHz 4G rollout, scheduled to begin in April 2013.

Moreover, Morrow has been a supporter for a National Broadband Network – both the current Labor Government planned rollout, and the coalition’s Fibre-to-the-Node alternative. Vodafone has been trialing customers in early rollout sites, marking a significant shift from a mobile-only provider to a full blooded telecoms, a status in enjoys in the UK and many other markets.

What Wireless Means To Most of Us

All this points to Vodafone believing that while wireless might be the future, there’s only so far that our current perception of ‘wireless’ can take us. With more than 50% of connected Australians now on mobile broadband solutions, the appetite for mobile communications can’t be denied. But the science and economics just aren’t there.

The amount of data permitted on mobile broadband plans tops out at 20GB, while the average Australian data usage has gone a bit over that. And that completely excludes customers who use hundreds of gigabytes of data. Even though some of these users can be summarily dismissed as porn fiends and copyright infringers (a common accusation from the anti-NBN crowd), there are plenty of individual users who use this much data legitimately. Most of it might be for entertainment (streaming video, online gaming, etc), but those are still businesses, generating income for some and taking part in the economy. This can’t be ignored.

Vodafone might be best placed to understand the extent to which the thirst for data can break a network. The iPhone took a marginal exercise (mobile data use) and made it mainstream, simply by tweaking the interface. If every Australian had easy access to high speed fixed-line broadband, with tons of data available and an easy-to-understand market, then the convenient-yet-erratic mobile broadband market might collapse.

Mobile Broadband has two things going for it – portability, and an ease of understanding. You buy a stick and it goes into your PC. Voila, internet. Fixed-line broadband requires installation, modems, long contracts, line rentals for services you seemingly don’t use, and other arbitrary conditions that do a lot to confuse the issue. In an NBN world, where every home has a network termination device built to the house, and a Wi-Fi router already connected at that point, then there will be little competition. You could call a service provider and have your service switched on within a day or two, like it was gas or electricity. You wouldn’t be ‘wireless’, but it would be ‘wireless’ in the way many customers want but don’t know how to ask for – wireless to the modem, with the modem connected directly to a high speed, high capacity feed.

Vodafone seems to understand this, and realizes that truly mobile broadband – where the modem (or just the SIM card, depending on the device being used) connects over a 3G or 4G network, will return to being a niche product, or a network reserved for tablets and mobiles. This would be good news all-round – it would reduce network traffic and more people would be on the type of connection they want, but don’t know how to ask for.

In this scenario, buying up expensive spectrum to provide ever faster mobile data would be a bit of a waste, as the 1800 MHZ spectrum (already in use) can provide huge speeds – if used correctly. It would make more sense for Vodafone to invest in their fixed-line future on the NBN.

Conclusion

Vodafone’s plans are murky, but point to a future where mobile broadband becomes an add-on to easily connected fixed line home services – a scenario we should be enjoying now, given the respective capabilities of those technologies.