Vodafone plans to charge premium for 5G some time after its launch
Thursday, 1 August 2019
Vodafone customers won't pay an extra charge for its 5G network when it launches in December, but the company does intend to impose a price premium down the track, Vodafone NZ chief executive Jason Paris says.
Paris announced Vodafone NZ was rolling out the newest generation of mobile technology in New Zealand and planned to switch on 'stage one' of the network in Auckland, Wellington, Christchurch and Queenstown in December, getting a jump on rivals Spark and 2degrees.
The company timed the announcement to coincide with new owner Infratil and Canadian investor Brookfield taking control of Vodafone NZ, which they bought for $3.4 billion from the British-based Vodafone Group.
'Our commitment to our existing customers is we want to make 5G available to them for free, but at some point of time in the future there will be a premium that we will consider charging for new customers joining us,' he said.
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That point would be 'well after' the December launch, he said.
Former Vodafone NZ boss Russell Stanners said last year that the company was not rushing to be first with 5G because it didn't see a significant advantage, noting a general expectation from telco customers that they would continually get more for the same price.
But Paris said 5G launches by Vodafone Group in the UK, Germany, Italy and Spain showed customers were getting big benefits from using 5G for gaming, and in conjunction with wearable devices, and 5G was more about improving the 'internet of things' than the performance of smartphones.
'We think it is a strategic advantage for Vodafone.
'The big play we are seeing is in business. 5G's speed advantage and its reduced lag means transformational applications in homes and autonomous vehicles, manufacturing, and in making cities 'smarter'.'
Vodafone NZ was investing 'tens of millions of dollars' upgrading 120 cellphone towers in the four centres to 5G, and was separately upgrading another 400 to improved 4G technology, he said.
Devices that would support 5G would be announced in the coming weeks, he said.
Customers would be able to move seamlessly between 4G and 5G where it was available.
Despite no longer being part of the worldwide Vodafone business, Vodafone NZ will be able to use the Vodafone brand for 'as long as it wants', for an undisclosed fee, under a partnership agreement, Paris has previously disclosed.
That agreement also provides 'preferential access' to Vodafone's networks overseas, meaning Vodafone NZ customers can still roam on those networks when travelling.
Vodafone NZ has said its 'number one' priority will be improving customer service, in the wake of complaints from some customers over service levels.
The company overhauled its contact centres this year, making an undisclosed number of staff redundant and outsourcing operations to Indian company Tech Mahindra.
Paris declined to discuss those changes in detail, or how they fitted into its mission to improve service, but said Vodafone NZ would make announcements in the near future on improvements that would make a material difference to 'the way we are showing up for our customers'.
'It is not good enough today, and there is no point having a brilliant network that no-one wants to connect to because you are not giving them great customer service and that is one of our major focuses.
'It took us a few months to get technology leadership and it will take us a few months to get customer experience leadership but we are not far away,' he said.
'The outcome of that will be customers not having to call, or when they do call being answered faster and when they do get answered, us resolving their issue first time every time.'
More information would be available within weeks, he said. 'Today is about technology, and in a few weeks time it will be about service.'
Vodafone NZ has been able to claim poll position for 5G thanks to it owning a bi-directional 28 megahertz chunk of radio spectrum in 3.5GHz band that is best supported by 5G handset makers, Paris confirmed.
That spectrum was inherited from TestraClear, which Vodafone acquired in 2012.
Paris said it had sufficient spectrum to allow users to experience a 10-times speed advantage over 4G.
Rights in the 3.5GHz band are expected to be put back out for auction around the end of next year, ahead of the expiry of existing licences in November 2022.
But Spark has indicated it could still launch 5G by July next year.
Spark spokesman Andrew Pirie noted on Tuesday that the Government was exploring ways to provide 'early access options for a limited amount of spectrum on a short-term basis' with the intention of freeing-up some spectrum for some purposes ahead of the auction date.
'If we were able to participate in that process, that would open the way for us to have 5G services up in the timeline we have indicated, if not sooner,' he said.
Vodafone NZ has a long-standing partnership with Nokia which will supply its 5G network gear. The other major vendors of 5G equipment are China's Huawei, which is still mired in geo-political turmoil, and Ericsson.
Paris joined Vodafone NZ at a time when it appeared destined for a second-attempt to partially list on the NZX, still as part of the Vodafone Group.
He said he did not join the company because it was headed for an IPO (initial public offering) but because he wanted to be in an industry that was always changing and 'improved businesses and people's lives'.
The takeover by Infratil and Brookfield was a better option than the shelved IPO or the merger with Sky TV that was sunk by the Commerce Commission, he said.
'I am really proud that we are reversing the trend and bringing an important, iconic organisation back to New Zealand.
'For the first time Vodafone NZ is going to be able to play its own game and one that is 100 per cent focused on New Zealand.'