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Vodafone boss changes the vibe

Vodafone announced plans to roll out the country’s first 5G network yesterday. The new technology was the focus, but as Mark Jennings writes, chief executive Jason Paris was effectively relaunching the company.

The was more than a hint of revival in the air. Jay Reeve from “The Rock” radio station warmed up the crowd, media were given front row seats and the urbane Paris ditched the suit for a tee-shirt with 'Jason' printed on it.

The new boss of Vodafone interviewed his technology director live on stage, except the interviewee was a hologram - the real one was in another room. The power of 5G was on show, there was no lag. The audience was impressed.

How will we use 5G?

According to Paris it will guide our driverless cars, allow doctors to remotely triage us as we’re flown to hospital in the Westpac Rescue chopper and it makes competitive gaming a lot more competitive.

5G was being hyped but there was more going on here.

The Vodafone staffer sitting next to me knew it. “This is day one of the new Vodafone,” she said.

For Paris, who has been in the job for 10 months, it was finally a chance to get on the front foot.

Restructuring, redundancies and rebuilding poor customer service (or trying to) has taken its toll on staff morale. Paris is well liked but, in cricketing parlance, he needs a big innings, needs some runs on the board.

Vodafone wanted its mojo back and yesterday was the day.

It’s been coming, but it’s been kept quiet. While Paris busied himself “resizing” the business he’s also been building a 5G network – secretly.

Yesterday coincided with the official change of ownership. NZX listed Infratil and Brookfield, a Canadian investment company, settled the $3.4 billion purchase of Vodafone NZ from its UK parent.

Part of Infratil’s logic for paying the hefty price tag is that local ownership will allow Vodafone to make faster and better decisions. The theory being that this will negate an advantage enjoyed by its main competitor, Spark and therefore make the company more valuable.

Previously, Vodafone New Zealand was competing for investment with 25 other countries where its parent company operated. The massive markets of Italy, Germany or Spain were always likely to provide a bigger payoff for capital deployment. In fact, Vodafone is currently rolling out 5G in those markets and in the UK. New Zealand was probably well down the priority list.

In this country telecommunications are a low margin business, almost a commodity play.

5G offers more, and for businesses who can use it to increase productivity and innovation, possibly a lot more. And there is potential for a premium to apply.

This is where Paris and Infratil are placing their bet.

5G allows for what’s called “Network slicing”, essentially allowing companies to have their own mobile networks. This is seen as critical for large scale automation of places like ports.

In December, Vodafone will switch on a 5G Network in Auckland, Wellington, Christchurch and Queenstown.

This should put it at least six months ahead of Spark which has previously said it will roll out its 5G network in mid 2020.

Spark has been trying to position itself as a market leader in 5G, running a slick marketing campaign featuring former 3 News reporter David Farrier sitting in a driverless car interviewing business leaders.

The telco has been running a 5G test lab in Auckland’s Wynyard Quarter but does not yet have the spectrum to roll out a network in the way Vodafone is doing.

Spark has talked a lot about how its 5G could assist Team New Zealand relay live data from its boat to its onshore base, but it remains stymied until the government auctions suitable spectrum.

Spark’s former CEO Simon Moutter often urged the government to speed up the process but the 3.5GHz band that is required is currently utilised and not due to be repackaged and sold on to other users until October 2022.

Will Faafoi play ball

The Minister responsible, Kris Faafoi, has indicated he is unlikely to help Spark expedite its plans. He has been reported as saying, "If 5G network operators want access prior to expiry of existing rights, this can be achieved with the agreement of existing users."

Clearly, this would be a difficult and expensive task for Spark. But the clock is ticking and while it tries to cajole the government into some kind of intervention the pace of 5G rollouts is picking up around the world.

Nokia, the Finish company that has been Vodafone’s equipment supplier for 25 years and will build the 5G network, says New Zealand will be its 10th major rollout.

Zoltan Losteiner, Nokia’s Vice President for Oceania, was in Auckland for yesterday’s announcement and says the it has 45 telcos signed up including Optus in Australia. “ Korea is the most advanced market in 5G and we will bring what we have learned there to New Zealand. I have a great admiration for New Zealand, you are a very innovative country,” Losteiner said.

Vodafone NZ’s decision to move rapidly ahead with the rollout has surprised most industry commentators given the company’s previous lukewarm view on the business case for 5G.

Technology journalist Bill Bennett said he was surprised at how “aggressive “ Vodafone’s plans are. “Infratil have thrown Jason (Paris) the keys to the car but the guy is hitting the accelerator, he is putting his foot to the floor.”

Phones aren't there yet

Paris has indicated existing Vodafone customers won’t pay extra for 5G but at some time in the future new customers will pay a premium.

Of course, very few people have 5G capable phones at this point.

Apple aren’t expected to have a 5G iPhone available until 2020. Vodafone is likely to push hard into the fixed wireless broadband market with its new capability. 5G’s superior speed could mean the download time for an HD movie reduces from 10 minutes to less than 10 seconds.

The rollout represents a massive investment for Vodafone but yesterday Paris seemed more worried about customer service levels. “5G will be great, I know it will work. But it is no good having awesome technology if we can’t get the amount on a customer’s bill correct or they have to wait an hour before they get through to someone at a call centre. We must fix this, I am going to fix this.”

Few Vodafone customers will argue with that.

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