Vodafone cautious on digital dividend spend

Vodafone Hutchison Australia has reaffirmed its cautious approach to the forthcoming digital dividend spectrum auction, revealing plans only to buy the 'waterfront' licenses at the "right price".

The 700 MHz and 2.5 GHz spectrum bands, made available in the switch to digital television, are expected to yield up to $4 billion for the Federal Government when they are auctioned off to interested parties from the last quarter of this year.

Though the three major carriers are all expected to participate in the auction, industry rumours have suggested a fourth participant - potentially Google - could raise the stakes as well as prices paid for the spectrum.

VHA chief executive Nigel Dews said that the company was "seriously" planning for the forthcoming auction but remained happy with the current licensing stocks it owned.

The company borrowed $1.7 billion in financing during December, a portion of which would be used to renew its current spectrum under declarations recently set down by the Government, and potentially toward digital dividend spectrum.

But when asked about the extent to which it would compete for the licenses, Dews remained cautious.

"We will seriously go into our preparation for the digital dividend auctions and look expectantly at that process," he said.

"But there's a price for everything and you don't buy anything that's at the wrong price, you buy things at the right price and that's what we'd be hoping to be able to do."

Though the digital dividend is expected to be vital spectrum for rolling out Long Term Evolution networks, all three major carriers plan to utilise existing stocks of 1800 MHz to roll out the fourth-generation technology as a stop-gap or back-up plan.

VHA remains the most tentative in rolling out the newer technology, with Dews this week still unable to provide a timeframe for a Vodafone LTE network.

He said the company was waiting until "mass-market devices are capable and have an impact for the vast majority of our customers".

"We're less inclined to do the aggressive talking about LTE," he said.

HSPA+ upgrades coming

Instead, Dews affirmed plans to use the existing HSPA roadmap as a stop-gap, upgrading current 3G base stations to be capable of providing 21 Mbps and ultimately 42 Mbps downstream speeds.

The network is currently capable of 7.2 Mbps, lagging behind Telstra's Next G which is already capable of 42 Mbps bandwidth.

A further step, capable of 84 Mbps, is believed to have been considered by Telstra but has since been replaced by the current rollout of its LTE network.

Despite the faster bandwidth, few phones or devices are capable of using the upgraded technology.

Vodafone's current network initiative, which has seen the company effectively rip-and-replace its 3G network, would be capable of providing 21 Mbps coverage to 87 percent of the Australian population with "usable, good coverage" for the remaining population up to 96 percent according to Dews.

A second network planned for the last quarter of 2012 would likely provide the additional boost in speeds.

"In most countries these days it's called 4G," Dews said. "That equipment will be LTE-ready."

The company confirmed estimates that it had lost more than 500,000 active customers in total over 2011, including those signed to its MVNOs, bringing its total customer base to seven million.

Despite overall customer losses, the company reported improved growth in post-paid customers, with 500,000 more customers using the 3G network than previously.