WE all know about Vodafail.
We’ve seen our friends scream at their phones in frustration because the signal has dropped out AGAIN. Or, we’ve experienced it first-hand.
But what actually went wrong? Why did Vodafone fail so badly?
The head of Vodafone Hutchison Australia last night admitted its network crashed two years ago because the company wasn't keeping up with the surging demand from smart phones.
"I think if you look at the way the market has evolved here in Australia, Aussies clearly love their mobile phones, they like smart phones in particular," Bill Morrow told the ABC's Inside Business.
"That drove a different kind of demand on to the network and that got ahead of the company and the investment wasn't there at the time, but it is now and that's what we are correcting."
Half a million customers lost
The numbers speak for themselves. Earlier this year the telco reported it lost 554,000 customers during the 2011 financial year.
And half of Vodafone's parent company, Hutchison Telecommunications Australia, reported a $131.3 million loss for its half-year results to 30 June 2012.
The company also announced its share of Vodafone Hutchison Australia’s total revenue decreased by 9 per cent to $1.03 billion.
"A perfect storm"
Matthew Sorell, a senior lecturer in telecommunications at the University of Adelaide, said the problems began when Vodafone merged its network with the 3 network in 2009.
At the same time the popularity of smart phones was surging, which meant demand for data was rising just as quickly.
“Really Vodafone got caught with its pants down,” Dr Sorell said.
“They had the perfect storm of having all of the engineering focus on merging the two networks, while at the same time the data market they’ve been trying to get to work for at least a decade suddenly exploded.”
This meant the telco’s engineering resources were being stretched in two directions.
“As frustrating as that is for customers, it’s very difficult to focus on one big thing let alone two,” he said.
Data overload
Telecommunications expert Professor Jamil Khan said Vodafone’s coverage was so patchy because it did not have enough base stations to match demand.
Base stations are the towers with large antennas that send and receive data to your mobile when you make phone calls or use the internet.
“With introduction of smart phones people were doing a lot more and using a lot more data,” said Prof Khan, from the University of Newcastle.
“At the same time Vodafone’s infrastructure was very poor.”
Prof Khan said Vodafone was also unprepared.
“The telcos generally do this investment pre-emptively and they know these things are coming so they have to gear up for that,” he said.
“My view is Vodafone has completely failed in that respect.”
Can Optus save Vodafone?
In May, Vodafone struck a deal with rival Optus to jointly build hundreds of new base stations.
Under the joint venture, Vodafone plans to access about 400 Optus base station sites, with the two telcos set to build 500 more shared sites over the next four years.
Dr Mark Gregory, senior lecturer in electrical engineering at RMIT University, questioned how long Vodafone could remain a stand-alone carrier.
“If they start sharing with Optus are they no different from iiNet or TPG?,” said Dr Gregory.
“When does Vodafone stop becoming a separate carrier and simply become a reseller of Optus?”
Dr Sorell said the move was beneficial to both parties but it also meant they were just chasing Telstra’s tail.
“The only thing is it gives you a catch-up strategy but it doesn’t give you a long-term sustainable strategy,” he said.
Telstra could afford to prepare
Dr Sorell said Telstra had been actively developing its network to cope with surging data demand for years.
“Telstra’s been planning for this I know for at least four years but they can afford to speculate in a way Vodafone really couldn’t,” he said.
“You either have to be so big that you can drive the market, which is what Telstra is doing, or you need to have a crystal ball and Vodafone didn’t have a crystal ball working that day.”
“It would be great to see them succeed because we do need that competition to keep everyone honest and keep prices down,” he said.
A Vodafone spokesperson told news.com.au that customers were already feeling the benefits of the company’s investment over the last two years.
“We know there is more work to be done before the experience is consistent across our entire network and we are working around the clock to deliver a good experience for our customers with improvements being built into the network every day,” the spokeswoman said.
The telco - which is the only large carrier without an operating 4G network - plans to start rolling out 4G from early next year.
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