Australia's No. 3 mobile provider Vodafone has delayed a $500 million network upgrade planned by Christmas and has blamed supplier Ericsson for the delay.
The project, announced in late 2007, was to extend Vodafone's 3G footprint to 95% of Australia in time for a new range of product offerings for Christmas. Instead, the upgrade won't be live until the first half of 2009 and there is speculation that Ericsson will face a A$1 million ($697,000) penalty.
Officially, Vodafone is downplaying the delay, saying the decision was based more on a desire to launch a 'bug free' system into the market.
'The build itself is well on track, it's just the integration into the live network that is causing some issues,' Vodafone CTO Andy Reeves said.
'Our competitors have suffered a number of outrages and so we're very conscious that we want to keep our network clean of outages leading up to and through the Christmas period. Vodafone is conscious that integrating a whole new network on top of a live network to just meet a date can be risky.'
Reeves said that while the launch date was now unknown, the delay was unlikely to last any more than six months.
Vodafone has declined to reveal the details of its contract with Ericsson, but local reports have claimed Ericsson now faces a financial penalty for its delay. Ericsson has also declined to outline details of the situation.
The failure to get new product into the lucrative Christmas market is a blow to Vodafone's ambition to hold its own in the Australian market, where it has a market share of around 17%. Last Christmas Vodafone was forced to secure extra capacity from Optus to help it stem the congestion on its network.
Vodafone is using Ericsson's high-speed packet access (HSPA) technology to upgrade its 900-MHz and 2100-MHz mobile network in regional Australia.
The provider says the upgrade will improve its services for both business and residential customers using Mobile Connect data cards and USB modems, and will deliver significant increases in upload and download speeds for urban customers travelling outside of the cities.
Ericsson constructed Telstra's 3G network and won the Vodafone contract over Nokia Siemens Networks and Huawei. Vodafone uses Nokia as its network manager.
Related news and analysis:
- Vodafone to announce job cuts‾
- RIM: Vodafone rejected first Storm attempt
- Vodafone secures Qatar's second fixed-line license
- Vodafone restructures management