End of the affair: Telstra and VHA end 3G network sharing venture

Stuart Corner
Thursday, 21 October 2010 14:13

IT Industry - Strategy

Telstra and VHA are to scrap the arrangement under which they share 2100MHz mobile spectrum and radio base stations, put in place in 2004 shortly after Hutchison launched Australia's first 3G network.

Telstra said that very few customers would be impacted as nearly all those with 3G devices have ones that can use the 850MHz Next G spectrum which already provides much greater coverage than the 2100MHZ spectrum.

For VHA, only the former Vodafone 2100MHz spectrum provides national coverage; Hutchison had spectrum only in major metropolitan areas, and VHA has announced plans for substantial investment to upgrade the former Vodafone network.

The spectrum sharing arrangement was implemented through a 50/50 joint venture company between Telstra and Hutchison.  The company, 3GIS Pty Ltd, owned and operated the base stations for the 2100MHz spectrum Under the agreement, Telstra provides design, construction and operational services to 3GIS for the radio access network and Telstra and Hutchison were responsible for their own core and backhaul networks and other network infrastructure.

When it was put in place, Telstra had no 2100MHz network infrastructure and paid Hutchison $450m for 50 percent of its network of 2000-base stations in Sydney, Melbourne, Brisbane, Gold Coast, Adelaide and Perth. The move enabled Telstra to bring forward the introduction of its 3G services.

In a joint announcement Telstra and VHA said that the joint network would continue to operate normally until 2012 after which time network assets and the spectrum from the 2100MHz network would be incorporated into other networks that Telstra and VHA operate. The nominal end date for the partnership is 31 August 2012, but this may be brought forward to a date from 1 January 2012 if certain conditions are met.

The announcement brings a, presumably, amicable end to a relationship that became somewhat fraught in 2009 when Vodafone Australia and Hutchison announced plans to merge. At that time Telstra argued that the proposed merger represented a change of control of Hutchison 3G Australia and that this changed the terms of the 3GIS agreement.

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