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Vodafone New Zealand chief executive Russell Stanners says the telco is likely to increase its number of cellsites “exponentially” as it promotes its 3G mobile network as a mainstream alternative to Telecom’s JetStream.

The telco confirmed last week that it had contracted Nokia to begin upgrading its cellphone network to the HSDPA standard by the end of the year, and says it will use 3G to provide a mass market broadband service.

The telco has 1400 cellsites that provide basic 2G coverage and is believed to have a few hundred W-CDMA cellsites that provide “fast internet access” and which can be quickly upgraded to provide broadband using HSDPA.

Mr Stanners says adding cellsites to serve broadband customers in residential areas should be as simple as attaching “a three-foot antenna to a lamppost”, though it will still need to go through the resource consent process.

The long-anticipated investment in HSDPA will increase the speed at which customers can surf the net over Vodafone’s network by “four or five times”, he says.

Vodafone has been cagey about specifying the connection speeds customers will be able to expect and this will vary according to how close customers are to a cellsite and how many customers are using the cellsite at any time. However, HSDPA deployments overseas suggest customers could expect average speeds of 500-700 kilobits per second, which will roughly match the performance of Telecom’s T3G network.

Telecom will upgrade its network to deliver speeds of about 1 megabit per second to maintain its raw performance advantage, but Mr Stanners says compression technology used on Vodafone’s network means customers will enjoy a similar performance.

Vodafone’s use of compression also means customers don’t need to pay for “a whole lot of data that is just overhead”, he says.

The practical limitation on the capacity of the 3G network and hence the price of the broadband plans Vodafone will be able to offer customers is the carrying capacity of each cellsite.

Mr Stanners declines to give an approximate number of customers each could support at 500kbps connection speed, but says bottlenecks will decrease over time. “We are pretty confident with where Nokia is going with the technology over the next couple of years.”

Mr Stanners rules out Vodafone abandoning its mobile-only philosophy and opting to resell Telecom DSL, saying “it’s not a place the company wants to go”.

Vodafone is threatened by Telecom’s move to develop a hybrid fixed/mobile phone that could be used to make free local calls in the home but which would also serve as a cellphone.

Mr Stanners says Telecom would prove a “tough competitor” if it invested in its own W-CDMA network and was able to deploy such a product while shutting Vodafone out of the free local call market, but he says there are “a lot of ‘ifs’ in that scenario.