Is the new iPhone a telco "Terminator"?

Vodafone has denied larger data caps and free tethering on its iPhone 3G S plans will degrade network performance, despite acknowledging problems in a leaked internal newsletter.

In the Voice of Retail newsletter obtained by iTnews, Vodafone tabled the biggest headaches raised by customers and retailers from March to May

Coverage, degradation, dropouts and echo are users' biggest bugbears.

And retailers complained that Vodafone's coverage tool  provides "incorrect information".

Mobile broadband problems were third on the list and included "poor coverage, slow speed and congestion issues".

Vodafone was two months away from completing its Xelerate network upgrade to enable it to achieve 94 percent population coverage.

But completion is eight months behind schedule, which the carrier blamed on Ericsson.

The introduction of data-hungry iPhone 3G S customers to the network from today could exacerbate congestion problems.

Vodafone's iPhone 3GS plans, revealed earlier this week, include free tethering and larger data quotas than rivals such as Optus and Telstra.

Taking into consideration past data consumption rates for iPhone, these features could encourage iPhone 3GS owners to access even large amounts of mobile broadband data on the Vodafone network.

But the gap between the iPhone 3GS launch today and completion of Xelerate has at least some of the telco's retailers raising questions privately over Vodafone's ability to support the new users without further degrading performance for existing customers.

Vodafone denied the iPhone 3GS would slow its network.

"Vodafone continually monitors levels of traffic across its network and will continue increasing capacity where it is needed most," a spokeswoman told iTnews.

"Vodafone has a long-term network strategy that is well geared to meet customers' current and future mobile voice and data requirements."

The leaked document said Vodafone was providing "regular updates ... to keep stores informed of any testing, improved coverage areas and areas temporarily impacted by the Xelerate upgrade project".

And it said it had "updated" its network coverage tool for retailers "to reflect accurate coverage throughout Australia".

The document said Vodafone's voice-recognition system, Lara, was "difficult to navigate" and "doesn't always understand the request". It said shops' sales staff were frustrated by being forced to call Lara rather than a direct line, which "causes frustration and lengthy wait times when assisting customers".