Your printer doesn't know what he is talking about, unfortunately!
Both Illustrator and InDesign create gradients using the PDF 1.3 / PostScript language level 3 smooth shading operators, for many years, long before CS5. These operators don't specify the number of steps in the gradient. That is totally dependent upon the software that renders the smooth-shaded gradient either on screen for display or by a RIP for printing. The definition of the smooth shading is that it is up to the renderer (i.e., RIP for printing) to optimally generate the gradient based on the technology of the output device. The output should be identical for gradients produced in Illustrator and InDesign. Ironically, it is Photoshop that produces gradients differently. It produces a raster bitmap, varying the colors as best as possible given the number of pixels available from the starting to the ending points of the gradient.
Assuming that your printer is using a direct PDF RIP or even printing your PDF to PostScript in Acrobat, it may very well be a problem in the RIP and/or the large format printer and its ink nozzles that is the source of the banding.
Thanks Dov that's great info. One curiosity I'm seeing in the printed job, the gradient I've used contains only percentages of cyan and black (when looking at the seps in Acrobat). On the printed banner there is a very obvious amount of yellow in the gradient section which is turning some of it green, is that evidence of some dodgy business at the printer's end or is there a logical reason why this might happen? (Screen shot and final product attached below)...
Ouch! That really is terrible!
The fact that the gradient renders correctly in Acrobat would be indicative that the PDF file and InDesign which generated it are certainly not the problem.
It almost looks like your printer is taking your perfectly fine PDF file and subjecting it some type of oddball workflow that attempts to do color management prior to the actual RIP process and in doing so, does its own faulty interpretation of the smooth shading.
Without knowing exactly what torture they are subjecting that PDF file to, I can't give an exact diagnosis.
Needless to say, you might want (actually need) to find a new printer.
Thanks Dov, as long as its not something I'm doing wrong I'm happy Thanks for all your help!
I'd normally add about 1 or 2% noise into a gradient to stop that happening. But I don't see an easy way to do that in InDesign.