4G: How Telstra will ROFLstomp Optus, VHA


opinion There was a wonderful little moment during the question and answer session with chief executive David Thodey at Telstra’s half-yearly financial results session last week which I just can’t get out of my mind, as I think about the company’s plans to launch Australia’s first 4G mobile network.

At the end of the briefing, Thodey took one last question on how many iPhones and iPads Telstra had connected over the past six months. “New iPhones was 400,000,” Thodey said. And then, almost sub-vocalised, the chief executive said the word “iPhone” again, before noting that Android-based smartphones are selling strongly as well — with some 290,000 of the devices shipping in the first half.

Now what’s remarkable about this little segment — which you can watch in this video — is both what Thodey says, as well as how he says it.

For starters, the amount of iPhones which Telstra connected to its network in the second half of 2010 was simply extraordinary.

Numbers from local analyst house IDC show that the total number of smartphones sold in the third calendary quarter of 2010 was 1.78 million. In that quarter, Apple had taken 30.5 percent of the market for smartphones shipped in Australia — meaning about 543,00 iPhones were sold in Australia in the three months to the end of September.

If you multiply the numbers by two, you’ll get a very rough estimate of the size of the entire iPhone sales figures in Australia for the second half of 2010 — about 1.08 million (and this is an extremely rough estimate). What it means, doing some simple math, is that what Thodey truly said in the Telstra results session was that 37 percent of the iPhones now sold in Australia are connected to Telstra’s network.

Now, normally this wouldn’t be a huge deal — after all, you’d expect Telstra to have a large market share in any given area, as it’s by far the biggest telco in Australia. However, the reality is that this market share is incredible, when you consider that Telstra royally buggered up its launch of the iPhone 3G back in 2008 with exorbitant prices. At the time, Optus executive Maha Krishnapillai famously said that the SingTel subsidiary had captured “the lion’s share of iPhones in Australia”, due to its launch offer, which knocked rival plans by both Telstra and Vodafone for six.

What Thodey said last week was extraordinary. In short, the chief executive disclosed that over a period of just two years, Telstra had gone from having only a very tiny share of the market for Australia’s most popular smartphone, to 37 percent.

The reasons for this are not hard to understand.

iPhone users are the most data-hungry mobile customers on earth, and Optus and VHA have shown time and time again over the past several years that they are simply not prepared to make the investments necessary in their mobile networks to truly support this new category of customer.

Optus’ network was stretched to breaking point after the launch of the iPhone 3G in mid-2008, and although it has recovered a great deal since, complaints still abound about blackspots and slow connection speeds. And we hardly need to go into the problems experienced by Vodafone over the past few months … a class action lawsuit with thousands of dissatisfied customers is not exactly a recommendation to sign up with the beleagured telco.

What Thodey made clear in Telstra’s financial results session last week — with a single one-line answer — is that the telco has been making hay continuously over the past 18 months or so as its rivals have been hemorrhaging smartphone customers.

Sure, Optus and VHA are still both adding customers, and converting legacy phone customers to smartphones. But they are doing so at nowhere near the speed that Telstra is doing so. Optus, for instance, added just 150,000 new mobile customers on plans for its own quarter to 31 December.

Extrapolating, I’d say there is a good chance Telstra added more iPhone customers during the second half of 2010 than Optus did postpaid mobile customers in total.

And the Telstra chief executive is clearly aware of this fact. His manner when answering the iPhone question was extremely revealing — already a soothing talker, Thodey went to great lengths to vocally caress the word ‘iPhone’ in his response, even repeating it in a softer tone as he raised his eyebrows slightly.

I almost expected Thodey to pull out a cheshire cat with a diamond-encrusted collar from behind his podium and start gently stroking it with one hand while continually murmuring “iPhone” over and over, such was his sense of self-satisfaction at the number of Apple devices Telstra had sold. His purring quality has to be seen to be believed … watch the video again and you’ll see what I mean.

All of this bodes extremely ill for both Optus and VHA.

Telstra’s success in the smartphone arena is fuelled, of course, by the speed, coverage and reliability of its Next G mobile network, which is commonly hailed as being one of the best of its type anywhere in the world. And that network is about to get dramatically better, with Telstra’s announcement late on Monday night that it is planning to upgrade it with the long-awaited Long Term Evolution technology.

But it’s not going to get better in the way that many think it will.

Telstra’s deployment of LTE is not just another example of the incremental upgrades it has been ploughing into Next G since the network was first built back in 2006 — pushing peak theoretical speeds from 7.2Mbps, to 14.4Mbps, 21Mbps and even up to 42Mbps, with 84Mbps on the horizon.

The fledgling LTE deployment constitutes the first move in what will become a step change for Telstra’s infrastructure, vaulting it above the current level of 3G mobile broadband into the stratospheric speeds and capacity of what is coming to be called ‘4G’, for fourth generation. This can be seen in the speeds which Telstra has already achieved in trials of the technology — 100Mbps right to the edges of a 75km area radius, for example.

Of course, these are all just speeds on paper. But the ultimate significance of Telstra’s upgrade cannot be overstated. The reason for this is that Optus and VHA have not kept pace with even the current level of Telstra’s Next G network and are ill-positioned to take the next major leap alongside the Big T.

An IDC study last year for example, found Telstra’s network was on average 60 percent faster than Optus’ — with VHA lagging behind in third. The truth is that Telstra has never spent that much on Next G — just $1 billion initially, likely followed by a few billion more over the succeeding years since 2006. That’s nothing in the context of a company which generated free cash flow of $2.02 billion in the last six months of 2010 alone.

Optus and VHA have also invested substantially in their Australian networks, and continue to do so. However, despite the fact that both have very deep pockets backing them — SingTel, in Optus’s case, and the wider Vodafone group for VHA — neither has thrown down the several billion that Telstra has to truly provide the capacity that smartphone users are now demanding.

Telstra’s LTE rollout will put the pair even further behind.

Both Optus and VHA are currently trialling LTE. But when asked about their plans this week, neither would confirm any concrete plans to deploy the technology. What all of this means is that Australia’s mobile sector is about to experience a dramatic segregation into two halves: With Telstra’s blisteringly fast and capable network on the one side, and those of Optus and VHA on the other.

Telstra is not aiming with its LTE ploy to gain a speed, coverage and capacity advantage on Optus and VHA. It already has that. What the telco is aiming to do with its 4G strategy is advance so far ahead of what the pair have to offer, that there is no point comparing the different networks any more — Telstra’s advantage will be exponential.

This is why Thodey was so self-satisfied when discussing the iPhone at Telstra’s financial results conference last week.

The Telstra CEO knows that data-hungry smartphone users are already switching to his network because of the enticing advantages it currently offers. When the reality of a working LTE deployment hits Australia through late 2011, with all mobile phone owners increasingly being smartphone owners … that network will become nothing short of irresistable.

Image credit: Chris Moore (Team Fortress 2 screenshot), Creative Commons


  1. “Telstra’s LTE rollout will put the pair even further behind.”


    It’s a big jump in per-user bandwidth requirements. The success of NextG has been that the backhaul to support it is overspecced – due to it being shared in some places with their NextIP fixed solutions.

    It will be interesting to find out just how overspecced it is once LTE customer numbers start to grow – interesting times.

    • From what I hear, all of the major carriers, including Telstra, are more or less constantly upgrading backhaul connections everywhere they can at the moment, changing microwave over for fibre and so on. I don’t expect this to be a problem for Telstra — although I can’t speak for the others.

      • Of course.

        And Telstra is best placed to keep up, undoubtedly – it will just be interesting to see how it scales, particularly once the Telstra/NBN deal gets sealed, and the usage of some of Telstra’s fibre assets change priority.

      • Telstra has basically almost replaced all of its towers from microwave to fiber cores, its one of the main reasons why their mobile network is so good.

        The major step that LTE of course provides in terms of technology is more efficient (= cheaper) use of spectrum, reduced latency time for things like video calling, better management of contention and of course higher speeds

    • There is also the price point to consider.

      By that I mean your casual iPhone user may be happy (or at the very least reasonably happy) with the service from their respective 3G carrier. It may not be perfect or fast but if you’re just using the data on the phone and not tethering it may meet your requirements. What will be the incentive to go to a most likely higher priced plan just to get a little bit of extra speed?

      • The problems we’re still hearing about on Optus and Voda (more so than Optus) have nothing to do with prices — it’s more about whether the network actually works most of the time when you need it to. Slow is OK, but when it’s just not working very well at all, that’s a problem.

      • Its more about quality of service then speed, the Optus has more black holes then the NSW state budget. I get it every time I travel to uni

  2. Telstra’s backhaul is mostly fibre & has been for a while, while Optus’ wasn’t & they’re still converting- its a big part of the differences.

    • Yup — and you can imagine how bad the situation would be for VHA — which doesn’t actually have much fixed infrastructure in Australia. It’s not VHA can call its own fibre deployment team and get stuff laid out easily as Optus and Telstra can.

    • Optus doesn’t have fibre backhaul? Optus has IOF connections from Cairns to Perth and has had for years. Not sure what conversion you’re talking about.

      • Yeah, tower backhual’s are/were mostly microwave. You can see it quite clearly when you lookup transmission sites on the ACMA site, the emission designators show you whats transmitting- lots of the Optus, 3 & Vodafone sites have the 3G radios, 2G radios & some high frequency point to point microwave links.

  3. I made the switch a few months back when their data bundles changed to offer a mostly-similar deal to Vodafone’s, with the addendum of better coverage and data.

    Since then they’ve changed the billing for calls from 30sec increments to 60sec increments, but overall I am still impressed with the service offered by Telstra.

    • Same — I dumped Optus for Telstra late last year. To be brutally honest, Telstra could jack the price up quite a lot on me and I would be very very reluctant to switch to anyone else … Vodafone is a no-go zone at the moment, and I’ve spent enough time on Optus to know that I don’t want to go back there.

      • I’ll be honest.

        I left Telstra for ideological reasons – (I could explain, but that’ll take all day!)…and haven’t struck too many problems with Vodafone. I’d never go near Optus for other reasons again.

        Vodafone is DEFINITELY worse for in-vehicle reception, but outside I’ve not noticed a lot of difference. When in the part of the Melbourne CBD I work, it’s actually sensational – (seems like the 850Mhz towers are up and running in this corner of town).

        My gut feeling is that they have more capacity issues in Sydney than they do in Melbourne. I also have a tinkling in my bones that it’s not backhaul specfically – if it were a backhaul issue, there is plenty enough available in CBD areas to “pump up the volume”.

        Ultimately, the 2100Mhz range is a pretty congested part of the spectrum, and phones struggle for a carrier wave – NextG runs just great in the 850Mhz range, and seemingly so does Vodafone when on one of their new towers.

        Telstra looks all shiny because all their newer (smartphones) are on the 850Mhz NextG. If you’ve just got an old GSM jobby, you’re sitting on the 2100Mhz network, or even the older 1800/1900 ranges if your phone is ancient.

        It will be interesting to see how it goes as more of these Vodafone 850Mhz towers come online.

        • (Completely OT)

          “I also have a tinkling in my bones”

          I only get that when the weather is going to change, but it’s more like an insistent pinging, possibly from the BOM server. ;)

  4. A very likely key reason why Telstra is doing so well on iPhone marketshare is simply because it actually had a lot of iPhone 4’s in stock. To my recollection it was much more difficult to get iPhone 4 stocks from Optus, Virgin, Voda, Three.

  5. I used to have an iPhone 3G with Virgin and the experience of using Optus’s 2100Mhz 3G (900Mhz 2G) network in Tasmania was unbearable. Constant call drop-outs, poor reception, very rarely a 3D signal (or edge, it was nearly always 2G). Trying to download anything anywhere other than the Hobart city centre was almost impossible. As a result the 1GB a month data limit I had was barely used. I was lucky to hit 200MB a month.

    Since switching to Telstra with an iPhone 4, it’s in a completely different league. The same awesome 3G signal everywhere I go in Tasmania, with blistering fast download speeds and even acceptable latency for wireless. It’s amazing how much better the 850Mhz frequency penetrates buildings.

    I also use my phone as a wireless hotspot where it performs to the same standards of Telstra’s s Next G wireless dongles. I just wish I could afford a higher data allowance (currently get 3GB a month) as I could definitely make use of it.

    Having worked at Telstra there’s a lot I dislike about them as a company and the way they do business, but there’s no denying their network is leaps and bounds ahead of the competition.

  6. Remember tho that Telstra tested their 42mbps speed with just a single user and the fastest he could get was just 21mbps, surely you would think that with one user close to the tower he would get at the very least 38mbps, and not just half the spec’d speed.

    • “Telstra’s deployment of LTE is not just another example of the incremental upgrades it has been ploughing into Next G since the network was first built back in 2006 — pushing peak theoretical speeds from 7.2Mbps, to 14.4Mbps, 21Mbps and even up to 42Mbps, with 84Mbps on the horizon.”


      “Remember tho that Telstra tested their 42mbps speed with just a single user and the fastest he could get was just 21mbps,”

      That 42mbps quoted here is actually the wireless network connection Link Speed as displayed in Windows Task Manager.

      According to my Big Pond NextG Ultimate hardware config shows that this is true. However, the truth is that Network connection Link Speeds is a totally different metric to Internet file transfer speeds. Both are measured in completely different ways.

      The peek Internet speed of 20mbps as advertised for this service is fiction – I would be lucky to get 2mbps on speed tests and for a $89.95 /mth 12GB data cap wack.

      Location: Close to Sydney CBD

          • I’m going to have to agree. However I do duplicate his results using local servers, granted with slighty better bandwidth and pings in both counts. i.e. the speed of the mobile network is consistantly slower, especially in the CBD, compared to the ADSL (and now Cable) connections I have had at home.

          • I should note that both my tests were conducted in the Sydney CBD, while in an office on the 23rd floor, using the MyWi app to share the connection to my laptop.

          • Impressive. You wanna do something fun? I sometimes go down and use the demo laptop for Telstra NextG Ultimate at the T-Life Store on the corner of King and George, I have yet to get a test about 2Mbps/1Mbps. :)

            Maybe I should post a result or two.

          • I think Hobart’s lower population density works in my favour with Telstra Next G. . I generally enjoy in the vicinity of 4mbps down 1mbps up. Not blistering fast, but more than an enough for my iPhone and much more consistent than the pathetic speeds I used to get with Optus.

            Test Date: Feb 18, 2011 12:12 PM
            Connection Type: Cellular
            Server: Melbourne
            Download: 4.54 Mbps
            Upload: 0.31 Mbps
            Ping: 218 ms

            External IP:
            Internal IP:
            Latitude: -42.9131
            Longitude: 147.3429

            A detailed image for this result can be found here:


            And here’s one for comparison using Internode ADSL2 (sitting next to my wirless N router). The phone is the bottleneck here as I’ve never seen it get over 7mbps.

            Test Date: Feb 18, 2011 12:14 PM
            Connection Type: WiFi
            Server: Melbourne
            Download: 5.98 Mbps
            Upload: 1.07 Mbps
            Ping: 104 ms

            External IP:
            Internal IP:
            Latitude: -42.9131
            Longitude: 147.3429

            A detailed image for this result can be found here:


          • Location plays a part in the speed result, especially in lesser population density where you also have less congestion.

            There might be a difference between mobile and fixed wireless network performance stats.

            Another important test uses the trace route utility – tracert. Point it at YOUR most popular Internet destination – then you can see exactly where the holdup is, including any high latency routers.

          • Thanks, as ex-tech support for a couple of ISPs, I’m well acquainted with tracert :).

            Speedtest.net remains the best general network test and comparison tool for mobile devices IMHO. The SpeedTest iPhone app is very simple and well designed too, making it easy for me to help other people check data flow from their devices when troubleshooting.

          • ICT since 1978.

            Then its highly likely that you will also be familiar with deep packet inspection based traffic management system policies including some very heavy-handed ones by certain ISPs.

            The FCC, since handing down their 3 net neutrality rulings, are currently overseeing full implementation of those rulings – that includes AT&T and Comcast. There has already been an improvement on several networks and all the dodgy routers – fixed pronto!

            Also in Canada

            Your Local Network Connection Link Speed means nuffin!!!! If I had a 1Gbps Ethernet adapter installed you would have 1Gbps Link Speed on that connection.

          • “I’m not sure how fair it is to speed test using a server on the other side of the world though.”

            Thats an old-wives-tale. I also could not trust the accuracy or the sad lack of detail in the results an Australian speed test site. I don’t think any of them provide statistics either.

            DSLReports (also great for Broadband news)


            The majority of volume of traffic is between Australian users connecting to servers on US domains. I think about 78%. Show me an Aussie site on the Top 20 visited list.

            I think thats fair.

  7. Optus has(had?) internally had a strategy to be #1 in mobile for some time however although they may appear to have ‘deep pockets’ Singtel/Optus are extremely tight when it comes to capex – lots of ROI hoops to jump though.
    I have had an iPhone with Optus for years and the network always seemed flakey.
    Although from Optus perspective is it worth it to be as good as Telstra from a capex perspective? If they are picking up customers, ARPU going in the right direction why pour huge amounts of money into the network.
    It will be interesting to see what they do this time – at the start of 3G they sat on their hands with the mantra ‘when our customers tell us they want 3g we will build it’ and rather infamously got caught off guard. They were burnt badly by this strategy and have been playing catch up ever since.
    From what I see so far it may just happen again.

  8. I work for a telstra store in the Sydney CBD, and have personally seen speed test results of 36Mbps. I have used Optus and vodafone in the past and there is absolutely no doubt that Telstra is a mile ahead of the competition. Not only are the data speeds way higher and more consistent, the little things such as calling and SMS are even more reliable. 4.5 months into my first ever telstra contract, and still have not experienced a dropped call. Pay the extra $10-20 per month and experience it for yourself.

  9. Oh, and mobile phones in australia are way behind the capacity of the network. All Australian mobiles to date are running 7.2Mbps modems, when the network is clearly capable of much higher speeds. Mid year we will see devices running 14.4Mbps modems, still far behind the network.

  10. Lets see what Gartner says about 4G in their emerging technologies Hype Cycle report.

    It is currently listed at “Peak of Inflated Expectations” and about to fall rapidly into the “Trough of Disallusionment”. The “Scope of Enlightenment” is years away.


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