news The nation’s number two telco Optus has kicked off a verbal offensive aimed at the mobile dominance of its arch-rival Telstra, with the SingTel subsidiary claiming its own fledgling 4G infrastructure will be the “highest capacity” and “best-performing” mobile network in Australia when it is completed.
Telstra currently has an extensive lead over rivals Optus and Vodafone when it comes to the deployment and customer uptake of the next generation of mobile infrastructure, known as 4G for fourth generation, as compared to the current 3G networks all three have deployed. After first switching on its 4G network in September last year, Telstra recently announced it had rolled out some 1,000 4G base stations around the nation, and had some 300,000 devices connected to the network already.
In comparison, Optus has only launched its own 4G network in the Newcastle and surrounding region, and Vodafone has not yet launched 4G speeds anywhere in Australia. In addition, the 3G networks of Optus and Vodafone are currently seen as inferior to Telstra’s Next G network, leading to a current market share situation where Optus is only adding small percentage numbers of customers to its infrastructure and Vodafone is losing customers, while Telstra is adding on some 900,000 new mobile connections about every six months.
However, in several high-profile public statements over the past few weeks, Optus has talked up the potential for its own 4G efforts to eventually eclipse Telstra’s efforts, despite the big T’s head start.
In a media release issued last week, Optus stated that it had successfully completed its $230 million acquisition of the Vividwireless Group, a move which saw Optus acquire up to 98MHz of wireless spectrum in the 2.3GHz band — which is already used by a number of global telcos to provide 4G services. Because of the acquisition, “Optus will soon have the highest capacity 4G network in Australia,” the telco said in a statement. “The new network will deliver a series of benefits to Optus customers across Australia, including stronger network performance and customer experience with Australia’s highest capacity 4G network in metropolitan areas.”
Kevin Russell, chief executive officer, Consumer Australia, said: ”The successful completion of the Vividwireless deal reinforces our commitment to being a leader in 4G and in providing Australians with a range of high speed mobile services. This is an important step in our vision to lead the industry in customer experience by delivering relevant content and applications anywhere, on any device.”
Telstra is currently using the 1800MHz spectrum band to provide 4G services to its customers, and Optus plans to do the same, but will also make the 2.3GHz band available simultaneously. Optus plans to expand its 4G network to capital cities including Sydney, Melbourne and Perth by “the middle of this year”.
In addition, in an interview in this morning’s Financial Review newspaper, Optus chief Paul O’Sullivan talked up the company’s 4G mobile plans further, with the company to increase its mobile broadband spend from around half a billion dollars each to year on average to about $2 billion over the next two years, in a move which O’Sullivan said would deliver the company “the best-performing network in Australia”.
Optus’ 4G network in Newcastle is based on equipment from Huawei, with the telco reported by a number of sources to be currently evaluating bids from the Chinese company and a number of other suppliers for its full 4G rollout, while Telstra has long standardised on equipment from Ericsson. Optus is planning to use the extension of its infrastructure-sharing agreement with Vodafone to ‘fast track’ the rollout of its 4G network.
When the telco announced its Newcastle 4G rollout, Optus was believed to have been seeing download speeds up to 50Mbps on the 4G network, with upload speeds up to 20Mbps. Last week it said the network was capable of typical download speeds ranging from 25Mbps to 87Mbps. Telstra says its own 4G network is capable of download speeds between 2Mbps and 40Mbps, and upload spees between 1Mbps to 10Mbps. However, recent real-world tests using HTC’s 4G One XL handset on the network in Sydney have shown speeds of around 35Mbps down and up between 15Mbps and 25Mbps.
Currently, Telstra has a number of mobile broadband and smartphone devices capable of connecting to its 4G network, including flagship models from companies like HTC and Samsung. Optus does have 4G USB dongles and mobile Wi-Fi adapters available to customers, but has not yet provided any for review purposes. In addition, the company has not yet confirmed what 4G smartphones it will offer customers.
Well, well. Looks like Paul O’Sullivan, Kevin Russell and their merry band of Optus engineers and ‘yes’ men have finally succeeded in unlocking the Singtel funding vault and will be plonking down a large wad of cold hard cash on the table over the next several years in a highly delayed attempt to catch up to Telstra’s dominance in Optus’ core mobile area. It seems as if Telstra’s long habit of eating Optus’ lunch in this area (ever since 2006, when its flagship Next G network kicked in) has finally attracted the attention of Singtel’s bean counters, and that a case has been made that Optus’ future growth requires a major investment about now.
This investment couldn’t be more timely. As I wrote several weeks ago, the level of real competition in Australia’s mobile telecommunications sector is declining every day, with Telstra the only player showing vigorous signs of growth and its rivals falling further and further behind it.
I wrote: “Right now, when it comes to mobile, Telstra holds all the cards in Australia, and it is playing those cards for all it is worth; rapidly soaking up hundreds of thousands of customers, destroying Vodafone’s revenue stream wholesale, and holding Optus back with one hand while it’s raking in cash with the other. It has the best handsets, the best network, the most marketing clout, the best reputation for network quality and a colossal lead in 4G infrastructure.”
So do I believe Optus’ claims that it will shortly have the “highest capacity”, “best-performing” 4G network in Australia? In a word, no. I view these claims right now as complete marketing hype, flooding from Optus into Australia’s mobile market in a feeble attempt to keep its current batch of often dissatisfied customers on the leash for a little while longer through holding out the possibility that the telco will be able to offer them a 4G experience which will be exceed that possible through Telstra.
Right now, everyone in Australia’s telecommunications industry knows that Telstra has at least a year, perhaps more worth of lead time on Optus when it comes to the deployment of its 4G network, and that that early investment is already paying off in spades for the telco, as it continues to attract high-quality early adopter customers on its 4G infrastructure and reduce the burden on its 3G network at the same time.
Sure, Optus will no doubt move very fast over the next six months to roll out its 4G network across Australia, utilising all of its spectrum assets and the expertise of its networking vendor partners to do so. However, Telstra’s also not going to be standing still over that time. I suspect that Telstra chief executive David Thodey has taken Optus’ 4G comments over the past few weeks to heart, and has already given the green light to Telstra mobile network chief Mike Wright to both start upgrading Telstra’s 4G speeds, as well as accelerating the coverage rollout across Australia. Telstra has a huge head start in 4G, and a massive amount more resources than Optus does.
I bet both Thodey and Wright are sitting in their corner offices right now, rubbing their hands and muttering “bring it” as they read the Financial Review and sip their double lattes. As for Vodafone … wait: Does Vodafone even still exist?
Image credit: Warner Bros Interactive Entertainment Australia