Fatality: Optus plans to kill Telstra’s 4G monopoly


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


  1. I think it’s great if they have given up on competing for best coverage. Having a better network (where it works) would be a significant point of difference that would be relevant for plenty of city slickers… now they just have to achieve it.

  2. ‘leading to a current market share situation where Optus is only adding small percentage numbers of customers to its infrastructure’

    Not according to the latest ACCC statistics on mobile carrier market share.

    Optus share June 2008 30%, June 2009 29%, June 2010 30% and June 2011 30%.

    Telstra’s share went from 37% in 2010 to 41% in 2011, the winner from Vodafone’s problems was Telstra.

    Optus has to convince Telstra’s 3G and 4G customers to leave them for Optus, with Telstra having a massive head start with its 4G rollout and national NextG footprint it’s a big ask.

  3. It is good to dream but reality is the problem. The owners of Optus, the Singapore Government, will not advance the tremendous amount of cash needed to enable Optus to approach the quality of the Telstra service. It could well be, that over time, News Corp. and Telstra will develop a gigantic partnership to supply Australia with every need concerning telecommunication and service delivery.

    • News Corp. and Telstra, eh…

      And people are afraid of the people orientated (not $ orientated) NBN having too much power?

    • Welcome to the private sector Corporate screw over of Australia with the full support of mthe Coalition. The problem is Murdoch controls Australia’s media and the public will continue to be treated like mushrooms, in fact it will become mmore blatant. Add in Reinhart (information surfacing which fits the view she is a neo Nazi or fascist). Australia will just slide into being a Fascist nation where politicians must toe the line or never be elected. The excessive dominance of News Ltd. has already severly damaged Democracy in Australia.
      That is why the importance of the NBN, to allow access to different viewpoints and news presenration, different Video providers rater than being locked into just Murdoch Media.
      Look at the deals available on the Bris South fibre. For Business capable you must still deal with Telstra wholesale.
      The argument of providing choice of connection at the premises will actually destroy real competition at the product level

  4. Optus does have one small advantaged and that is a vivid wireless spectrum which give them a more to play with ahead of the spectrum sale.

    • Is 2300 better or worse than 1800 for LTE though? I’d thought it would be worse (higher frequency = less building penetration, etc) but there’s more of it, so it “should” be faster.

      Wasn’t the spectrum sale going to be both 700 and 2600? I also remember some talk of opening up the 1500 range, which could make things more interesting! Imaging trying to get a device that supports all five of those ranges, plus any others that might appear as GSM and 3G start to get phased out (eg 850, 900 or 2100).

  5. Optus doesn’t need to create the biggest and best. As long as it makes Telstra and Vodafone do better it helps the whole market. I welcome the news and sentiment – good luck Optus. My Telstra 4G regularly drops out at key places I most want it to work – i.e. Flinder Street station in Melbourne. And falling back to their over-crowded 3G network in these places is also useless.

  6. Hey hey hey … Are you taking a shot at my workmanship Renai ? :D

    At the moment, with the remaining 3 Mobile customer base still not crossed over to Vodafone in all states, we’re fighting an uphill battle. We’ve still got a good 12-18 months of solid work ahead of us before we have Vodafone OR Optus in a workable state that doesnt have consistent reliability issues.

    3 Mobile customers in Queensland crossed over ahead of planned date, which is causing some absolute havoc on certain sites. Cell Shrinkage, an often underspoken problem with any congested Cellular Network is causing some problems here and there. Should have it resolved mostly … soon .

    Lets just say, those extra Cell On Wheels we’ve just paid for are going to get a workout over the next 3 months as we get those 3 customers under control.

    Lots of Love,

    Network Engineering @ Vodafone.com.au :)

    • I’m not sure how legit it is, but I really like this comment. When a company can state a problem in plain terms, it gives me a lot more confidence that they’ll be fixed.

      • Lets just say we’ve had some bad management previously *Cough*…

        We’re still around on the internet. I comment on Whirlpool sometimes, otherwise its here. Vodafone’s internal disclosure policies prevent me from posting on here or Whirlpool as a physical represenative, so I just add my two bits where I think its warranted.

        We do watch alot of forums and tech websites, I’ve found Delimiter to be the most to-the-point, as opposed to the pointless dribble i see sometimes on Giz, Zdnet or some others.

        Vodafone’s always had a big history of communicating on every medium they can with the customer base, unfortunately due to certain previous internal policies that stopped for a long while. We’re hoping to resurrect some of that shortly ;)

  7. It’ll be the coverage lead the Telstra has over Optus that will always keep them commercially in front.

    At any rate, it’s wireless so it’s going to be spectrum congested eventually, no matter how many towers you put up.

    Saying “mine’s bigger than yours” now or then is totally irrelevant. What they should be saying is “we’ve got more spectrum than you, and at more appropriate frequencies” or something…

  8. Just more hot air from Paul O’Sullivan and his cronies.

    A little less talk and more action would be better Optus!

  9. What I think will be interesting is if Optus permit VirginMobile and Amaysim to resell 4G at the same price as 3G. Historically, the transition from 2G to 3G did not attract a premium. Telstra don’t charge a premium for 4G.

  10. From what I’ve heard from another member of my family who talked to an optus employee (so take it with half a grain of salt), Optus is currently working on doing major upgrades to their entire network for next month including upgrading the 3.5G network and releasing 4G in the most congested areas, mainly CBDs. I can’t confirm any of that, but it’s what I’ve heard.

  11. Considering the 3G base near me on Optus has been congested to the point where you cant even browse at dialup speeds most of the day and has for 18+ months, I think ill pass on the Optus Solution. Enjoying my 40 megabits 4G LTE on the Telstra Network though.. Thanks Optus for the competition, Not!

    • Optus are going to come back and build their network, Vodafone too probably, but this comment here is going to be the biggest problem both of them have, and it’s something I saw written on the wall back when I worked in the supermarket, basically it went like this.

      “I waited patiently while you gossiped behind the counter, I didn’t complain when you didn’t do exactly what you promised (or what my expectations were), etc, but now I’ve left, and it amuses me how much money and effort you spend trying to get me back as a customer when I was there in the first place”

    • FWIW I use my Optus netbook on the train most days and it has improved for me over the last year or so. There used to be blackspots but they have been filled in (I note on Telstra’s mobile broadband map those same areas are blackspots). Since changing from “connectcap” to the “internet” APN (changed to Amaysim prepaid to save some $$$) speeds are not as good but I can still get over 300KBytes/sec – though when moving it’s not that fast but still usable.

      This is on the Beenleigh-Helensvale part of the line, south of Brisbane.

  12. Isn’t the Vivid wireless network already congested some what? I fail to see how Optus having a small amount if 2300Mhz will help them that much.

    What device is going to be 1800, 2300 and what ever the TV sell of is Compatiable?

    The simple fact is if telstra have more base stations (with decent back haul) out there ultimately, they are going to be less congested than the next provider

    • Where is the congestion? If it’s in the backhaul it’s a (relatively) easy fix. If it’s in the air then the only way to relieve it is to change to LTE-Advanced or some other standard with a higher Mbps per MHz rating.

  13. Optus plans to expand its 4G network to capital cities including Sydney, Melbourne and Perth by “the middle of this year”.

    Todays date = 26/06/2012.

    If they mean next year the race will already be over.

  14. Master T
    Don’t forget all those new towers with fibre backhaul that the NBN is putting up, scope for some wheeling and dealing, start expanding the network into areas that may not have previously been viable ?.
    P.S I reckon the V $20 uncontracted byo phone plan has been a winner, still some connection issues but wearable

  15. Optus may have the spectrum. It may actually have funding. But it’s competing against Telstra. Whom are not above overbuilding, restricting or otherwise crushing competition, where required.

    Optus have left it a bit late; the damage is done, the brand has taken a beating and as Telstra has aggressively re-entered the market, it’s pricing has seen some changes (downward).

    We need a strong Optus, if for no better reason than to push Telstra to offer competitive plans and services. They will keep each other (to a degree) more honest, than if either were alone. I hope this is more than just talk. They need to massively invest to boost capacity and capabilities.

    Thing is, Optus has always, always struggled to deploy. Hell, it’s always “struggled” in just about every area. I’d prefer to be an Optus user, but there’s a reason I now use NextG.

    It’s one thing to claim to be able to beat Telstra, it’s another to actually do so.

  16. Telstra are always ahead of the game. First mover advantage and all that. More towers, more fibre backhaul, more real estate for facilities, more quality customers (as in ARPU etc) to hang on to, more LTE coverage coming every week. Plus Telstra has service in places the other two haven’t even been to. The CBD issues are temporary – you can’t fix every area all at once. However competition is a wonderful thing, and I look forward to seeing what the other two come up with.

  17. My first thought: Believe it when I see it. (or use it)

    It would be good to see more competition in the market.

    Final thought: kudos on using MK references AND images in your article!

  18. Even if Optus get some base stations upgraded to support 4G, I don’t believe their backhaul from those stations nor their core network will approach the performance requirements in latency, routing and throughput that is needed to for 4G to truly work well. A sad state of affairs.

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