news The nation’s largest telco Telstra has responded to the threat of expanded 4G networks from Optus and Vodafone by pledging to almost double its number of mobile towers with 4G support by the end of the year, as the race to cover the country with the latest mobile broadband infrastructure steps up a notch.
Telstra first officially switched on its 4G network in September 2011. Since then the telco has continually progressed the rollout of the network to thousands of locations around Australia, accumulating a massive 4G customer base running to several million along the way. Optus was slower off the mark, launching 4G services in mid-2012; but the SingTel subsidiary has done much to catch up with Telstra and has accumulated close to a million 4G customers.
In contrast, Vodafone has lagged behind as the telco deals with the still-dire fallout of the series of network outages and customer service woes it has suffered over the past few years, known collectively as ‘Vodafail’. The telco has focused on bringing its existing 3G infrastructure up to speed rather than on the next generation of 4G speeds. However, in mid-June Vodafone finally launched its 4G network in certain locations around Australia, stating that its network could deliver speed enhancements over Telstra and Optus, as the telco had access to certain wireless ‘contiguous’ spectrum blocks in some areas.
Telstra has since complained that Vodafone’s claims about having the fastest network are inaccurate, and this afternoon told journalists that it was about to make another huge investment in its 4G network to keep ahead of its rivals.
In a statement, the telco said it would 4G coverage to a further 200 regional towns across Australia in the next six months, including towns such as Batemans Bay (NSW), Colac (VIC), Biloela (QLD), Berri (SA), Margaret River (WA) and Latrobe (TAS).
Telstra Chief Operations Officer, Brendon Riley said the roll out program would take Telstra’s 4G coverage to 85 per cent of the population by Christmas this year, up from 66 per cent at the end of June. “Each week, large numbers of customers are choosing a Telstra 4G mobile device to enjoy the superfast speeds that our network offers. We want to make that experience available to even more customers in more places across Australia,” Riley said.
“Last August, we committed to extending our 4G coverage to 66 per cent of Australians by June 30. Having met that target, we are now committing to have superfast services in place for 85 per cent of the population by the end of the year by upgrading another 1500 base stations before Christmas. We already offer 4G services in approximately 100 regional locations and this new expansion will take 4G services to more than 200 new towns and increase our capital city footprint across many more suburbs.
As at June 30, Telstra had made 4G services available to 66 per cent of the Australian population and had deployed more than 2000 4G base stations, making services available in every capital city and many surrounding metropolitan suburbs, and more than 100 Australian regional areas.
Today it also stated that it now had 20MHz of contiguous spectrum in the 1800MHz band in Brisbane, Adelaide and Perth and 15MHz in Sydney and Melbourne; theoretically bringing it up to speed with Vodafone in some areas. It has also launched more than 30 4G mobile phones, tablets and data devices. By Christmas this year, Telstra plans to make 4G available in more than 300 towns across Australia, including many popular holiday hotspots and deploy 4G equipment to more than 3500 base stations.
Telstra Mobile Executive Director Warwick Bray said: “We will continue to offer Australians the most extensive and technically advanced 4G coverage in this country. This is important as we continue to manage capacity in our network and build out wireless services for the future.”
There can be no better demonstration of how many fat sacks of cash money Telstra has sitting around than the recent battle the telco has been fighting with Optus and Vodafone with 4G. Optus announces a moderate expansion of its network? Telstra will hold a major press conference the next day to lay down another 500 4G towers or so. Vodafone barely limps across the line, and beats Telstra’s speeds a little with its superior wireless spectrum? Telstra will come out a few weeks later with an announcement to virtually double its 4G coverage — AND address the speed issue.
I’ve said before, and I’ll say again: Right now, Telstra is killing off mobile competition in Australia through massively outspending its rivals in mobile infrastructure. Telstra can do this because it’s a former incumbent and can also cross-subsidise its mobile network through owning other infrastructure that can support it (backhaul). I wrote this in June 2012:
“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.
Now, from a customer viewpoint, there is no doubt this is fantastic — for now. Telstra is bending over to make customers like myself happy, and I’m happy to admit I’m a Telstra mobile customer. There is simply no point for someone like myself (who needs access to the Internet pretty much 24×7, anywhere I am), to sign up with Vodafone or Optus, when I know I’m going to get reduced coverage and speed from the alternative networks for only a slightly cheaper cost. And Telstra has been the only mobile carrier I recommend to anyone who asks for years now.
But long-term, what Telstra is doing right now represents a troubling sign for Australia’s mobile industry. Just as it did in fixed broadband, Telstra is now winding back competition in the mobile telecommunications space. One really has to wonder how long multinationals like SingTel and Vodafone will continue to be committed to piling hundreds of millions of dollars into mobile phone infrastructure in Australia, when it is clear they are only going to see very moderate levels of growth in return — and are even going to have to struggle to keep what customers they have. And who will keep Telstra honest with strong competitive offerings, when the company gets too far ahead for its own good?”
With its massive cash investments in 4G infrastructure, Telstra is re-monopolising Australia’s mobile space at the moment. Vodafone chief executive Bill Morrow has hinted at it before, and I think it’ll happen eventually, that regulators such as the Australian Competition and Consumer Commission will step in. Telstra is simply able to massively out-spend Optus and Vodafone in this space right now, as today’s announcement demonstrates.
Vodafone barely limped across the line to get 4G services available in Australia. Telstra’s response was to instantly try and squash it like a bug through throwing buckets of cash at the issue. That’s not competition. That’s a cashed-up former monopolist telco trying to kill off rivals. Under David Thodey, Telstra has had a great public relations image. But underneath all the fatherly smiles, the evil old Telstra is still there. And the beast is rapidly growing in strength, to the point where its rivals cannot keep up.
Image credit: Telstra