Telstra has big plans for interactive services

Stuart Corner
Tuesday, 10 March 2009 11:39

IT Industry - Market

While the headline from today's announcement by Telstra of plans to upgrade its HFC network in Melbourne to DOCSIS 3.0 might be the downstream bandwidth of 100Mbps, according to CEO Sol Trujillo the upstream bandwidth of 2.0Mbps is just as important and maybe more so and it (or rather the services it will enable) is what customers have been asking for.

"This is not just about upgrading in a one way direction. This will be a two way interactive capability," he told a press briefing this morning. "We are going to be transforming Telstra's cable network into a two way superfast interactive network.

What's more he said that customers had already been asking for this capability, and it would be this increased upstream bandwidth as much as the downstream bandwidth that would make the network upgrade 'game changing'.

"We do a lot of research...and customers want that two way interactivity and that is what we are looking at so people can do more than simply download...that would not be a 'change the game' opportunity that will lift ARPU," he said.

Trujillo also made it clear that Telstra was already working on a range of applications to deliver over the upgraded network that would exploit this new interactive functionality and bring in additional revenue. He talked of a coming "renaissance in the fixed line business", saying "Now we have a platform to leverage it. The idea is to raise ARPU because we can deliver more services interactively and in some cases we will disintermediate the way people spend their money today."

It's not too easy to see what all these interactive offerings might be that would tempt the average consumer to spend more money online, unless it's high resolution video conferencing with family and friends. But whatever they are, so long as they are end-to-end and live with other users, the market will be restricted to those customers on the upgraded Melbourne HFC network.

That's not to say that Telstra could not readily provide higher upstream speeds to a much wider range of customers, and if this functionality is as important as Trujillo makes out you have to ask why it is not already doing so. The technology is called Annex M and it's a mode of operation of ADSL2+ that effectively at least doubles upstream bandwidth by 'stealing' that capacity from the downstream link.

Internode was largely responsible for getting ACIF (forerunner to Communications Alliance) to come up with an Australian standard for Annex M and has been offering the service for several years. In December 2006 Internode surveyed a random sample of 400 customers and found that over 53 percent of these customers were achieving upstream speeds in excess of 1.8Mbps. Thirty five percent got speeds in excess of 2.1Mbps.

Internode has not gone the next step and offered customers services that would exploit this higher bandwidth, they have been left to make whatever use of it they choose. Any similar move from Telstra would, however, be very much service and market driven.

Telstra was non-committal on whether any such upgrade was on the cards. Michael Rocca, Telstra Networks and Services group managing director, told iTWire: "You are right, we do have other choices. We have a number of options on the table in relation to technology choices and we would look at these depending on how the market takes up our next generation products. These are all factors that will go into the decision making as we learn from Melbourne."