Telstra mobile data shaping setting market up for LTE

Stan Beer
Wednesday, 25 May 2011 19:00

Opinion and Analysis

Is it a coincidence that Telstra announced that it has switched on its first LTE base stations in the same week that mobile data shaping was announced? We think not.

A few short months ago, 'long suffering' Telstra shareholders and the public alike were writing off Australia's telecoms juggernaut as an out of date behemoth that had seen its best days.

However, after negotiating a crafty $11 billion deal to turn over its ageing copper network and HFC network to the Federal Government, and provide access to its ducts, Telstra has been busily cultivating the real jewel in its crown.

In case anyone hasn't noticed, Telstra's national mobile network is one of the best in the world. In Australia, it's so far ahead of its two rivals that it's not even a race anymore. The best Optus and Vodafone can do is try to compete on price.

And if anyone thinks this is just about voice services, think again. Telstra's HSPA+ Next G mobile data service, unlike its competitors, is world class. Yes, it has its black spots but in most areas of major population centres it is excellent.

I walked into a travel agent yesterday, and the agents were all using their own Next G dongles. The shop hadn't even bothered to put on a fixed line service.

So what we have today is massive global growth in the uptake of mobile data services and a marked flattening of fixed line services. Telstra has obviously seen the writing on the wall some time ago.

One of the big bugbears of mobile data is the excessive charges and potential for massive cost overruns.

Another big irritant is the unpredictable variability of the performance of mobile broadband.

Telstra's actions of this week provide a strong indication that Australia's dominant telco intends to address both issues.

Mobile data is still too expensive but shaping has proven to be a good strategy for showing consumers that there are limits to what they can get for their money without killing the golden goose so to speak.

With the advent of LTE, Telstra knows that it has a potentially huge market of upwardly mobile consumers just waiting to get their hands on super fast mobile broadband, willing to pay a good price for good plans, knowing that they can't overspend but may if necessary upgrade to a bigger data allocation.

Oh, we haven't mentioned the NBN? Yes, provided we don't have a number of changes in government - and that's big proviso - ten years from now a fair number of Australian homes may get fibre to their premises.

However, to use what we have now as an analogy, most homes have a perfectly reliable copper fixed line voice service - far more reliable than mobile services.  The problem is that most of us are prepared to sacrifice the reliability and superior quality of service for the flexibility that mobility provides.

That, may I suggest, is why growth in mobile broadband dwarfs the growth in the fixed line services.

Telstra obviously knows on which side its bread is buttered.

Full disclosure: the writer is NOT a Telstra shareholder.