Stuart Corner
Sunday, 08 October 2006 03:54
Opinion and Analysis
Page 2 of 4
So I asked on of the Telstra people: he told me the data rate was 1.5 cents per kilobyte. Surely he meant megabyte. That works out at $15 per megabyte, $15,000 per gigabyte!). At those prices Next G will do little to bring broadband to all Australians.
And how much is the "turbo card" the plug-in card that makes these data rates available from your laptop? He couldn't tell me, but he did tell me I could buy one that day from the Telstra shop down the road.
All this is not to diminish what Telstra has achieved in rolling out the network in such a short time frame. There was much anticipation that Telstra would pull something out of the hat, launching the new network with limited coverage, but it has gone the whole hog, claiming coverage of 98 percent of the population around the same as that of the CDMA network, all in just 10 months. Achieving this meant that, at one stage of the project prime contractor Ericsson was installing a base station every 25 minutes 24 hours a day seven days a week.
But where's the benefit for shareholders? This has nothing to do with higher data speeds for more Australians or being able to make and receive video calls from beyond the black stump, per se. It has a lot do with reduced costs, through not running both a GSM and CDMA network, higher ARPU, higher market share through differentiation, and reduced churn.
Just what are the justification against these parameters of the $1 billion investment? Not a word. When the plan for the network was announced back in November 2005, Telstra COO, Greg Winn, made a bid deal of cost savings saying: "Over the last few years we've spent over four times as much CAPEX per CDMA subscriber than we have on GSM. At the same time we spend more than three times the CAPEX on a cost per originating minute of use, than GSM. We must and will change this."
