Saturday, 14 June 2008 10:41

Telstra vs Optus: iPhone 3G, revenues and you

Telstra’s legal letter to Optus shows that Telstra hates losing, and until Telstra announces it has the iPhone 3G too, it’s the big loser in the iPhone 3G stakes. What are the facts on coverage issues?

Aside from being one of the coolest tech toys of the 21st century, why do telecommunications carriers want the iPhone 3G?

Well, it’s very simple. Apple is cool, and telcos are hoping some of that cool rubs off on them – and with it comes monthly revenues and the chance to churn some customers away from the competition.

In the Australian market where Telstra has millions of customers, anything Optus and Vodafone can do to get more customers is worth doing, short of losing money which helps no-one.

Because Telstra hasn’t yet announced that it too will sell the iPhone, we can only assume, for now, that it won’t, sad though that will be for Telstra customers – especially those in rural and regional Australia – that were hoping to get the iPhone 3G and use it as a broadband speed device.

Telstra has also sent a legal letter to Optus saying that it refers to “Optus' press release on 7 May 2008 in which Optus announced that the planned expansion of its 3G network would be achieve using the 900 Megahertz (MHz) spectrum utilising High Speed Pack Access (HSPA) wireless broadband technology.”

In this press release, Telstra notes that “Optus states that it would “embark on an investment program to expand its nationwide mobile network beyond 96 per cent population coverage to reach 98 per cent”.”

Telstra notes that Optus’ 3G expansion will include 900MHz 3.5G equipment, which not all 3G devices are compatible with. While Telstra doesn’t mention the iPhone 3G, it seems obvious they are referring to it when Telstra’ letter notes: “Telstra is concerned that Optus may represent to customers that they can enjoy a range of 3G features and services with Optus using a 3G device and that they will be able to access those services in more places as Optus expands its network. However, in fact those features and services will not be available if the 3G device is incompatible with Optus’ 3G 900 Mhz network.”

Telstra’s letter stated it believed Optus might be engaging in “misleading or deceptive conduct”, that it would “continue to monitor Optus’ claims in relation to use of 3G devices on its 3G 900MHz network, and will not hesitate to take such action as is appropriate” and that it reserved its rights.

Wow. Heavy stuff. So, what’s the true position of Optus and Vodafone on the topic, as far as I can tell? Why did Apple not include a 900MHz chip in the iPhone? How did Telstra end up in this mess? Don't stop here - please read on to page 2.

It should be noted that iTWire has requested comment from Optus on the Telstra letter, but as yet, no comment from Optus has been forthcoming.

It appears that, although Optus has said it would be building a 3.5G 900MHz set of towers to reach up to 98% population coverage with 3.5G, expanding upon the 60%-plus coverage of cities using existing 2100MHz 3.5G equipment, that this wasn’t exactly true.

Optus has since said that its expansion from 60%-plus coverage to 98% coverage would happen with a mix of 2100MHz and 900MHz towers.

Vodafone, on the other hand, has made no such promises as far as I can ascertain. iTWire has also asked Vodafone for a comment on its own 900MHz rollout plans and hasn’t yet received an answer either.

Given that Optus now says part of its addition 3.5G rollout will contain 2100MHz 3.5G equipment, the big question for rural and regional customers wanting to buy the iPhone 3G and use it on the Optus 3G/3.5G network is whether or not they will be lucky enough to live in an area that Optus will install 2100MHz 3.5G equipment into.

Optus needs to come out with a definite map of Australia and should show precisely where 2100MHz and 900MHz equipment will be installed, and how far the 2100MHz coverage will extend in rural and regional areas.

After all, a country town might have some 2100MHz towers in town, but that coverage might not extend very far outside the city itself.

Of course, if GSM coverage is available in out-of-town areas, then the 3G iPhone will still work – but only at GPRS speeds for data, not even the slightly faster EDGE speeds or the vastly faster 3G speeds that 2100MHz 3.5G coverage areas will enjoy.

Please read on to page 3.

Vodafone also needs to come clean on whether or not it will be installing any 2100MHz 3.5G equipment or if its rollout will consist exclusively of 900MHz equipment.

In addition, if Optus won’t complete a lot of its rollout – even of 2100MHz equipment – until the end of the year, or even the end of 2009 – customers need to know this ASAP.

After all, if they already have a phone that works, and aren’t interested in a GPRS speed iPhone experience, they’d simply be better off waiting until the NEXT iPhone arrives – an iPhone which will probably have a 900MHz chip inside, along with video calling capabilities, 32GB and even 64GB capacities and other features, like, er... copy and paste.

If Telstra was selling the iPhone 3G, none of this would be an issue, as the iPhone 3G supports the 850MHz network that Telstra already has installed with coverage to 98.9% of the population of Australia.

The only major issue with a Telstra iPhone 3G would be the cost of the voice and data plan, something that could easily end up being the most expensive iPhone 3G voice and data plan on the planet, if Telstra’s pricing history is anything to go by, which of course, it is.

So... if you’re a city dweller, the biggest issue for you will be what the iPhone 3G plans are on offer from Optus and Vodafone.

But if you’re a rural and regional customer, you should either wait to see if the areas you live, work and travel to will have 2100MHz 3.5G coverage, or you need to decide if you are happy to put up with, at least in some areas, GPRS speed for Internet browsing, which you may well do if you can get 2100MHz 3G speeds in some of the areas you live and work.

In the end, it’s rural and regional customers that are being screwed again. Why couldn’t Optus and Vodafone put the pressure onto Apple to deliver a quad-band HSDPA device? Why did it only have to be tri-band?

Please read on to page 4.

Clearly, pressuring Apple to do anything it doesn’t want to do is very tricky. And perhaps it was simply too difficult or expensive for Apple to do a quad-band iPhone 3G right now.

But it’s definitely messy, not just for Optus and Vodafone, but Apple too. Even Telstra is in a mess – it’s not selling the iPhone when it is the best placed, coverage-wise, to do so.

Why didn’t Telstra go with 900MHz 3.5G equipment if Optus is saying that 900MHz is the new standard for rural and regional 3.5G coverage? Maybe the 900MHz standard and equipment weren’t ready at the time, but whatever the issue there, plenty of companies have rolled out 850Mhz compatible equipment – even Apple with the iPhone 3G.

If what Optus and Vodafone are saying about 900MHz is true, why didn’t Apple go with 900MHz in the iPhone 3G? Clearly Apple thinks 850MHz is more important, at least in the 2008 version of the iPhone 3G.

And the company that would, in theory, be the most generous with voice and data plans – Three Mobile – isn’t selling the iPhone either, despite the fact it is selling the iPhone in Hong Kong and Macau.

Blimmin’ heck. If you thought the WWDC and the introduction of the iPhone 3G by Steve Jobs would answer all the questions, it hasn’t. Like an episode of the X-Files, or Heroes or any other modern show, the end of an episode is no guarantee all of the questions will be answered.

Tune in again, same time, same bat channel next week, loose strings still to be tied up, to be continued... this maddening wait for answers comes courtesy of Apple, Telstra, Vodafone, Three Mobile and Optus. Thanks!


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Alex Zaharov-Reutt

One of Australia’s best-known technology journalists and consumer tech experts, Alex has appeared in his capacity as technology expert on all of Australia’s free-to-air and pay TV networks on all the major news and current affairs programs, on commercial and public radio, and technology, lifestyle and reality TV shows. Visit Alex at Twitter here.



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