Telstra unveils 4G mobile plan

TELSTRA will launch its next-generation mobile phone network by the end of this year, the first Australian mobile carrier to announce when it will provide the so-called fourth generation of mobile technology.

By InvestSMART · 15 Feb 2011

By InvestSMART ·
15 Feb 2011

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Mobile networks in capital cities and some regional areas will be upgraded before 2012 and Telstra will start selling devices capable of crossing between the two networks.

"The technology can provide many Australians with faster data speeds, high-quality video conferencing and faster response times when using mobile applications or accessing the internet," chief executive David Thodey said this morning in Barcelona at the Mobile World Congress.

"It can also help Telstra meet demand for mobile data, which is doubling every year as customers move to adopt data-hungry smartphones, mobile modems and tablets."

The new network will be built from the existing capital expenditure budget.

Swedish network manager Ericsson has been chosen to build the network along with Qualcomm and Sierra Wireless, beating competitors Huawei and Nokia Siemens.

"We found the Ericsson proposal to be the most innovative and immediate, compatible with our network," a Telstra spokesman said.

Telstra will use existing spectrum assets at the 1800MHz frequency for the new network and integrate it with its existing high-speed service on the 850MHz spectrum range.

Known as long-term-evolution (LTE) technology, the next generation of mobile networks will carry more data faster than existing 3G technology.

An independent review has told the government to closely monitor mobile-only households that shun fixed-line telecommunications, saying they pose a "key risk" to the $36 billion national broadband network.

The government yesterday released part of its review into NBN Co's corporate plan, which makes the financial case for the taxpayer-owned company.

Conducted by advisers from Greenhill Caliburn, the review found the corporate plan and its assumptions about revenue were "reasonable". But it also highlighted the high take-up rates that would be needed for the project to earn a commercial return a key government promise.

In particular, it said competition to the network from wireless technology was a key risk to the NBN Co's revenue forecast.

To achieve a return higher than the government bond rate, NBN Co's business case has assumed 70 per cent of households will sign up to the network by 2025, while 16.3 per cent will be wireless only.

Opposition communications spokesman Malcolm Turnbull said the report exposed serious risks to the NBN, but did not tackle whether taxpayers were getting their money's worth through the project.

Lucy Battersby travelled to Barcelona as a guest of Ericsson.

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Frequently Asked Questions about this Article…

What did Telstra announce about its 4G (LTE) mobile network rollout?

Telstra announced it will launch its next-generation 4G mobile network (long-term evolution, LTE) by the end of this year, becoming the first Australian mobile carrier to give a timetable. Mobile networks in capital cities and some regional areas will be upgraded before 2012, and Telstra will begin selling devices able to switch between its new LTE network and existing services.

How will Telstra's LTE network affect mobile data speeds and services for customers?

Telstra says LTE can deliver faster data speeds, higher-quality video conferencing and quicker response times for mobile apps and internet use. The company expects the technology to carry more data and help meet rapidly growing mobile data demand, which Telstra states is doubling every year as customers adopt smartphones, mobile modems and tablets.

Which companies are building Telstra's next-generation network and who missed out?

Swedish network manager Ericsson has been chosen to build the network together with Qualcomm and Sierra Wireless. Their proposal beat competing bids from Huawei and Nokia Siemens, with Telstra describing Ericsson’s approach as the most innovative and immediately compatible with its network.

What spectrum will Telstra use for its LTE network and how will it integrate with existing services?

Telstra will use its existing spectrum assets around the 1800 MHz frequency for the new LTE network and integrate that with its current high-speed service on the 850 MHz spectrum range, enabling combined coverage and service continuity between the networks.

How is Telstra funding the rollout of its LTE network?

Telstra has said the new LTE network will be built from its existing capital expenditure (capex) budget, rather than requiring a separate or additional funding program announced in the article.

What did the independent review say about wireless competition and risks to the NBN?

An independent review by advisers from Greenhill Caliburn warned the government to closely monitor mobile-only households and said wireless competition poses a key risk to NBN Co’s revenue forecasts. The review found NBN Co’s corporate plan and revenue assumptions 'reasonable' but noted high customer take-up would be needed for a commercial return.

What take-up assumptions does the NBN corporate plan use that investors should know about?

The NBN Co business case assumes about 70% of households will sign up to the fixed network by 2025, while roughly 16.3% of households are expected to be wireless-only. The review highlighted that achieving these take-up rates is important for earning a return above the government bond rate.

Are there political or regulatory issues investors should watch related to Telstra and the NBN?

Yes. The government released part of a review into NBN Co’s corporate plan and advisers flagged risks from wireless competition and mobile-only households. Opposition communications spokesman Malcolm Turnbull also commented that the report exposed serious risks. Investors should monitor further government review updates, regulatory responses and any policy shifts that could affect NBN Co and telecom sector dynamics.