Telstra's Wi-Fi land grab

The telco's humble payphone is getting a Wi-Fi makeover but there may be more to life than just being a hotspot.

Graph for Telstra's Wi-Fi land grab

Telstra's renewed interest in Wi-Fi looks set to give the humble payphone a makeover, allowing the telco to eke every last ounce of value out of an under-utilised asset, increasingly sidelined by the ascendancy of smartphones.

Telstra is by no means alone its desire to monetise the growing public appetite for ubiquitous Wi-Fi connectivity, especially in the metropolitan centres, with iiNet also active in the market.

However, its nationwide network of 18,000 payphones gives Telstra a significant advantage over its rivals.

The technology involved in turning payphones into Wi-Fi hotspots (using indoor access points buried in the hood of the payphones or directional antennas to cover a larger range) is relatively simple. There are numerous overseas templates for Telstra to follow as it retrofits its payphones and gives that component of its overall fixed infrastructure network a new lease of life.

Similar initiatives across the globe -- with operators like Spark New Zealand (previously Telecom NZ), PCCW in Hong Kong and Oi in Brazil -- have all shown the efficacy of the technology.

Earlier this year, the City of New York sent out a call for interested parties in its push to create a citywide network of internet hotspots, turning the city’s 7,000 payphones into a one of the largest free Wi-Fi networks in the US.

Meanwhile, London’s iconic red telephone boxes also received a Wi-Fi makeover, with Spectrum Interactive converting some 1,800 pay phones throughout London into hotspots in 2012.

Race for Wi-Fi real estate

The real challenge for carriers, including Telstra, is to work out a business model that uses the lure of Wi-Fi to provide real value to customers and more importantly, adds to the company's bottom line.

Sorting out a viable model that turns payphones into more than just hotspots will take time but for the time being carriers are focused on Wi-Fi real estate.

Pat Devlin, the managing director of Wi-Fi technology vendor Ruckus Wireless in Australia and New Zealand, says that securing the appropriate locations where equipment can be deployed with power and backhaul is the first task for any challenger hoping to roll out a Wi-Fi network.

Repurposing portions of its payphone network gives the telco an elegant solution to that.

“There’s a land grab under way at the moment and whoever gets the infrastructure spread right gains an advantage,” Devlin told Business Spectator.

“Like many operators around the world, Telstra clearly see Wi-Fi moving beyond simply hotspots and becoming an integral part of its network, which customers like, want and value.”

However, it will be an iterative process, with the models likely to change and adapt to evolving technology parameters and customer needs.

Devlin points to Spark NZ’s experience with its Wi-Fi network, saying that while the Kiwi telco started with a base model (with free service for Spark customers), it quickly adapted its offering as the network started to gain traction.

Telstra will no doubt look to follow a similar template and if its proposed network is able to make a meaningful impact on customer churn and help offload mobile data pressures from its budding 4G network, we might start to see the payphones evolve as well.

“We are seeing a revolution in how carriers are exploring new avenues of utilising existing infrastructure like payphones,’ Devlin says.

A physically embedded Wi-Fi network with large coverage opens doors to commercial partnerships and can be used as a marketing and communications tool to engage with the public.

The influx of location-based services is particularly geared to make use of such a scenario where payphones carry out data collection in real-time to allow prompt service delivery.

The infrastructure can also be repurposed to broadcast commercial events or emergency messages in case of an emergency.

 “Sky’s the limit when it comes to utilising this technology and this phenomenal platform,” Devlin says.

Like other operators around the world, Telstra clearly sees Wi-Fi moving beyond simply hotspots and becoming an integral part of its network but making money from Wi-Fi remains a work in progress.

For now, Telstra will be hoping that the trials give it the information to stress test its network and provide useful behavioural data on how customers are utilising bandwidth while on the network.