The real reason Telstra's building a public Wi-Fi network

Unlike Optus and Vodafone, Telstra has no international partnership to bolster its global roaming services. Teaming up with Spain's Fon on a public Wi-Fi network could change all that.

Graph for The real reason Telstra's building a public Wi-Fi network

Is this the graph that convinced Telstra to sign on with Fon? Source: Fon.

Telstra’s new Wi-Fi partner, Fon, is aiming to have up to 25 million Wi-Fi routers in operation around the globe by the end of 2015. A Fon spokesperson told Business Spectator the Spanish telecommunications company may also open a local office in Australia in a bid to push into the wider APAC region.

All of this is rather good news for Telstra, Australia’s largest telco operator. Last week, Telstra rocked the sector by announcing it would partner with Fon build a nationwide Wi-Fi network by 2019. As with all of Fon’s networks overseas, it will operate on a network sharing arrangement: consumers and businesses will open up part of their Wi-Fi network to public access and, in return, will be able to access other Fon-powered networks around the globe.

Despite what may have already been said, this Wi-Fi deal isn’t a means to offload traffic. That point was reiterated in a network briefing yesterday, where Telstra reaffirmed its strategy to conquer the competition by maintaining mobile network superiority. Looking at Fon’s data, it’s instead apparent that this deal is a way for Telstra to work around its one major limitation: its overseas coverage.

Telstra's major rivals, Optus and Vodafone, are both tied to international telco conglomerates. As the world becomes more and more globalised, they will likely leverage these relationships to outmanoeuvre Telstra.

This is already starting to happen. Just last year, Vodafone struck deals with its overseas counterparts to offer its customers $5 per day roaming across a raft of popular Australian tourist destinations.

As part of its agreement with Fon, Telstra has pledged to add around 2 million Fon-enabled Wi-Fi hotspots to its network between 2015 and 2019. In return, Telstra can offer its customers access to all of Fon’s global Wi-Fi hotspots. As seen in the map below, they are predominantly in Europe and Japan. 

Telstra’s goal to introduce just two million hotspots to the Fon network by 2019 may not be a game-changer for the Spanish Wi-Fi operator; it’s actually a pretty light arrangement. In March, Fon struck a deal with the Dutch telco provider KPN to have one million hotspots in place by the end of this year. But analysts tip that selling Fon’s Wi-Fi network will still be a hard slog for Telstra.

BuddeComm founder Paul Budde says Australians may be suspicious about opening their network up to Telstra and converting their personal Wi-Fi connections into public hotspots. He also questions how hard Telstra will push this endeavour, given it isn't likely to make money from it directly.

Independent telco analyst Chris Coughlan shares Budde’s concerns, however he points to the $210 router cost that some consumers will need to pay to buy into the network as a major deterrent. Coughlan adds that Telstra’s Fon routers may also face compatibility issues with services like Apple Airplay.

But Coughlan is reserving his ultimate judgement for the service until later this year, when Telstra will reveal more details as to how it will be rolling the network out. 

Would you sign up to Telstra's Fon network? Let the reporter @HarrisonPolites know on Twitter or in the comments below.

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