Why Telstra wants to build a public Wi-Fi network

It's a wonderful bit of PR for Telstra but the telco's renewed interest in rolling out a public Wi-Fi service delivers on multiple levels.

Telstra is set to press go on a national public Wi-Fi network, as David Thodey gets ready to start his sixth year as the head of Australia’s dominant telco.

According to The Australian, the expanded network is designed to give Telstra broadband customers the ability to access their download quotas while on the move. Combine that functionality with Telstra's extensive geographic coverage, thanks to its available infrastructure assets, and the telco might be on to a winner.

Telstra certainly has the muscle, fiscal and otherwise, to get the network off the ground but the question marks will come with regards to pricing and just what sort of service level customers can look forward to.

More should be revealed as David Thodey officially lifts the lid later today, but why is Telstra suddenly keen to pour millions into building a public Wi-Fi network?

Flexing the PR muscles

Firstly, this is a wonderful bit of PR for Telstra, which has been flexing its muscle off late with regards to technology breakthroughs.

There’s the ambition to take its 4G LTE  network to the skies, delivering peak network speeds of 450 megabits per second (Mbps) through its carrier aggregation system and now a public Wi-Fi network.

When it comes to maintaining network superiority over its rivals, Telstra is leaving no stone unturned. After all, that’s where the shareholder value lies.

A nationwide public Wi-Fi service may not be economically feasible in all areas but a targeted service helps Telstra put the squeeze on its rivals. The likes of Optus, iiNet and Vodafone Hutchinson Australia may label Telstra’s latest exercise as nothing more than a marketing exercise, but they do so at their own peril.

Sharing the load

There are other factors at play here as well, a national Wi-Fi network may be seen as a disruptive element, cannibalising the telco's 3G and 4G services, but there’s a significant upside here for Telstra.

A Wi-Fi network provides infill capacity that helps Telstra manage the congestion on its cellular network. It’s cheaper to serve mobile data traffic on a Wi-Fi network than it’s on a cellular network and given the growing consumer appetite for data, a targeted Wi-Fi network will help Telstra manage the load on its network more effectively.

A lot of this thinking is in line with Telstra’s internal thinking, which does see Vodafone Australia’s network as a potential threat. With Vodafone pouring billions into its network, which too a large extent is underutilised, Telstra is wary of losing customers to it and the best way to counter that would be to ensure that there are no capacity-induced service drops in its cellular network.

Telstra has the advantage of geographical coverage, which allows the telco to demand a premium for it services, however, that gap may not last for much longer. To stay on top Telstra needs a value add and the public w-fi aspirations may deliver that.

Another potential advantage of the proposed network is the channel it provides for Telstra to upsell its connected devices and further propel the Internet of Things (IoT) story. Essentially, Telstra could use the proposed network as a platform to extend advanced analytics and location-based services to commercial customers.

Telstra’s ambition is certainly well timed, given that the latest research from Telsyte highlights that public Wi-Fi hotspots are gaining greater popularity among users. It certainly provides one explanation as to why Telstra is keen to revisit the idea after ditching it in 2012.

As Telsyte puts it, with public Wi-Fi hotspots "sprouting like mushrooms" growth in the local mobile broadband market is taking a hit, growing by only 3 per cent in the past 12 months.

Wi-Fi networks are rapidly becoming just as compelling as cellular services when it comes to connectivity. Overseas telcos have been quite active in setting up Wi-Fi hotspots in metro areas, in fact Telstra, iiNet and AAPT have all dabbled with the idea, with limited success in the last couple of years.

Telstra’s new-found aspiration allows it to keep track with changing market dynamics. However, the immediate benefit for Telstra, as Thodey gets five years as CEO under his belt, is capacity and taking the load off its cellular networks.

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