Telstra’s launch of 4G yesterday is part of the telecommunication giant’s plan to cement itself in the eyes of Australians as the carrier with the fastest and biggest network. And it’s got the new-look brand and massive marketing budget to go with it.
The move is an essential defence strategy as Telstra faces declining profits driven by plummeting fixed-line revenues, and prepares to compete in an NBN world where switching broadband providers will be much easier.
The 4G rollout is limited to CBDs and 30 regional centres, and we won’t be seeing 4G-enabled smartphones and tablets in the market until next year, but meanwhile, instead of marketing LTE as a separate service, Telstra will issue everyone with the same 3G/4G dongles so that the 3G and 4G networks work seamlessly. As Ovum research director David Kennedy says, most users won’t be aware which network they are using.
Speed has become a major competing factor for mobile customers of late, with Telstra boasting download speeds of between two megabits per second (Mbps) and 40Mbps, which it says is up to 10 times faster than 3G speeds currently claimed by its rivals.
Telecommunications analyst Paul Budde says 4G provides Telstra with an insurance policy in case the NBN falls through leading to further delays in fixed broadband upgrades.
A new report from Ovum predicts fixed broadband connections will soar by 45% between 2011 and 2016 in Asia-Pacific, while fixed telephone lines for consumers will fall by 23% in the same period.
With mobile voice and fixed broadband the key growth areas, Telstra seems to be betting more heavily on the former. Perhaps that’s because customers will be able to switch broadband providers with the flick of a switch once the NBN is here.
NBN Co chief technology office Gary McLaren says NBN customers will be able to switch providers in minutes.
“Basically you’ll plug your Ethernet port from here to here, we can even do it in our back office, and within what we would hope is minutes you’ll be able to have a new service provider on,” McLaren told a networking event last week.
With faster switching, McLaren is predicting it’s customer service that will be the real competition point — another key component of Telstra’s current strategy.
“Obviously there will be competition on price, we’d expect that … but there will also be a lot of competition on quality, innovation, and probably the best thing, I think there will actually be a focus back on customer service by the telco providers.”
Telstra may be taking steps to improve its customer service, but it might not be enough given the way the industry is changing.
Ovum analyst Charlie Davies says broadband revenue growth alone will not be sufficient to offset the decline in fixed voice revenues due to the investment needed for next-generation access networks and software. This underlines the need for telcos to find revenue from new service lines.
As we reported in June, SingTel’s Singapore-based innovation team is already planning for a world where WiMAX and Wi-Fi are so pervasive people don’t even need a mobile data network.
Davies says entertainment (TV, gaming and music) represents a significant opportunity for telcos to drive revenue growth, particularly in the form of on-demand content.
McLaren is also predicting on-demand services, arguing with faster switching a model will develop where services can be turned on for a particular event or occasion, driving further competition in the market.
*This article first appeared on Technology Spectator