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Tuesday, 04 June 2013 09:52

How Telstra will leverage its LTE lead


Australians' love affair with smartphone and tablets and their insatiable appetite for content and applications have been good to Telstra. They have boosted its first mover advantage with LTE significantly, but that advantage will be magnified even further when Telstra introduces joyn.

Not heard of joyn? Neither had I until a couple of weeks ago, but more of joyn anon. Today the main advantage conferred on Telstra by being first with LTE has been its ability to offer faster download and upload speeds for broadband data, coupled with lower latency (although its debatable how many users appreciate the lower latency) and the fact that it costs less to carry the same volume of data on LTE than on 3G.

With Optus lagging considerably in LTE rollout, hamstrung by a lack of 1800MHz spectrum outside major capitals, and with Vodafone only just off the starting blocks that speed boost has done Telstra proud.

At its half year results announcement in February Telstra revealed that it had sold 1.5 million LTE devices since launch, added over half a million new mobile customers and 218,000 mobile broadband devices in the half year and taken the total number of mobile broadband services on its network to 3.3 million of which 790,000 were tablets.

On 21 May Telstra announced switch-on of its 1500th LTE base station saying it was on target to reach coverage of 66 percent of the population - all capital cities and over 100 regional and suburban centres - by the end of May and that it would have installed 2000 LTE base stations by the end of the financial year. It now has over 2.2 million 4G services in operation.

The next thing Telstra can be expected to do is to launch voice over LTE (VoLTE). Today voice on LTE is circuit-switched, just like voice on 3G and 2G phones. With VoLTE it will be carried as IP packets, a much more efficient method because LTE networks are IP end-to-end.

However this per se will make little difference to users. What it will do is enable voice to integrate into a whole range of Rich Communications Services, aka joyn.

Joyn is simply the brand name under which Rich Communications Services will be promoted to the general public. Both are the brainchild of the GSMA, an organisation that represents some 800 mobile operators and 230 companies from the mobile ecosystem.

Here's what its web site says about RCS. "RCS is changing the way people communicate. It delivers an experience beyond voice and SMS by providing them with instant messaging or chat, live video and file sharing across any device, on any network, with all the joyn enabled contacts in their address book."

And the site carries a stern warning for mobile operators. "Your consumers are hungry for access to the entertainment and interaction offered by RCS-based apps. Agile and innovative, over the top (OTT) providers are exploiting the massive penetration of smartphones by developing appealing rich communication apps available at little or no cost to the consumer. ... Once consumers start using an OTT app service, that offering becomes, for them, the lead brand for communications services."


And voice is still big business. According to Warren Chaisatien, strategic marketing manager & networked society evangelist with Ericsson ANZ, "Voice and messaging remain the killer apps and will continue to be so for the foreseeable future. Our research shows that globally mobile voice minutes grew at double-digit rates last year and will continue to do the same this year. ... Pure voice is still a $600 billion a year business globally and operators will not only have to maintain that, they will have to be creative in growing that revenue."

Operators do not need LTE to offer RCS but the full potential of RCS will not be achievable without VoLTE. Chaisatien said: "Many operators around the world have introduced RCS on 3G but we are seeing a very strong trend for voice over LTE and RCS together as a move towards the next generation. And we think that makes a lot of sense."

Telstra has given no indication of plans to launch either VoLTE or RCS, but given the extent of its LTE network rollout, Chaisatien suggests this may not be too far away. "When you look at Telstra's global peers: leaders in the US, Verizon and AT&T, which hold the same market dominance, they have made it pretty clear that voice over LTE can expected next year. There are two key factors driving that decision... Coverage is key for voice over LTE, and for RCS. There is no point in offering them over a patchy LTE network and users having to fall back to 3G. It defeats the purpose."

Optus and Vodafone are clearly a very long way from achieving sufficient LTE coverage to offer RCS, giving Telstra a clear window of opportunity.

And what might this mean? Chaisatien offered as an example Rogers, a mobile operator in Canada, a market similar to Australia in its maturing and saturation. Rogers has introduced Rogers One Number, a service that allows subscribers to extend their Rogers mobile phone number to their computer and transfer voice and video calls mid-conversation between a phone and a PC and vice versa.

Chaisatien said: "They launched at the end of Q1 last year and in the three quarters since launch they have grown their subscriber base in a highly mature market like Australia. The vast majority of that growth has come from high-value postpaid customers and they have been able to reverse the long-term decline in ARPU. That's a fantastic result."

In an Ericsson video on the service, Larry Baziw, Rogers' director of voice/VoIP development says the service exceed expectations to such an extent that it had to call on Ericsson to help it scale the service to meet demand.

And if that was not bad enough news for Australia's LTE laggards, Telstra CEO, David Thodey observed at the half-year results announcement. "The first justification around getting LTE is that it's a far cheaper way of carrying data so we're actually trying to migrate as many people from 3 to 4G because it takes the pressure off the 3G."

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