KEY POINTS:
As the mobile industry descended on Barcelona this week to showcase the technology bringing faster internet access to mobile phones, Australian operator Telstra was held up as a shining example of the benefits that come from investing big in mobile broadband.
Everywhere you look at the Mobile World Congress this year, from Google with its Android software for phones to Nokia which unveiled a flagship new music phone in the N96, the focus is the same - getting the internet to work better on mobiles.
That mobile internet increasingly means video-streaming and data services that require real-time communication, which puts pressure on mobile operators to upgrade their networks to support such services.
Telstra, which launched its A$1.1 billion ($1.2 billion) nationwide Next G service in October 2006 plans to have download speeds over its high-speed packet access network of up to 21Mbps (megabits per second) later this year, moving to 42Mbps next year. It recently upgraded its network to allow maximum download speeds of 14.4Mbps, though there are few devices on the market yet that support the higher speed.
"We have a roadmap that in 2009 we intend to go up to 42 megabits per second on our network and within a couple of years of that we expect to be in the hundred-plus range," said Telstra chief executive Sol Trujillo, at the Mobile World Congress.
Taking the reins at Telstra in 2005, Trujillo's first major investment decision was to upgrade Telstra's mobile network to offer the high-speed data connections.
"We basically made a billion-dollar bet," he said.
"We were like most incumbent telcos but we were worse. We were losing market share and high ARPU customers. Our revenue was flat. It was a tough situation to walk into."
But the figures Trujillo rolls off 16 months after launch are impressive. Average revenue per user from post-paid Next-G customers in the September quarter was A$100 per month. Some 15 per cent of those customers use wireless data cards in their laptops.
Telstra has 70,000 4G customers spending around A$11 per month accessing Foxtel's pay TV service on their mobiles. Telstra now has 38 per cent of its customers on the 3G network and 60 per cent of those lucrative post-paid customers are on the faster network.
Data services accounted for 30 per cent of Telstra's mobile services revenue in the six months to December 2007.
Losing high-value customers and struggling to grow ARPU, Telecom will this year look to a similar type of transformation to revive its mobile business.
The telco's equipment supplier Alcatel Lucent is constructing a nationwide GSM-based network in the same 850MHz (megahertz) band Telstra is using. Telecom will maintain its existing CDMA network for a few years.
The same technology used by Telstra and its equipment supplier Ericsson in Australia was planned for TelstraClear's Unwired mobile network which was to cover the Tauranga area. But those plans were scrapped last year after TelstraClear had already invested tens of millions of dollars in the project.
It has since struck a deal to share Telecom's network rather than build its own.
With the sort of data speeds now delivered by these new faster HSPA network technologies, mobile equipment makers argue that wireless broadband services are an increasingly viable alternative to building fibre optic cable networks, something both New Zealand and Australia are currently considering on a large scale.
"It takes a lot of time, effort, and money to put [fibre] in the ground. Compare that to the deployment of a base station and radio power over a much larger area. I think in the next few years the mobile operators have the upper hand," said Ericsson's director of WCDMA radio access networks, Magnus Ewerbring.
The introduction of femtocell technology, which effectively puts a small cell site in the home to improve wireless signal quality and aid with faster data throughput, may also allow mobile broadband to better compete with fixed-line services. Vodafone and major European mobile carrier O2 are currently trialling femtocell technology.
But Dave Williams, the chief technology officer for O2, said there were a number of sticking points preventing mobile services designed to deliver similar speeds to fixed-line broadband services from taking off.
One big issue is getting fast data links to each mobile base station to provide sufficient backhaul capacity for all the customers connecting to the internet through that cell site.
"This is one of our biggest challenges without a shadow of a doubt," said Williams.
"We haven't decided what the end game is. Fibre to the radio site probably."
Lack of availability of radio spectrum was also a hindrance. Williams said regulatory issues surrounding use of 900MHz spectrum in Europe had created a "hornet's nest" of debate.
"Some regulators want to move fast. Some don't have the spectrum or have given it away already for 2G,"he said.
Nigel Wright, vice-president of mobile equipment testing lab Spirent, said that as a result of the lack of progress on 900MHz spectrum - which is being used here by Vodafone to extend its network, compatible devices were few and far between. While maximum mobile network speeds were doubling every six months, the current HSPA technology needed greater support in terms of the devices that use it.
"There's a lot of work to do to have multiple chipsets available for 7.2Mbps," he said.
Pure economics also come into play. Mobile operators worldwide who have spent heavily on 3G networks have to recoup that investment before spending more on even faster networks.
Williams said O2 was around halfway through its 10-year technology investment cycle and would rely on its existing 3G network until it had paid for itself.
"My chief financial officer expects me to fulfil that. I'm going to make 3G last through that cycle," he said.
"We all have to go to the same banker for our investments."
Ultimately, said Thomas Klemenschits, chief technology officer at Mobilkom Austria, the HSPA upgrades were necessary to meet the surging demand for high-speed internet access on mobile devices.
"The nature of physics is hitting us. It just can't be like a fixed line. We have to do something."
* Peter Griffin attended the Mobile World Congress as a guest of Ericsson.
For more coverage of the show go to nzherald.co.nz/techblog
