▶EBR #3 2012 • 25

«« Handling broadband«« Strategy

▶ NETWORK QUALITY HAS always been at the heart of Telstra’s strategy as it competes in Australia’s mobile market, which saw the user base grow by 1.7 million to 30.2 million users between 2011 and 2012. During that period, Telstra’s subscriber numbers grew from 12.2 million to 13.8 million: about 95 percent of all new subscriber additions in the country. Telstra’s market share rose by 3 percentage points, and it maintained a clear lead in the all-important smartphone and mobile-da-ta segments, while enjoying the highest profita-bility of any operator in the Australian market.

One of Telstra’s key strategies following the 2006 launch of its Next G WCDMA network was a concerted effort to move 2G users to the new network. Many factors lay behind this strategy, including network rationalization, coherent branding and operational efficiency. To provide incentives for users to move to 3G, Telstra relied on a variety of options, such as free handset up-grades and attractive “no premium” pricing plans. As users moved to more advanced technology, they became more likely to adopt new services. But perhaps the most significant outcome was Telstra’s ability to “empty” its 2G network and re-farm the 1800MHz spectrum to launch Austral-ia’s first LTE network in September 2011.

FORCED TO ACT FAST

Since the Next G network launch, the volume of traffic in Telstra’s mobile network has doubled

every year. In late 2010, through a capacity mod-eling tool, the operator forecast that the Next G network capacity would run out before the new 700MHz spectrum – primed for LTE – became available. So something had to be done – and fast.

Spectrum refarming was not new to Telstra. It had already successfully introduced WCDMA on refarmed 850MHz and built a healthy ecosystem in the process. In pioneering a global 1800MHz LTE ecosystem, Telstra took the same approach, playing an active role by working in conjunction with infrastructure suppliers, device and chipset manufacturers and industry bodies. Today, 1800MHz has become the most popular LTE band worldwide. During the 2013 Mobile World Con-gress, Telstra announced that it would also refarm some of its 900MHz, another 2G spectrum band, for LTE.

When Telstra launched the nation’s first LTE net-work, it was seen by industry observers as a six-month headstart on competitors that could con-solidate the company’s already dominant position. The launch was as much a result of Telstra’s engi-neering strategy as of its business strategy.

Also marketed under the Next G brand, Tel-stra’s LTE network currently covers more than 40 percent of the Australian population – more than double the coverage of other LTE networks – and serves over 1.5 million users. In 2012, Telstra’s Next G network was recognized by marketing

Boosting network capacity to meet increasing demand is no easy task. Network growth requires long-term planning – and demand can be erratic. The history of the Australian operator Telstra’s Next G network provides lessons in the importance of capacity planning and having a proactive spectrum policy.

Telstra’s network strategy:

Growing without pain

▶

“When Telstra launched the nation’s

first LTE network, it was seen by indu-stry observers as a

six-month headstart on competitors that

could consolidate the company’s already

dominant position.”

26 • EBR #3 2012

formation services firm JD Power and Associates as Australia’s best-quality wireless network.

DECOUPLING CAPACITY AND COST

Despite the rapid rise in mobile traffic, Telstra has been able to reduce its network cost per mega-byte of data delivered, thanks to a continual up-grade, over a number of years, to more advanced radio, transmission and core technologies. In fact, the operator’s network cost per megabyte of data decreased by more than 70 percent between 2008 and 2011, including a reduction of 40 percent in 2011 alone as the effect of the LTE rollout began to kick in. Telstra’s estimates show that it should be able to further reduce this cost by one-third between 2012 and 2014 as LTE coverage gradu-ally expands.

In 2011, Telstra implemented a triple-access Evolved Packet Core, allowing 2G, 3G and LTE traffic to be pooled on the same core network. This radical network-architecture simplification enables the operator to handle highly dynamic demand patterns as loads from the three genera-tions of access networks are automatically bal-anced. Traffic pooling on a shared core also al-lows network maintenance to be carried out any time during the day or night, without service in-terruptions or revenue losses.

The deployment of a common core network has enabled Telstra to significantly reduce the number of nodes required to support the growth

of its mobile business. Between 2010 and 2011, the number of core network nodes decreased by 30 percent, with an additional 10 percent reduc-tion realized in 2012. In 2012, Telstra became the world’s first operator to deploy a next-generation IP packet gateway, further boosting network ca-pacity and introducing the network intelligence required to deliver the country’s best mobile-phone user experience.

Telstra’s solid position in the Australian mobile market is the result of a successful combination of technological and commercial foresight. The company’s transition from 3G to LTE provides a lesson on the importance of close links between engineering and business, as well as between the technology solution provider and operator. ●

AUTHOR

▶ WARREN CHAISATIEN is a Strategic Marketing Manager for Ericsson’s Region South East Asia and Oceania, in charge of positioning the company for market, technology and thought

leadership across the region. He is also a Networked Society evangelist, advancing Ericsson’s vision of a world with 50 billion connected devices. Chaisatien joined Ericsson in 2010, bringing with him more than 15 years of international ICT industry experience in sales, marketing and strategy, spanning North America, Europe and Asia-Pacific. He holds an M.Sc. in engineering management from the University of Technology, Sydney, Australia. (warren.chaisatien@ericsson.com)

Telstra's unit costs per MByte (Hybrid HSPA+ and LTE)

FY09 FY10 FY11 FY12 FY13 FY14FY08

100

75

50

25

0

Index

Index based on Telstra derived network unit costs per MByte (excluding OSS/BSS)Source: Telstra

Network rationalization paying off

“The deployment of a common core network has enabled Telstra to significantly reduce the number of nodes required to support the growth of its mobile business. ”

Strategy «« Handling broadband ««