Growing Without Pain


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Growing Without Pain

  1. 1. ▶EBR #3 2012 • 25«« Handling broadband«« Strategy▶ NETWORK QUALITY HAS always been at the heartof Telstra’s strategy as it competes in Australia’smobile market, which saw the user base grow by1.7 million to 30.2 million users between 2011 and2012. During that period, Telstra’s subscribernumbers grew from 12.2 million to 13.8 million:about 95 percent of all new subscriber additionsin the country. Telstra’s market share rose by 3percentage points, and it maintained a clear leadin 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 the2006 launch of its Next G WCDMA network wasa concerted effort to move 2G users to the newnetwork. Many factors lay behind this strategy,including network rationalization, coherentbranding and operational efficiency. To provideincentives for users to move to 3G, Telstra reliedon 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 wasTelstra’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 FASTSince the Next G network launch, the volume oftraffic in Telstra’s mobile network has doubledevery year. In late 2010, through a capacity mod-eling tool, the operator forecast that the Next Gnetwork capacity would run out before the new700MHz spectrum – primed for LTE – becameavailable. So something had to be done – andfast.Spectrum refarming was not new to Telstra. Ithad already successfully introduced WCDMA onrefarmed 850MHz and built a healthy ecosystemin the process. In pioneering a global 1800MHzLTE ecosystem, Telstra took the same approach,playing an active role by working in conjunctionwith infrastructure suppliers, device and chipsetmanufacturers and industry bodies. Today,1800MHz has become the most popular LTE bandworldwide. During the 2013 Mobile World Con-gress, Telstra announced that it would also refarmsome 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 40percent of the Australian population – more thandouble the coverage of other LTE networks – andserves over 1.5 million users. In 2012, Telstra’sNext G network was recognized by marketingBoosting network capacity to meet increasing demand is no easy task. Networkgrowth requires long-term planning – and demand can be erratic. Thehistory of the Australian operator Telstra’s Next G network provides lessons inthe importance of capacity planning and having a proactive spectrum policy.Telstra’s network strategy:Growing without pain▶“WhenTelstralaunched the nation’sfirst LTE network, itwas seen by indu-stry observers as asix-month headstarton competitors thatcould consolidate thecompany’s alreadydominant position.”
  2. 2. 26 • EBR #3 2012formation services firm JD Power and Associatesas Australia’s best-quality wireless network.DECOUPLING CAPACITY AND COSTDespite the rapid rise in mobile traffic, Telstra hasbeen 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 advancedradio, transmission and core technologies. In fact,the operator’s network cost per megabyte of datadecreased by more than 70 percent between 2008and 2011, including a reduction of 40 percent in2011 alone as the effect of the LTE rollout beganto kick in. Telstra’s estimates show that it shouldbe able to further reduce this cost by one-thirdbetween 2012 and 2014 as LTE coverage gradu-ally expands.In 2011, Telstra implemented a triple-accessEvolved Packet Core, allowing 2G, 3G and LTEtraffic to be pooled on the same core network.This radical network-architecture simplificationenables the operator to handle highly dynamicdemand 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 anytime during the day or night, without service in-terruptions or revenue losses.The deployment of a common core networkhas enabled Telstra to significantly reduce thenumber of nodes required to support the growthof its mobile business. Between 2010 and 2011,the number of core network nodes decreased by30 percent, with an additional 10 percent reduc-tion realized in 2012. In 2012, Telstra became theworld’s first operator to deploy a next-generationIP packet gateway, further boosting network ca-pacity and introducing the network intelligencerequired to deliver the country’s best mobile-phone user experience.Telstra’s solid position in the Australian mobilemarket is the result of a successful combinationof technological and commercial foresight. Thecompany’s transition from 3G to LTE provides alesson on the importance of close links betweenengineering and business, as well as between thetechnology solution provider and operator. ●AUTHOR▶WARREN CHAISATIEN is aStrategic Marketing Manager forEricsson’s Region South East Asiaand Oceania, in charge ofpositioning the company formarket, technology and thoughtleadership across the region. He is also a NetworkedSociety evangelist, advancing Ericsson’s vision of a worldwith 50 billion connected devices. Chaisatien joinedEricsson in 2010, bringing with him more than 15 years ofinternational ICT industry experience in sales, marketingand strategy, spanning North America, Europe and Asia-Pacific. He holds an M.Sc. in engineering managementfrom the University of Technology, Sydney, Australia. ( unit costs per MByte (Hybrid HSPA+ and LTE)FY09 FY10 FY11 FY12 FY13 FY14FY081007550250IndexIndex based on Telstra derived network unit costs per MByte (excluding OSS/BSS)Source: TelstraNetwork rationalization paying off“The deployment of acommon core networkhas enabledTelstra tosignificantly reducethe number of nodesrequired to supportthe growth of itsmobile business. ”Strategy «« Handling broadband ««