yARN: Will Telstra's 4G LTE launch kick NBN Co where it hurts?

Telstra has recently announced an ambitious program to roll out “4G” LTE throughout Australia. The obvious and crucial question is what this will do to the Government’s National Broadband Network, which remains venerable to high-speed wireless technology.

The Telstra LTE rollout, announced by its CEO, David Thodey, at the Mobile World Conference in Barcelona, Spain, promises to see capital cities and some regional cities covered by LTE technology by the end of 2011.

Besides Telstra, Perth-based ISP, Vividwireless, recently announced it would roll out TD-LTE technology within 12 months of getting financial backing – something it expects to secure within the next six months.

It’s this kind of next-generation wireless technology that has long been touted by the Coalition Shadow Communications Minister, Malcolm Turnbull. He claims it will make fibre-based networks like the Government’s NBN obsolete and that it’s cheaper and up to the task.

“We will end up spending $50 billion or whatever it is in expenditure on the NBN and there will still be billions or tens of billions of dollars to be spent on wireless networks because that’s where the demand is going to come from,” he recently told ARN.

The reality is there are plenty of limitations to wireless technology, whether it’s WiMAX, LTE or TD-LTE. They all depend on wireless spectrum, which cannot be spread out indefinitely – severe competition will be faced by all the carriers with licences in need of renewal within the next three years.

Signal degradation is also a fundamentally limiting factor over distance and each base station will only be able to support a limited number of users simultaneously before speeds get slashed to a fraction of its potential.

But these issues become less problematic when you move into population centres, where the big carriers know they have enough paying customers to support a large number of wireless transmitters. Rural and regional users would be left stranded with sub-standard services.

This is where the NBN faces its biggest risk – cherry picking telcos that snap up users in the urban centres where the vast majority of Australians live. This would destroy the financial viability of an NBN, make it far less attractive to private investors and need far more taxpayer dollars than originally anticipated.

Cherry picking is an issue the Government is well aware of and aims to legislate against. Potential fibre wholesale rivals to the NBN are already facing extinction in Australia because the Government fears they’ll sell cheaper cable services to city-dwellers without providing anything to rural and regional areas like NBN Co would have to.

But when it comes to cherry-picking with wireless technology, the Government has left itself open to attack. When asked by ARN about a section in the business case that assumes business won’t use wireless technology, Communications Minister, Senator Stephen Conroy, was nigh on dismissive.

“I don’t think there are any wireless-only businesses now. I think that’s a very sensible assumption and I haven’t met anyone who has cut off their fibre connection to go pure wireless in the business world,” he said.

Even the most recent Government-funded investigation into NBN Co’s business case by Greenhill Caliburn, which said the it was reasonable and conducted according to high standards, warned of wireless competition – a point leapt on by Malcolm Turnbull.

“Trends towards “mobile centric” broadband networks could also have significant long-term implications for NBN Co’s fibre offerings, to the extent that some consumers may be willing to sacrifice higher speed fibre transmissions for the convenience of mobile platforms,” it said. “The prevalence of such homes should be carefully monitored in connection with ongoing performance management efforts.”

Telstra and vividwireless are just the first two companies to embark on next-generation wireless broadband. More will come unless the Government is willing to stymie competition in the sector with more legislation or regulation.

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