Telstra job cuts foreshadow mobile shakeup in the bush

Telstra 5G plans spring from job cut strategy


Farm Online News
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Telcos prepare for 5G battle which risks unequal network access for metro and regional customers.

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Telstra is taking drastic action to remain competitive in the telecommunications market.

The forward-looking vision mapped out by chief executive Andy Penn could ultimately bring faster mobile networks to customers in major cities, and even regional centres.

But Federal Government’s plan to sell monopoly access to spectrum for 5G mobile – the next wave of mobile broadband network technology – could cut out the benefits of Telstra’s plans for smaller regional communities.

On Wednesday, Mr Penn announced the company would shed some 8000 employees, freeing-up money to invest in the rollout of new towers to carry the 5G network.

Telstra shares are in the doldrums at a seven-year low. The company faces unprecedented competition from TPG, Optus and Vodafone as well as the National Broadband Network.

About 40 per cent of Telstra’s earnings before interest, taxes, depreciation and amortisation come from the mobile business and Mr Penn is eying growth potential, which he highlighted when he predicted that about one-third of future Australian households will use a 5G mobile network to access the internet.

Mr Penn’s cost-cutting will fund a war chest which Telstra will use to outbid its growing rivals in the auction of licences to operate 5G (due in October).

Communications Minister Mitch Fifield has designated the spectrum of frequencies in the 3.6 gigahertz band to be reserved for 5G, expected to be available by 2020.

The licences will run for 20 years in one of three zones. Metropolitan areas are divided between two and the third covers all regional areas.

Many smaller towns have patchy or non-existent coverage under 4G, because their populations are too small to justify a telco’s return on the investment of building mobile towers. 

History is set to repeat with 5G, which promises quicker download speed than 4G networks, but needs more towers per square kilometre.

The spectrum to be auctioned for 5G is the same frequency used by wireless internet service providers (WISPs).

Existing regional customers may be able to keep using their phones on 4G networks for some time after 5G is rolled out, but the 200,000 businesses customers which use WISPs may not be as lucky.

WISPs operate small localised wireless networks with relatively fast upload and download speeds, designed to suit businesses that need to transfer more data than is practicable under the upload speeds of 4G.

The NBN presents businesses with the same sluggish upload problem.

Mr Fifield says existing regional licence holders will get a generous seven year transition period where they can maintain access to their spectrum, and he will investigate the potential of sharing arrangements with the new 5G licence holder.

The WISPs say they cannot continue to invest in their businesses without a future home for their networks and that many regional customers could be forced onto inferior services. 

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