The National Broadband Network (NBN) in whatever form it happens to take over the next few years will, if it does what it says on the box, take out Telstra's dominance in the fixed line space.
That's something Telstra has been pretty up front about. The company doesn't want to be the network operator of fixed line networks in Australia; it just wants to be a retail player.
As customers transition from the existing Telstra copper, or HFC networks onto the NBN, there is a good chance that the, at last report, 2.8 million fixed line customers with Telstra may look elsewhere for their internet needs.
Today's announcement of the AU$100 million Wi-Fi network is Telstra's first weapon in its arsenal to fight the natural shift away from Telstra that the NBN will bring.
Telstra will build out 8,000 new Wi-Fi hotspots using 802.11ac technology, which is much better for handling the amount of users Telstra would expect with a national Wi-Fi network.
Fixed line customers will be recruited to become part of the network, with new Fon modems to go out to the customers that will have a secure public Wi-Fi network separate to the person's home Wi-Fi that will provide access to the public at 2Mbps, provided that the user has a decent internet connection across ADSL, NBN, HFC, and 4G.
This is going to be the major hurdle for Telstra to overcome. It's logical that if Telstra is looking to roll out a national network, turning all its fixed customers into access points means suburban and regional Australia will be much easier to cover, and at a much lower cost for Telstra.
But convincing residents to hand over a portion of their fixed line network to complete strangers will take some time, and at least an educational campaign. Firstly, there's security concerns. Telstra today said it would ensure both the personal and public Wi-Fi networks for each customer was secure when it sets up residents with the new modems, but the question remains about just how much customers trust Telstra to keep their home networks secure.
Telstra will need to be completely up front about it to customers. Comcast last year began rolling out a similar Wi-Fi network across the United States only to find some residents were completely unaware that their modem was also providing a second, separate Wi-Fi network to the public.
Secondly, Telstra will need to tell customers exactly what impact the public Wi-Fi network will have on their own connection speeds. Obviously for an NBN connection, 2Mbps is nothing, but for your ADSL connection in the rain, the public hogging all the Wi-Fi might have a big impact.
Telstra has said that the public Wi-Fi will only be available from a home user's modem when the line speed is above a certain threshold, but you can guarantee, as soon as anyone's connection slows down, they'll be blaming that public Wi-Fi.
The obvious immediate reaction is to assume Telstra is doing all this because the 4G network isn't coping, or they want to offload mobile customers onto the Wi-Fi, but mobile customers failing to immediately get access to the Wi-Fi network for free suggests otherwise.
The possibility of it being opened up to mobile customers down the track suggests Telstra is adopting a wait-and-see approach for its 4G network expansion when the digital dividend spectrum comes online in 2015.
Instead, what we may end up seeing is Telstra refusing to offer any particularly large mobile data plans in the future. Both for smartphone, and mobile broadband customers. Want a big mobile data connection? Sign up for a fixed line service at home and use one of Telstra's 2 million Wi-Fi hotspots when out and about.
It's one way to drive up adoption outside of tourists scrounging around for Wi-Fi as they travel across our country.
Others have suggested that it could be a big data harvesting push by Telstra, but given Telstra's dominance in the mobile network area, it's unclear that the company would gain all that much extra data from the public.
Telstra wants to create the idea of community sharing ubiquitous internet access, but I suspect that given bandwidth is seen as a scarce resource due to the ongoing heated debate around the best access technology for the NBN, it's going to be a while before the public is feeling in a sharing mood.
In any case, this is far from the last announcement from Telstra in this area; the company has AU$11 billion in sweet NBN cash to work with.