LTE, NBN, iiBorg: 2011 in telco

It's never quiet for the telecommunications industry, and 2011 was no different.
Written by Josh Taylor, Contributor

It's never quiet for the telecommunications industry, and 2011 was no different.

After horrific floods in Far North Queensland in late 2010, 2011 didn't start much better, as the floods hit Brisbane in January 2011. This saw the telcos' mobile networks and Telstra's fixed network brought down. Thankfully, the carriers were on the ball, and had temporary infrastructure rolled out quickly as repairs to services were made.

Vodafone's network woes continued well into 2011, but, by February, the company had come clean, and had admitted that its network wasn't quite up to scratch. It announced that it would overhaul 2G and 3G network equipment in 5200 base stations, and would install 2800 new base stations to cope with consumer demands, at a cost of over $1 billion.

But it really wasn't a good year for Vodafone, which was also found to have breached the Privacy Act over lax security policies for its Siebel customer relationship-management system. The privacy commissioner found that staff had been sharing passwords.

The bad news didn't stop coming, as it topped the telecommunications industry ombudsman's complaints list and lost 375,000 customers in one financial year.

The company then copped warnings from the Australian Communications and Media Authority (ACMA), which stated that if it stepped out of line again, it would face a $250,000 fine.

It was a bit of a better year for the incumbent, Telstra. In February, the company announced plans to roll out its long-term evolution (LTE) or "4G" network to capital cities and a number of regional centres. Deciding that the company couldn't wait for the digital dividend spectrum auction in 2012, Telstra opted to reuse 1800MHz spectrum that had been freed up as customers migrated from 2G to 3G services.

The services were launched to consumers in September, for which the company brought out YouTube star Rebecca Black. The company also began eyeing wholesaling its 3G services.

Telstra's shift in focus towards customer service and a drastic cut in the cost for mobile plans began to pay off, with the company adding 1.66 million new mobile customers in the last financial year.

After lengthy negotiations, Telstra shareholders also agreed to the $11 billion deal with the National Broadband Network Company (NBN Co), which will see it decommission its copper network and migrate customers onto the NBN.

But it wasn't all good news. In December, Telstra was caught out accidentally publishing customer details online, causing it to bring down BigPond services for a day, and forcing the telco to reset the passwords of 60,000 customers.

While Telstra scores $11 billion for its NBN deal, rival Optus wasn't left out in 2011, agreeing to an $800 million deal to move its hybrid fibre-coaxial (HFC) customers over to the NBN.

After umming and arring over LTE for months, by September, CEO Paul O'Sullivan announced that Optus, too, would jump on the 1800MHz LTE bandwagon, with services set to start in April 2012.

The telco also lost one of its heavy hitters, with director of government and corporate affairs Maha Krishnapillai leaving the telecommunications industry for a quieter life in Australia Post.

Optus found itself embroiled in a number of legal battles, which you can read about here.

The NBN kept rolling on in 2011, but not without a number of hurdles along the way. NBN Co backed out of its lengthy tender process for a construction contract, instead dishing out smaller contracts in a number of different states throughout the year. The withdrawal led to the resignation of NBN Co's head of construction at the time, Patrick Flannigan.

NBN Co's pricing model remained a sore point for the industry, with many, including Internode founder Simon Hackett, questioning whether any telco with less than 250,000 customers could survive in an NBN world where all 121 points of interconnect (PoI) come with substantial connectivity virtual circuit (CVC) charges. Hackett eventually won that argument, with NBN Co holding off on the CVC charge as the network rolls out.

NBN Co also made a number of substantial revisions to its wholesale-broadband agreement and special-access undertaking. The industry had been concerned about the length of the agreements it would have to sign up to, and the fact that questions remained over NBN Co's liability for faults on its network. NBN Co shortened the length of the contract to just one year; however, it has still yet to address the liability concerns. This is still subject to discussion with the industry.

On the special access undertaking, Shadow Communications Minister Malcolm Turnbull raised concerns that a clause in the undertaking would have allowed NBN Co to increase prices each year by inflation plus 5 per cent. NBN Co decided to "simplify" the undertaking, and changed this clause so that the company can only increase prices on products by half the rate of inflation, and there's a freeze on wholesale prices in the first five years.

Despite all the controversy, the NBN kept on rolling out, with the first mainland site in Armidale coming online in May, and Townsville, Brunswick, Kiama and Willunga not far behind. The year also saw retail service providers (RSPs) announce their pricing plans, and the first 12-month roll-out plan was announced towards the end of 2011.

After spending most of his first few months as shadow minister in 2010 and 2011 calling for a cost-benefit analysis for the NBN, Turnbull turned his focus towards the coalition's proposals for a broadband policy alternative to the NBN, should the party come to power. The shadow minister turned to New Zealand for his policy proposal, suggesting a mix of fibre to the node (FttN), fibre to the home (FttH) in greenfields sites, wireless and HFC. Turnbull has yet to put a price on this policy, though it has been suggested that it could cost $16.7 billion.

iiNet scored a huge win early in 2011, beating the Australian Federation Against Copyright Theft (AFACT) in its appeal of the 2010 Federal Court. The court ruled that it did not authorise its customers' copyright infringement by not passing infringement notices to its customers.

That wasn't the end, however, with the case ending up before the High Court in December. The case was heard by five judges over two and a half days, and we won't know the outcome until sometime next year. It seems that no matter what the outcome is, it is likely that the government will look to implement some sort of streamlined process for dealing with online copyright infringement in the near future. Indeed, the carriers have already put forward their own proposal involving warning notices.

The iiBorg seemed to be settled for most of 2011, but, just as everyone was letting their guard down, iiNet swooped in and assimilated ACT telco TransACT into itself for $60 million and underdog favourite Internode for $105 million in the space of one month.

What were your top telco moments in 2011?

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