Telco 2008: A year in review

2008 was a cracker year for telco in Australia, with so many huge events happening that those at the beginning of the year have been drowned by the importance of those at the end.
Written by Suzanne Tindal, Contributor

2008 was a cracker year for Australia's telco industry but three dates stand out: 26 November (no points for guessing what happened then), 11 July (clue is it starts with an "i"), and 28 April.

There was likely a lot of head scratching going on with the mention of the last date. For those who have forgotten, this was the day the CDMA network finally got switched off after Telstra finally managed to convince the government that Next G was good enough for the bush. The switch-off had been delayed for three months after Communications Minister Stephen Conroy realised he couldn't rule equivalence between the networks.

Conroy's final tick of approval didn't stop farmers claiming CDMA beat Next G hands down on coverage, but it's a bit late now.

Mobile reliability copped a bit of flak in general this year, as Optus battled with outages on its network. The carrier had announced with fanfare in May that it would be increasing its coverage out to 98 per cent of the population which would allow it to go "head to head" with Telstra.

Yet the upgrade path may have been a tad too ambitious, as the carrier experienced a major outage due to a software glitch which affected 3G data in Melbourne, NSW, the ACT and Queensland as well as voice services in parts of Sydney, Melbourne and Brisbane. This was followed by a spate of incidents which Optus oddly acknowledged as "unacceptable" but also "normal", considering its aggressive coverage expansion strategy.

Part of the reason that Optus' problems, which stemmed not only from network expansion glitches but also from congestion issues, were made into such a big issue was that they affected people who were trying out their new iPhone.

It was 11 July before Australians had finally got their hands on some Apple mobile goodness. Optus and Vodafone announced they were authorised to sell the phones and for a while it seemed that Telstra may have missed out, but at the last minute the telco announced it too would be playing the game. Virgin announced its mobile plans after the 11 July launch. While 3 had to be satisfied with telling its customers to buy phones outright and bring them to its network.

The hyped launch saw long lines outside Optus stores, while Telstra experienced only moderate interest in its more expensive offering. Optus' success came with its problems, however. Not only did the congestion of new iPhone users add to its problems but the sheer number of sign-ups threatened to buckle the company's network. High subsidy costs also meant that the new iPhone customers cost the company $44 million in the first quarter of sales. The company believed it would get its money back on users paying for data.

Although less hyped, there was another mobile release which sent tech circles into a spin: the G1 or HTC Dream — the first phone to run on Google's new Android mobile operating system. There's no consensus on whether it will be a resounding success. One gets the feeling that Microsoft (Windows Mobile) and Nokia (Symbian) might be quivering in their boots. But who can know in the fickle world of mobile comms?

However, the pet obsession for most telco minded Australians in 2008 was most likely the national broadband network. This network was one of the government's election promises, involving $4.7 billion of taxpayers' money, which ushered it so convincingly through the door in November 2007. The brief was to build a fibre-to-the-node network to 98 per cent of Australians, providing minimum speeds of 12Mbps.

Communications Minister Conroy had believed that the first services on the new network could be coming on line at the end of this year. Unfortunately for Australians and for him, this didn't eventuate, because the tender process took over, delaying and complicating matters. He received fire from the opposition for the delays but held his ground. The request for proposals were published in April but the 25 July deadline was pushed back because it took far longer than originally expected to produce the network information necessary for proponents to make a full bid. All the necessary information was finally delivered to the department of broadband, communications and the digital economy on 26 November.

Everyone knew Telstra would want to have a part in building the network, and that Optus, whether tethered by Terria or on its own, would have a go, but there was a lot of rumour flying around about which other corporations might make a bid. In the end, there were four national proposals and two state bids. One was from Optus, backed by the Terria consortium, which included iiNet, Internode, Macquarie Telecom and iPrimus.

Another bid came from a Canadian company called Axia Netmedia which had built a similar network in one of Canada's provinces. A new group called Acacia, which was made up of former Telstra executives and finance bigwigs, was also formed in order to make a bid. State bids came from the Tasmanian government and ACT-based network provider TransACT. The shock news of the day was that Telstra, the darling of the bid process, had only deigned to put in a 13-page document as its proposal, which next to Optus' 1,000-plus-page tome seemed paltry.

The reason for Telstra's meagre contribution — it had a full proposal waiting in the wings — was officially that it had not yet received any confirmation from the government that it would not be required to separate itself into network, wholesale and retail arms like its counterpart over the Tasman Telecom New Zealand had undergone earlier in the year. The Telstra executives believed separation would be costly and undermine any profits to be had from the national broadband network.

Telstra rejected
There was a lot of speculation over whether Telstra's mini-bid, proposing to only reach 90 per cent of the population, would carry water and whether the other companies would be able to use it as legal ammunition against the government.

After a weekend of deliberations by the expert panel — commissioned to sift through the bids' details and make a recommendation to Conroy — its members decided that Telstra's bid could not be considered because it lacked a small and medium business enterprise plan.

It seemed Telstra had lost that game of brinkmanship, but its CEO Sol Trujillo would likely say it isn't over until the fat lady sings and a network builder is chosen. Even then, it will take years for the network to be built and Telstra has announced plans to ramp up the development of its Next G network and extend the reach and speeds of its HFC cable. It has also drawn attention to its ADSL2+ network which was switched on earlier this year, providing speeds of up to 20Mbps to customers across the country.

Of course, there's no use having a fast network inside Australia if there's no capacity going in and out of the country. Pipe Networks announced plans for a 1.92Tbps cable from Sydney to Guam, which would be another link for Australians to the international internet. Yet the whole plan almost crashed to the ground after Pipe was unable to find sufficient funding, which forced it to put itself into a trading halt until additional finance could be secured. In the end a supplier and one key customer put up the dosh so the cable could go ahead, with Pipe Networks' ISP customers cheering on the sidelines.

Likewise Tasmanians would have been happy with this year, which saw negotiations to light up the fibre-optic cable spanning the Bass Straight between Melbourne and Hobart finally came to a conclusion. The saga had started in the early 2000s but delays, changes of ownership and negotiation problems had seen nothing happen until November this year, when the state government finished its negotiations with carrier Aurora and cable owner City Spring.

Services are due to flow over the cable early next year. It is tipped to give Tasmanians more of a choice, with ISPs able to source their backhaul from a Telstra-alternative, which will hopefully mean competitive prices.

Industrial action and economic woes
Telstra customers may not even need a pricing incentive to jump, however, with many of the telco's workers deciding this month to go on strike after negotiations between the telco and its unions broke down. According to the national president of the company's main union Ed Husic, Telstra's backlog of faults has been rising the longer the strike goes on.

Optus also faced a strike, but amongst its contractors, not its own staff. That meant a halt on all installations until the subcontractors came back to work after five days.

The strikes have spiced an already strange employment environment. With the financial crisis making the world feel like it's downed six margaritas in as many minutes, the lay-offs have been flying in. Telstra, Optus, Alphawest and Ericsson all shed workers this year. Commander Communications also laid off workers early in the year, but as part of its turnaround plan not the crisis.

The turnaround plan wasn't successful, with Commander going into administration. Bits and pieces of it were sold to the highest bidder, resulting in the iBurst network being shut down last Friday. From what most people have said, it was on its last legs anyway.

Despite such a negative finish to the round up, the end of the year feels hopeful. After all, if the iPhone 3G can challenge the likes of RIM's crackberry after such a short time in the market, anything is possible. Right?

Did we miss anything? What was your highlight of 2008? Tell us using Talkback below.

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