Telstra's CDMA shutdown: No gain without pain?

As Telstra prepares to close off its CDMA network at the end of the month amidst concerns over customer migration to Next G, industry observers have said that after the dust settles the new network could hold promise for bush users.
Written by Marcus Browne, Contributor

As Telstra prepares to close off its CDMA network at the end of the month amidst concerns over customer migration to Next G, industry observers have said that after the dust settles, the new network could hold promise for bush users.

The Federal government gave Telstra the all-clear to close its CDMA network last week, with the national carrier setting the official date for switch off as 28 April, ignoring calls from the Opposition to put the service closure on hold, as well as ongoing pressure from the National Farmers Federation.


Both groups had raised concerns over the adequacy of the new Next G network's voice service in parts of rural Australia, with NSW Farmers Association president, Jock Laurie telling AAP on Tuesday that he "would not rest" until problems with the Next G network had been resolved.

"Patchy coverage is still being experienced, and there is concern that in some instances technicians simply cannot identify a Next G handset capable of providing equivalent coverage to CDMA," he said.

However, industry commentators have told ZDNet.com.au today that while migration to the new network may be difficult for some, its future benefits will outweigh any problems users are experiencing now.

"Undoubtedly the Next G network is significantly more advanced," said David Cannon, telecommunications analyst at research firm IDC, adding that the technology behind Next G "will enable services beyond people's imaginations at this point in time".

"Over the long term there will be services and applications available through Next G that will be well beyond what you could do with CDMA, and people wonder how they did without it," he said. "All of the hoo-ha we see now will be well and truly old news by then."

Cannon did say that some users will be "impeded by the shutdown", but the bottom line for Telstra is that it "cannot continue running multiple networks forever... especially when an absolute minority of subscribers are using CDMA".

"We've all heard about the men in their vans driving round checking reception every 36 seconds: it would seem to me that the government and Telstra have done as good a job as they could to ensure the rights of the consumer have been looked after," he said.

According to Ovum analyst Nathan Burley, Telstra has "fervently" pushed the Next G network onto bush consumers, but "they do have a point because it is an advanced network."

"I think it's well documented what the issues are with the network. In reality, the network does provide equivalent or better coverage [than CDMA], but wireless networks being what they are there's always going to be some difference with how the service works for individuals, even if the antennas are next to each other," he said.

Burley emphasised the importance of having correct handsets for users migrating from CDMA to Next G, saying "obviously it's about getting that equipment in people's hands".

IDC's Cannon blames problems with Next G's basic voice service on the fact that it is a comparatively young network compared to CDMA.

"When one network has been in place for a long time it gets tweaked for any number of idiosyncrasies", he said, adding that service degradation occurs on new networks such as Next G where "tweaking" is required to get it right.

"Once [Next G] has been tweaked to all of the different areas required I've no doubt it will perform adequately," said Cannon.

Gartner analyst Robin Simpson echoed Cannon's sentiments when he spoke to ZDNet.com.au today, saying that "there's always issues tuning up a new network to get good voice coverage across the board".

According to Simpson, the Next G network will be of most immediate benefit to larger businesses such as distribution and transport companies operating in rural Australia, because the service increased data transfer capacity and range.

"I don't think regional and rural consumers will be too excited about its wireless capacity yet, but [Next G] will be a real boon for business in rural Australia," he said, adding that "clearly they [Telstra] see data as an increased revenue stream".

Warren Chaisatien, principal analyst at telco research firm Telsyte, agreed the network will hold boost Telstra's coffers.

"It's a strategic move by Telstra to replace CDMA with a more advanced network. They want more people using more advanced services to generate more revenue ... so the focus is placed more on non-voice services like data transfer, and that explains why we've been hearing complaints about that."

If the last remaining 2G to 3G switchers follow their predecessors, voice revenues will go up 8 percent, SMS 15 percent and data 260 percent. Telstra stands to benefit from the switch — now it just remains to be seen how many of their bush users can do the same.

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