A year on from launch, 1 million services and dozens of devices later, long-term evolution (LTE) networks known as 4G have well and truly landed in Australia. Both Optus and Telstra are engaged in a battle for customers, with Vodafone trailing closely behind. In this feature, ZDNet looks at how 4G has performed in its first year, where each telco is winning in 4G, and what the future holds.
It has been the year of 4G for mobile operators both in Australia and across the globe. The Oxford Dictionary added both 4G and LTE (as a 4G standard) to its online dictionary.
The launch of several 4G-enabled smartphones and tablets from the likes of Apple, Samsung, HTC, and Motorola have driven uptake of the standard across the globe, with customers chasing faster download speeds and better connectivity.
The latest Global mobile Suppliers' Association (GSA) report revealed that there are now 113 LTE operators in 51 countries as of November 2012, and this is tipped to increase to 209 networks in 75 countries by the end of 2013. There are now more than 560 LTE devices available across the globe.
"LTE technology is entering the mainstream," the GSA said.
Telstra, Optus, and Vodafone have been racing around the country over the last year, upgrading their 3G networks and rolling out 4G infrastructure to prepare for what Vodafone Australia CEO Bill Morrow refers to as the "data tsunami." Cisco forecasts that mobile data traffic in Australia will grow by 14 times between 2011 and 2016. Australians will be using 119 Petabytes per month, up from 9 per month in 2011, and mobile traffic will account for 23 percent of all IP traffic by 2016, up from 7 percent today.
For the telecommunications companies in Australia, 4G isn't just a luxury for customers wanting faster speeds; it's a way to keep up with demand and ride the data tsunami. To that end, Australia's three major mobile network operators have invested billions to get 4G out as quickly as possible. But some have been faster than others.
Read on for where 4G is at in Australia today.
4G in Australia
As you would expect with the rollout of new networks, progress is a fast-moving target, and Telstra and Optus are progressively rolling out 4G networks in the 1800MHz spectrum band across the country at a rate of knots, while Vodafone is busy getting its own network ready for a 4G launch in 2013.
Since launching the network in September last year, Telstra has now reached 40 percent of the population with its 4G network, and is aiming to get this to 66.6 percent by the end of June 2013. The company aims to achieve this through the installation of over 1,000 new base stations to add to the more than 1,000 that are 4G capable today. The network currently reaches every capital city and over 100 regional centres.
As the network expands across the country, Telstra's director of networks Mike Wright said that each stage has to be managed carefully, but that Telstra is now in a ramp-up phase.
"Like any big project rollout, we [were] in the organisation stage to get these things to work, [and] there's a lot of preparation," he told ZDNet.
"Getting the plans right, getting the designs right, doing any approvals, getting steel made, getting troops organised. [Then] usually, you're adding something to the tower top. It might be a bit of electronics, because a lot of our 4G technology nowadays uses the latest radio tower-mounted base-station hardware."
Wright said that Telstra's plan is now to expand the network from its existing coverage areas, driven by where there is demand for 4G, but he also said that the company has begun to notice that there are hotspots in the 3G network where there are many customers using 4G devices. He said that Telstra will look to target those places, too.
"We've got parts of the network that are seeing strong traffic growth and take-up, and in some of those areas we're starting to put LTE into a particular hotspot almost separately to the footprint growth," he said.
"One customer wouldn't make the difference, but you might find one part of the network where, for whatever reason, there is a population of users in the area using 4G devices, even though it is not 4G enabled. We say, next time we do a capacity upgrade, we'll actually increase the capacity with 4G, rather than 3G."
"We've got parts of the network that are seeing strong traffic growth and take-up, and in some of those areas we're starting to put LTE into a particular hotspot almost separately to the footprint growth." - Mike Wright
Telstra has also been on an aggressive campaign to get 3G customers to switch to 4G, even if they don't currently live in a 4G coverage area.
"If they migrate to the latest technology, it gives us more flexibility to more efficiently load the network up," Wright said.
"4G is somewhat unique in that the latest devices have not only come on very quickly, they are not only the best 4G device; they are the most efficient 3G device, because they are DC-HSPA enabled."
At a recent investor day briefing in October, Telstra's head of mobile Warwick Bray revealed that Telstra is driving customers onto 4G because the cost per user to run customers on 4G is less than it is on the 3G network.
Telstra has approximately 1 million devices on the 4G network, including over 405,000 handsets, with 100,000 iPhone 5s. The company has a total of 17 devices in the market and will have 23 by Christmas. Two thirds of the devices launched in the next year are expected to be 4G compatible.
Devices available through Telstra include: HTC Velocity, Galaxy S2, Galaxy S3, HTC One XL, Motorola RAZR HD, RAZR M, iPhone 5, EasyTouch, Telstra 4G tablet, Galaxy Tab 8.9, Telstra USB 4G, Telstra Mobile Wi-Fi, Telstra Pre-Paid USB 4G and Telstra Pre-Paid Mobile Wi-Fi.
Optus has now launched services in Sydney, Newcastle, Melbourne, Brisbane, the Gold Coast, and Perth. It has installed 4G radios in 1,000 towers, and plans to launch services in Adelaide and the ACT in early 2013.
The company began trialling the 4G technology in Newcastle, because it represents a cross-section of the types of areas that the network would have to cover in Australia, from suburbs to cities to coastal areas to rural locations.
Optus' managing director of networks Günther Ottendorfer told ZDNet that Optus specifically conducted the trials of 4G in Newcastle in order to prepare for the iPhone 5 and Samsung Galaxy S III. The lessons learned from the Newcastle trial have allowed Optus to roll out its network faster than expected, he said.
"That was why we could accelerate the rollout a little bit," he said. "We could only do that because of all the preparation on sites and transmission is running to plan, or in some cases even better than planned."
Ottendorfer said that Optus is beginning to see the traffic impact on its network, but that there is a long way to go.
"What we're seeing is that the bulk of our traffic is on the 3G network, but we have a good LTE network, and we see the customers using that."
After launching the networks in Adelaide and the ACT early next year, Optus plans to expand its coverage from those areas progressively, and then also target hotspots.
At the same time, Optus will be launching a second LTE network in the 2.3GHz spectrum band, which it obtained when it bought Vividwireless in February this year for AU$230 million.
Optus will shut down the existing Unwired network at the end of February 2013, and then launch a time-division duplex (TDD) LTE network to complement the existing frequency-division duplex (FDD) LTE network operating in the 1800MHz spectrum band.
Ottendorfer said that the company will focus on rolling out this network in metro areas first off, where traffic is the highest.
"These networks are complementing each other very nicely. Customers who at that moment in time buy a multi-mode device can then use both networks. It will be very good for the customer, because it will open up another road to travel on."
Optus has thus far not revealed how many 4G devices it has sold but to date has eight devices on sale today including the iPhone 5, Galaxy S3, Galaxy Note 2, HTC One SV, Nokia Lumia 820, 4th Gen iPad, iPad Mini and Samsung Galaxy Tab 10.1
Both Optus and Telstra have priced their 4G plans in line with their existing 3G plans, while in other areas of the world, such as the UK with EE's network, 4G has been charged at a premium rate.
Optus' CEO of consumer, Kevin Russell, explained this recently by saying that it's about keeping plans simple for customers. But he didn't rule out premium pricing in the future.
"This is a question of simplicity and clarity from a customer standpoint. We obviously have quite different footprints in terms of initial 4G coverage to 3G," he said. "It is very different from a customer standpoint to understand the different pricing for different footprints.
"We will review that decision as and when 4G is universal across core coverage areas," he said.
Vodafone, which has lost over 1 million customers in the last 18 months, and has reported massive financial losses due to under-investment in its 3G network, has been overhauling its network with Huawei SingleRAN network equipment to provide not only dual-channel HSPA (DC-HSPA) 3G coverage, but also allow the company to switch on 4G coverage later down the track.
When ZDNet approached Vodafone for an interview on the state of its 4G rollout, the company said it had recently completed trials of 4G, and plans to launch its network in the 1800MHz spectrum band early next year, but had no further comment to make.
Read on to see how Australia is leading the world on 4G.
Australia leading the way
When Telstra and Optus announced their intentions to deploy their networks using the 1800MHz spectrum band, it was a lonely ecosystem. In fact, Telstra had to work closely with Sierra Wireless to bring the dual-band 1800MHz and 850MHz dongle device to market to ensure that customers would even be able to get on its 4G network last year.
Apple also found itself in hot water in March, when its LTE-capable third-generation iPad launched in Australia advertising itself as a 4G device, despite the fact that it did not operate on the 1800MHz spectrum band. Apple agreed to pay an AU$2.25 million fine, and removed the 4G label from the iPad product information in Australia.
But despite the initial hurdles, since then, the 1800MHz ecosystem has flourished as network operators across the globe seek to reuse the spectrum that was used for 2G services, but freed up with the uptake of 3G.
The GSA's latest statistics have revealed that 1800MHz is the most popular choice for LTE networks across the globe, making up 37 percent of the 113 commercial networks in operation today. In total, 42 operators across the globe use the 1800MHz band for 4G in 29 countries, including the UK, Denmark, Estonia, Finland, Germany, Hong Kong, Japan, Poland, South Africa, Singapore, and South Korea.
A further 22 operators, including Vodafone in Australia, are also planning to deploy 4G networks in the 1800MHz band in the near future.
As a result of its popularity, there are many devices available now that work on the 1800MHz band. The GSA estimates that 130 of the 560 LTE devices in the marketplace work on the 1800MHz spectrum band — almost one in four.
"We were, in a way, betting on the right horse, and the ecosystem has developed very good." - Günther Ottendorfer
"Industry momentum behind the deployment of LTE in 1800MHz has grown strongly over the past year, and a robust ecosystem is established to support 1800MHz as the prime band for LTE deployments worldwide, which will greatly assist international roaming," the GSA said.
Ottendorfer said that Optus bet on the right horse in using 1800MHz.
"We were, in a way, betting on the right horse, and the ecosystem has developed very good. The availability of the phones on the 1800[MHz] is there, so all that is really good for us," he said.
Wright said that he is "very pleased" with the uptake of 1800MHz worldwide, and what it means for what Telstra could offer.
"It's driving the device ecosystem, and that's the important thing with all these networks: getting the scale so there is enough devices out there.
With all of that in mind, just how are our 4G networks performing?
In October 2012, ZDNet tested the 4G networks of both Telstra and Optus in a number of locations in Sydney, Melbourne, and Perth. Optus provided a new iPhone 5, and Telstra provided a Samsung Galaxy Tab 8.9 4G tablet for the purposes of the test.
The tests were conducted in the heart of the CBDs of each city, with one test each at their respective domestic airports at varied times throughout the day and the evening.
In Sydney, Optus came out on top for 4G coverage, averaging around 24Mbps down and 14Mbps up, with an average latency of 29ms. Telstra clocked an average of 20Mbps down and 8Mbps up, with an average latency of 61ms.
In Melbourne, Optus also came out on top, with an average of 17Mbps down and 12Mbps up, and an average latency of 57ms. Telstra came in at 11Mbps down and 3Mbps up, with an average latency of 39ms.
Telstra shone in Perth, however, with a significant lead over Optus, at an average of 37Mbps down and 30Mbps up, and an average latency of 37ms. Optus had an average of 14Mbps down and 12Mpbs up, with an average latency of 127ms.
Telstra explained that in Perth, its 1800MHz spectrum holding is larger, which would mean that there is more capacity in the network, but Wright also said that the number of users in Perth may have had an impact on the speeds.
"It can be a combination of the bandwidth, how heavily loaded the network is and the quality of your signal, and how we've optimised the network, so it does vary," he said.
Ottendorfer said that in this early stage of the rollout, building density and topography would play a big role in the achievable speeds.
"It has a lot to do at this stage in the rollout, where you haven't reached full density; it has a lot to do with the buildings in the cities and the topography," he said.
Across the board, statistics taken from ZDNet's Broadband Speed Test from between February and October this year showed that Telstra's average speed was 12.5Mbps, while Optus' was 13.6Mbps. Telstra had many more tests run, however, with 2,188 tests compared to just 110 from Optus customers. Just 13 percent of all tests run over 4G networks achieved speeds higher than 20Mbps.
Where to from here?
The road ahead
While 1800Mhz is working wonders today, growing traffic demands require more spectrum in lower-frequency bands. This sets the stage for the auctioning off of the "waterfront" digital-dividend spectrum in April 2013.
Spectrum freed up from the switch-off of analog television signals by the end of 2013 is ideal for LTE networks. The 700MHz spectrum will offer telcos the ability to carry their LTE traffic farther across Australia's vast landscape, while the 2.5GHz spectrum will allow the telcos to deploy extra capacity in high-density areas, such as CBDs.
Optus and Telstra have both said that they will be participating in the auction, but Vodafone recently suggested that it may skip it, and instead rely on its large spectrum holdings in the 1800MHz spectrum.
This poses a potential threat to the expected AU$4 billion in revenue that the government was hoping to get from the auction, with Communications Minister Stephen Conroy stepping in to overrule the Australian Communications and Media Authority (ACMA) to set a reserve price on the spectrum.
A recent Commonwealth Bank Global Markets Research analysis of the spectrum auction described the minister's decision as a "disappointing development" that would likely push up prices, but said that telcos would be willing to pay a higher price to obtain the spectrum.
"With the forthcoming digital-dividend spectrum auctions providing a once-in-a-decade opportunity to access beachfront spectrum real estate, we see little risk of the carriers walking away, even if prices are higher than hoped for," Commonwealth Bank analyst Alice Bennett said.
The Commonwealth Bank estimates that Telstra will spend around AU$2.7 billion for its slice of spectrum, while Optus will spend AU$900 million. The analysis doesn't rule out a bid on spectrum from Vodafone, provided that the reserve pricing isn't too high, and said that it would likely acquire AU$350 million worth of spectrum.
Optus' "chief nerd" Ottendorfer said that while the spectrum auction won't play an immediate role in the company's 4G rollout plans, it will examine what products are in the market that can use that spectrum down the track.
"The chipsets are developing really fast. I'm the chief nerd of this company, and I am trialling everything as it comes out. I am pretty optimistic that the chipsets won't disappoint us," he said.
Wright said that there needs to be more devices using the 700MHz spectrum developed for the Asia-Pacific region by the time the spectrum is available.
"Ideally, we would have the devices manufactured and in market before the networks are built. That's not always a luxury we get, but that would be an ideal outcome," he said. "It's really a matter of getting device manufacturers to see that there is interest and scale that people will buy them."
"I'm the chief nerd of this company, and I am trialling everything as it comes out. " -Günther Ottendorfer
Customers with existing handsets will likely be at the point where they will be upgrading, so the rollout of LTE in the new spectrum bands won't make much difference, Wright said.
"Yes, there will be a device changeover, but I don't see it as a make or break for a customer, because, say, if they've got an 1800MHz device, it will continue to work OK," he said. "We'll just need to see what the network rollouts are like when we decide on the 700MHz network layer."
The last major hurdle for 4G will be global roaming. The telcos are also beginning to investigate global roaming on LTE, and several trials have been conducted in parts of Asia to test out roaming on LTE between countries. Wright said that coming to an agreement on LTE roaming is easier for existing roaming partners.
"It will be one of those things where operators had existing 3G agreements in place, and those are just upgraded to 4G."