Today Optus announced plans to expand its 3G network coverage next year to 98 percent of Australia and will bring mobile speeds up to 42Mbps by 2010, in a direct challenge to rival Telstra.
The telco is embarking on an investment program to expand its coverage from 96 percent of Australia's population to 98 percent by December 2009, in an upgrade which will cost the company AU$315 million.
Optus CEO Paul O'Sullivan
As part of the upgrade it will also be upping bandwidth across the network to 28Mbps from late 2009, with the aim of working with "strategic partners" to increase that speed to 42Mbps by the end of 2010, according to CEO Paul O'Sullivan.
"With this significant expansion we will be the only mobile carrier capable of challenging [Telstra's] network reach," he said in a statement.
Telecommunications industry analyst and BuddeComm CEO Paul Budde told ZDNet.com.au that Optus's plans to extend the reach and power of the network were "critical" for competition in regional Australia.
"Telstra is in a very comfortable situation at the moment ... it's always going to be difficult for a competitor to come in and break a market with so many people on 12- or 24-month contracts, but this is going to be an important boost for competition in general and specifically in regional Australia," he said.
Mobile services analyst at research firm IDC, Waqas Javed, believes that the announcement and ensuing network expansion will have "no effect" on Telstra as it has "already launched their 3G services and they are also constantly increasing their subscriber base".
"By the time Optus and Vodafone's 3G services are launched, Telstra would have already captured the major subscriber market share," he said.
However, analyst Paul Budde believes that the role of next-generation handheld devices is not to be underestimated.
"In the end they're all similar networks ... but with products like the iPhone people will start moving away from their basic voice service, which will push mobile competition in other areas," he said.
"The real problem for the operators is that they don't want to cannibalise their highly lucrative voice businesses, so the telcos will want to drag this sort of thing on in order to protect revenue from that," said Budde.
HSDPA using 900MHz spectrum will be utilised to expand Optus's coverage over an additional 400,000 square kilometres, after it announced late last year its intentions to switch on HSDPA in some areas by the end of 2008.