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Telstra CEO eyes innovation through startups, IoT, M2M

While its mobile network remains the core component of Telstra's business, the telco's CEO has argued that encouraging innovation and producing tech advancements will enable it to survive long term.
Written by Corinne Reichert, Contributor

Telstra is looking to stay ahead of the curve by encouraging technological innovation through collaboration with startups, machine-to-machine (M2M) technology, and the Internet of Things (IoT) -- but said that ensuring its network continues to be the best in Australia is still at the core of its business, and the driving force behind being able to deliver these capabilities.

Speaking at Telstra's Vantage 2015 conference in Melbourne on Tuesday, Telstra CEO Andrew Penn said that IoT is integral to all businesses now, because by 2020, "everything that can be connected will be connected".

Cisco, which has a long-standing cloud, communications, and collaboration partnership with Telstra, predicted that there will be 50 billion IoT devices by 2020.

Aglaia Kong, CTO for Cisco's Internet of Everything (IOE) business, said that what she calls "digitisation disruption" has changed the face of business: 40 percent of the Fortune 500 companies from 20 years ago no longer exist, with Cisco predicting the same percentage to disappear over the next 10 years.

"For example, Amazon pretty much took out the entire publishing business," she said, also pointing towards Airbnb for hotels, Uber for taxis, Spotify for music, Tesla for the automotive industry, and Facebook and Google for print advertising.

Cisco has said that the pace of change will only increase, and companies must therefore digitise everything involved in their chain of service; simplify the process by attaining end-to-end visibility; and create a new business model by connecting people, processes, things, and data in order to keep up with technological innovation.

While she conceded that there remain challenges involved in IoT -- those of data proximity, security, privacy, data sovereignty, and connectivity -- Kong argued that "there is no limit to what we can do with IoT".

The startup sector is also continuing to be pushed in efforts to encourage innovation, with Telstra having promoted over 20 accelerators over the past year and invested in 22 startups that deal in such technologies as 5G and mobile data management, according to the chief executive.

"We're investing heavily in startup organisations, and also creating accelerators and incubators, to try and create new environments, new ways, to help innovations flourish, giving them a little bit of capital, giving them the mentoring they need to help them nurture new ideas, and then take those into an environment where they can be capitalised and grow," Penn said.

In October 2013, Telstra launched its startup accelerator Muru-D for the purposes of incubating and providing seed funding for tech startups in Australia. Annie Parker, co-founder of Muru-D and chairman of Code Club Australia, said that the past few years have seen a trend towards startups for the purpose of creating apps for consumers to becoming a more business-focused area.

"There's a massive shift in the startup space from consumer to enterprise," she said during a panel at Telstra's Vantage conference.

Enterprise startups, according to Parker, hold greater value because they solve and monetise real-world problems.

Penn pushed continued collaboration with partners, customers, universities, and government, pointing towards the telco's recently opened Gurrowa Innovation Lab. The lab, located inside its head office in Melbourne, provides a co-creation space for Telstra and enterprise customers, vendors, research institutes, and incubators to collaborate on projects via the Pivotal and Cloud Foundry Foundation-provided open-source platform-as-a-service cloud software.

Frank Arrigo, API evangelist at Telstra, argued that while large companies are investing in startups, they're also attempting to integrate a more startup-based approach to their own business models in an effort to get ahead.

"There's also a desire within corporate Australia and enterprise to bring a bit of startup thinking for themselves," Arrigo explained.

"So we're seeing the creation of innovation centres, innovation labs, onsite hack-a-thons; bringing a lot of startup approaches into the enterprise."

Arrigo also pointed towards open-source software and public APIs as drivers of widespread innovation and advancement in the tech industry.

"Open source is becoming more and more an important component ... we're seeing a lot of innovation come out of open source, driving commercial products, and then improving it through that cycle," he said.

Telstra also spruiked machine learning -- particularly since the telco's FY15 financial results had seen its M2M business grow by 11.9 percent, to AU$113 million, in the 12 months to June 2015. In the same month, Telstra also announced that it had signed a three-year, AU$23 million contract to provide mining and construction equipment manufacturer Komatsu with M2M and cloud solutions.

Cisco cited statistics saying that over the same period, China Mobile saw growth in its M2M sector that was seven times faster than the growth in its overall customers, and Vodafone's M2M and IoT business line grew twice as fast as its overall revenue, at a rate of 25 percent.

Penn pointed towards combining mobility and cloud in conjunction with advanced computing power in order to drive artificial intelligence and machine learning, saying that these capabilities would accelerate the pace of technological innovation worldwide.

"If you imagine putting that compute power in the hands of virtually every startup around the world, just imagine the level of innovation, the level of change, the level of opportunity that that's going to create," he said.

"Computers are able now to see better, hear better, and recognise better than humans. And that's going to make a fundamental change to so many different industries, so many different services in the healthcare sector, just the diagnostic capabilities of compute power of that capacity ... would be transformational for the health system."

Telstra has had a recent focus on supplying and encouraging advanced health solutions. In April, Telstra Health signed a deal to acquire telehealth service Anywhere Healthcare in order to provide access to more than 1,600 GPs and 26 specialists to those located in regional and remote areas.

The health arm of Telstra also acquired UK health analytics company Dr Foster in March. Telstra Health was itself launched in October 2014, with the express purpose of bringing telehealth services to those in remote areas.

"Healthcare at its core is about connectivity. It is about how you can get better information flows going between doctor, GP, specialist, the pharmacist," then-CEO David Thodey said at the time.

To this point, Penn agreed, saying on Tuesday that connectivity is vital for any innovation in the tech sphere, with the ability to make advancements reliant on the quality of the underlying infrastructure.

He said that Telstra is investing half a billion dollars in its mobile network, and pointed towards the 4GX and Wi-Fi networks being rolled out; the construction of 750 additional mobile base stations and 750 small cells over the next two years; the recent release of a 600Mbps-capable Cat 11 device; and the continual work ongoing on the government's mobile blackspots program, of which Telstra claims to have been given "over 90 percent" to complete.

Penn also claimed that the telco now carries around one-third of all internet traffic across the Asia-Pacific region.

"Ultimately, the network sits at the core of the innovation," he concluded.

Disclosure: Corinne Reichert travelled to Melbourne as a guest of Telstra

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