Telstra to deploy 5G in three phases

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Telstra to deploy 5G in three phases

Full commercial services expected in FY20.

Telstra is planning to deploy its 5G network in three tranches with “full commercial deployment” expected in FY20.

CEO Andy Penn told the company’s strategy day today that the telco intended to “lead” 5G, as it had with prior generations of mobile technology.

“We intend to lead and win in 5G,” he said, adding that the company would reveal more about its specific plans at a 5G strategy day in the second half of the calendar year.

The first phase of the 5G rollout will be based on “pre-5G technical standards” and - like other carriers - is likely to be focused around fixed wireless services for residential users.

“Currently around 15 percent of homes in Australia choose to have no fixed broadband service and we can see a situation where this increases by a further 10-15 percentage points,” Penn said.

Telstra has previously estimated that around one million homes could be served by this kind pre-5G fixed wireless technology. Rival Optus is also gunning for the same market.

Penn said that the services were not intended to “replace the NBN”.

“It will not be for everyone,” he said.

Phase two of the 5G rollout “”will address the mainstream market as handsets become available”, which is unlikely to be before late 2019 or early 2020.

Telstra said in a slide deck that “full commercial deployment of 5G in capital cities, major regional centres and other high demand areas” would occur in financial year 2020.

Penn said that the technology should help Telstra “drive down the cost per gigabyte of data”, which would help the telco battle financial headwinds caused by a year-on-year increase in data usage of around 40 to 50 percent.

“We will roll out 5G fast and extensively as it becomes available,” he said.

The third phase of the 5G rollout will “comprise the longer term opportunities for growth, many of which have not been identified yet,” Penn noted.

Early use cases in this area are essentially continuations of applications that already run on 3G and 4G networks, such as the internet of things and ‘connected’ solutions such as smart home.

“These are the precursor for the long term growth opportunities that will exist as every business in every industry looks to improve efficiency and effectiveness of their operations through the use of technology,” Penn said.

To realise its 5G vision, Telstra - like other carriers - will need to bid for prized 5G spectrum at future auctions.

Telstra has already made its intentions clear in this regard, having laid down $50 million in December last year for a block of 5G spectrum in Brisbane.

The enormous price of that block is part of the reason Vodafone has been agitating for NBN Co’s 5G spectrum holdings to be re-auctioned, as the price Telstra paid for similar spectrum has shown how commercially valuable it is.

“Obviously we do have some 5G spectrum at the moment but we intend to participate in acquiring more spectrum because that’s critically important to us,” Penn said.

Penn also noted that Telstra has “been making very significant investments in core capacity”, which is seen as important for 5G networks since they will be more dense architecturally than previous generations of mobile network, and require fixed-line infrastructure to be brought closer to the edge.

Penn said that Telstra intended to lead on 5G “as we’ve done with 3G and 4G”.

He was unconcerned with how other carriers would market their entry into the 5G space.

“It’s not necessarily about who’s out of the door first,” he said.

“It’s about providing commercial, viable high quality 5G network and that’s what we’re absolutely committed to doing”.

Under a major restructure announced today, Telstra will hive off much of its fixed-line and physical infrastructure assets into a completely new business.

However, the telco will hold onto its mobile network as well as the backhaul that serves it, given the mobile network is the company’s main ticket to competing for broadband customers into the future.

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