G’day mate! LTE arrives in Australia

Australian market-leader Telstra has become the first operator in the country to commercially launch LTE, lighting up the next-generation network in the business districts of the country’s eight largest cities and a further 30 regional and metropolitan centres at the end of September.

Wireless Intelligence forecasts that Telstra will reach 500,000 LTE connections in two years (Q4 2013), which would account for about 4 percent of the operator’s connections base at this point.

Telstra’s launch means that Australia is the third-largest market in the Asia-Pacific region to launch LTE after Japan and South Korea. The region is expected to account for about a third of the world’s total LTE connections this year, according to our latest estimates. Telstra’s Hong Kong subsidiary, CSL, launched LTE in December 2010.

Telstra has been piloting LTE in Australia since May and has had a commercial pilot for business customers up-and-running since August. It plans to expand coverage to a further 50 locations by year-end.

The network – which boasts theoretical peak download speeds of 40Mb/s – will be initially accessible only via USB dongles, which will be given away for free when users sign-up to a two-year contract. However, the operator is promising that the first compatible handset will be available in the first half of next year. The new device is a collaboration between Telstra and Taiwanese smartphone-maker HTC, codenamed ‘HTC 4G.’

Telstra’s launch comes ahead of LTE offerings from rival operators Optus, the SingTel-owned number-two; and VHA, the operator formed two years ago by the merger between the local arms of Vodafone and 3. Optus announced last month that it plans to launch LTE at the beginning of next year, while VHA has recently agreed a deal with the country’s rail authorities to use their 1800MHz spectrum for LTE.

The Australian regulator has earmarked 700MHz (‘digital dividend’) and 2.5GHz for mobile broadband use, but auctions in these bands are not due until next year. This means that Telstra’s initial deployment uses its existing 1800MHz spectrum, a different frequency to its 850MHz ‘Next G’ HSPA-based network. The use of the lower frequency band, which works across greater distances, has enabled Telstra to rollout Next G to 99 percent of the population, an impressive achievement in such a vast country. By contrast, use of the 1800MHz spectrum is likely to limit early LTE rollout to urban areas with dense base station penetration.

Telstra’s advanced network strategy has enabled it to steal a lead in mobile broadband; it was one of the first operators in the world to offer HSPA when Next G first launched in 2006. It boasted 2.6 million mobile broadband customers at the end of its last fiscal year (end Q2 2011), adding almost a million (914,000) over the 12 month period.

According to the latest Wireless Intelligence data, Telstra had migrated 78 percent of its connections base to Next G by Q2. This gives it a much higher proportion of HSPA customers than either of its competitors: HSPA accounted for 39 percent of connections at Optus and 40 percent at VHA.

Telstra also strengthened its overall market share to 43 percent in the quarter, adding the most quarterly net additions (368,000) and growing its connections base by 16 percent year-on-year, ahead of the market average.