Telstra CEO dishes on superfast wireless

Correction: Telstra says it will not be introducing new 21Mbps-capable handsets at Mobile World Congress in Barcelona in February. The interview has been changed to reflect this.

If you're looking for a super fast wireless network, you might want to head to Australia, where Telstra, the largest wireless operator Down Under, has just launched an upgrade to its 3G wireless network that will offer peak data rates of 21 Megabits per second.

Of course, the 21Mbps downlink speed is a theoretical speed at peak performance. True download speeds will likely top out at between 4Mbps and 6.6Mbps. But that is still way faster than other 3G cellular networks around the world. In the U.S., most 3G cell phone users experience data downloads closer to 400Kbps to 700Kbps.

Telstra has improved the performance of its network by upgrading its 3G network, which uses a UMTS-based technology called HSPA or High Speed Packet Access. Enhancements to this technology will boost download speeds to enhance the mobile broadband user experience and enable a wide range of services, like mobile TV.

AT&T in the U.S. has also used HSPA technology to build its 3G wireless network. And like Telstra, it plans to increase the capacity of its wireless network using upgrades to its existing network. Last May, Ralph de la Vega, AT&T's mobility chief, said AT&T would be offering 20Mbps downloads over its wireless network as soon as 2009.

I recently sat down with Telstra CEO Sol Trujillo to get the scoop on his company's super fast network as well as to get some idea of where he sees the wireless industry going in the future. Below is an edited version of our conversation, as well as excerpts from an e-mail exchange following up our conversation.

Q: Telstra claims it has the fastest cellular data network with downlink transmission speeds up to 21Mbps. How is the 3G network you've built different from what people experience here in the U.S.?
Trujillo: Anyone can deploy anything on paper. And a lot of companies say they have deployed HSPA. But if you go to Australia and use services, you will get higher throughput wherever you go, no matter what city you are in or if you're in the bush.

How were you able to do that?
Trujillo: Building a network is more than just ensuring there is a connection between the device and the cell tower. There's also backhaul. And the chipsets in devices need to be able to handle things like the one button, one click to enable customers to get to a store. That is all part of the experience. What is the difference between 14Mbps and 21Mbps? The 21Mbps is more real time. It's all about the experience.

And how is the experience you've created in Australia different from what people get here in the U.S. with 3G wireless networks?
Trujillo: We made a big bet to roll out a nationwide 3G network nationwide to more than 2 million square kilometers in 10 months. We turned the whole network up on one day. I got criticized when we announced we'd do this. NTT had rolled out 3G and it was a big yawner. And the difference in ARPU (average revenue per user) between 2G and 3G services for carriers in Europe was only about 1 or 2 Euros. People weren't spending more money on the new network. And people said, "Why the hell are you spending this kind of money to build this network?" And I said, "Watch. We will create a new experience."

The difference in ARPU for us between 2G and 3G is $20 a month. Over 50 percent of our subscribers are on the 3G network. In the U.S., the 3G experience is spotty. It works well in some places. But if you commute, you probably get dropped calls the whole ride to work. This is unacceptable, especially when you are surfing the Web on your phone. You go to a Web site and the connection drops. To reconnect you have to start all over. It's not a pleasant experience. And people aren't going to spend money on a service if they don't think it's worth it.

In Australia, people will spend money if they think they are getting a good quality service. Our data pack consumers, the ones using a data card for their laptops, are generating $90 per month in revenue per user. It's all about the experience and making sure the service works where ever you are. If you know you can count on it, you start using it more. If you aren't sure whether it will work in some places, or if you think it will have slower speeds, you won't use the service and you'll just wait until you get some place where you know you'll have consistent service.

How much faster do you think you can scale this 3G network with current technology?
Trujillo: We'll be able to take this HSPA Plus technology to 100Mbps between now and 2010 or 2011. But the determining factor will be how much more bandwidth consumers really need. LTE is probably the next step for 4G technology, but we haven't made any announcements yet. But 4G is a long way off, probably not until 2015.

What is the plan in terms of rolling out the 21Mbps service?
Trujillo: We went to 21Mbps at the end of last year. And we're offering wireless laptop data cards in the first quarter.

What's the primary focus or strategy for Telstra?
Trujillo: We want to make communication easy. You have to make it about one click. There are many phones and services out there that people don't use because there are too many clicks to access them.

Do you think that Apple with its iPhone has done a good job in making it easy to access new applications and surf the Internet from a cell phone?
Trujillo: Yes, they have done good job. But Telstra gives consumers that plus choice. Apple has its view. Research In Motion has its view. And Microsoft has its view. Our job is to give consumers choices, but also give them the simplicity of that one-button, one-click experience. And we don't offer this simplicity on just one phone. We offer it on all our phones, including flip phones and slider phones. The button that says Big Pond or Foxtel for cable TV is right there on the phone, so users can access the broadband portal or watch TV right from their phones.

That brings up another interesting topic: Mobile TV. Foxtel is Telstra's cable TV service, as you mentioned. Do you see a lot of subscribers interested in watching TV on their phones?
Trujillo: People like snacking on mobile TV. They like to watch the news or they watch a big breaking news event, like what was unfolding in Mumbai last year. They want to find out what happened. And they want the latest news. They also want the latest scores for the sports matches, or they're checking the financial markets.

Here in the U.S., mobile TV hasn't yet taken off. What kind of uptake are you seeing in Australia?
Trujillo: Right now, it's building. Phones with better screen resolution are coming out and devices with better latency. One of the big things that Apple did was optimize its software operating system to reduce latency so that they could do a lot more with the phone in terms of video.

What kind of subscribership does Telstra have for Mobile TV?
Trujillo: I'd say that that a little under 5 percent of our Next G subscribers are viewing TV on their phones. It is growing, but I don't think it's going to be something that 50 percent of our subscribers will be doing in the next five years. But I think we can get to between 15 and 20 percent of our customer base to start watching TV. But when that happens it will be significant. We make about $10 and $11 ARPU on TV watchers.

In the U.S., some carriers are charging $10 and $15 extra for mobile TV service. And I think that might be slowing adoption. How do you think pricing affects adoption?
Trujillo: Part of it is price. Part of it is billing. People also need to know that it's available, and how they can use it. There's a whole learning curve that goes on. We actually have used different pricing models. For the Olympics, we sold packs for 15 days for $15.95 or $4.95 for one day. For example, when Grant Hackett, the Australian swimmer, swam the 1500 meters, we saw a huge spike in subscribers and usage. But typically it's about $10 or $11 per month on average for the TV service.

I think the real barrier to mobile TV adoption is that it needs to be one-click access. If there are multiple clicks to get there, people won't use it.

Google has talked a lot about its open platform for cell phones. And Verizon Wireless has talked about making its wireless network more open. What is Telstra's take on openness?
Trujillo: As carriers, we all have to enable features, services, and content that people want to see. And we need to offer devices that people want to use. So we have to create a process by which developers can enable new applications and services in a quick, easy, reliable and secure way. But the reality is that when something goes wrong with your phone or an application, everyone points to the carrier.

So if I allow an infection in my network, you won't be happy as a consumer. So you, the consumer, want us to make things reliable and secure. At the same time, I also need to provide new and interesting applications. And developers are thinking of 20 or more ideas a day. So we need to balance how much we take in with also providing the proper filters. And we also don't want to flood the customer with too much.

What do you think about Google's Android platform? Is Telstra going to announce it will support an Android phone anytime soon?
Trujillo: We are looking at it. But the platform isn't at the stage where it's really robust. We are looking at what's being said about it in the blogosphere, and we're looking at testing it. But it's still in evolution right now. It's very Google-centric. And there are limitations. We are hopeful that it will be more open, because it offers a great alternative operating platform. But it's not there today.

There were some reports recently that Telstra is interested in the new HTC Android phone that is expected to be on the market later this year. Can you share any thoughts with me on that?
Trujillo: I was very impressed by the array of new smartphones unveiled at the Consumer Electronics Show. Handset manufacturers such as Palm, HTC, and LG unveiled some great new products that focus on the features customers are increasingly looking for in a phone, like one-touch access to their favorite applications and services.

So is Telstra going to offer an Android phone?
Trujillo: At this stage, we have no announced plans. But we're looking at it and having conversations. We won't be rolling it out tomorrow. The research we've done suggests consumers want more simplicity and not more complexity.

Do you think that simplicity is missing in the U.S. market?
Trujillo: I think it's lacking everywhere. It's one of my passions to make things simpler. When I think of myself as a user I have different needs as a CEO when I am at work than when I am home as an average user. At home I'm looking for more entertainment. And how I interact with my employees at work is different from how I interact with my children at home. The key to this market is understanding that people are multimodel and multi-environment.

What has happened is we have segmented the market by product. But what we need to do is look at the market from a lifestyle perspective. That should drive new products. And it should be simple.

So where does Telstra go from here?
Trujillo: We're looking to do more integration with our Big Pond content engine, so that you can download a song that shows up on your laptop and your phone. Integration of these services is the hard part. Our next G network is IP and so is our fixed line broadband network, so we are integrating features and services so they work across different platforms. We want people to be able to get one bill and use the same service on whatever device or platform they want whether it's at home or on the train.

How is the economic downturn affecting your business?
Trujillo: We are experiencing the downturn. But not like folks are here in the U.S. Nowhere else seems to be feeling it like the U.S. is. But are there economic pressures? Yes. Will some consumers look at trade-offs about what services to keep and which ones to cut back on? The answer is possibly, yes. But we think the wireless device has become essential. It's one of the three things that people don't leave home without. Most people have become real time. People want to send SMS messages or e-mail if they can't call. So far we haven't seen usage change.

What about on the cable side? Do you think that as the crisis deepens people will cut back on things like cable TV service?
Trujillo: The vast majority of people won't deny their whole family in-home entertainment. In fact, they might spend more at home. Instead of going to the movies, they will subscribe to HBO or whatever premium channel is offered in Australia.

I've seen you pull out a couple of phones during the interview from your pockets. How many phones do you actually own?
Trujillo: Well, let's see I have an iPhone, BlackBerry Bold, a Verizon LG Voyager, Samsung touch screen, and a couple of others. I try them all in different markets as I travel the world. I'm always testing networks. My job is to study the markets. And watch how people use them. When I was on the board of Pepsi, I watched and learned how people consumed Pepsi products. I'm on the board of Target and I've learned about retailing. It's all about the customer's experience. It's not about the network or the system the service is delivered on. It's the customer.