4G wars: New spectrum key to Optus' 4G future

Optus has set its sights on winning the 700MHz spectrum at the Digital Dividend auction to help roll out its 4G network.

Since 2009, Optus has invested a considerable amount of capital into upgrading its network – including adding 4G capabilities – spending $1.8 billion in the process. Most recently, the telco has invested $600 million in network upgrades over the past year – and further investment has been forecast.

Media reports have pegged future investment from SingTel at $2 billion.

4G wars: Can Optus and Vodafone compete with Telstra?

While Telstra has streaked ahead in its 4G rollout, Optus appears to have some constraints on the horizon, particularly if the telco does not get the 700MHz spectrum at the Digital Dividend auction it is banking on winning.

How Optus is rolling out 4G

So far Optus has upgraded more than 600 sites in its portfolio to 4G capabilities, with more than 5000 sites in total across Australia.

The upgrade process can include building extra equipment, installing new antennas and upgrading the backhaul to provide more capacity. In metro areas this typically involves fibre, but in regional areas this can be using radio.

“Usually there’s work putting an extra antenna or a set of antennas up on the site, so that might involve rigging near what’s called the feeders, which is the cabling that takes the cabling from the radio signals to the base station up to the antennas,” Andrew Smith, vice-president, mobile core engineering at Optus, told Computerworld Australia.

“The site might be a tower or it might be what you’re probably more likely to see in the metropolitan areas on a rooftop somewhere where you see a number of panel antennas, generally pointed in three different directions from that site.”

Smith says this typically takes place over a couple of weeks, with additional work required prior to on-site changes. For example, planning approval needs to be sought for some work and council approval for permits may also be required to carry out on-site work.

Eventually, every single Optus tower and mobile base station will be upgraded to support 4G services.

“There’s lots of logistical challenges in getting all the new equipment on-site and going through the approval process to do that. We’re dealing with new antenna designs [and] we’re dealing with a reasonably new technology,” Smith says.

“There’s a lot of physical work on-site [and] there’s a lot of work in upgrading the backhaul, which means the continual evolution of our fibre network and getting fibre rolled out in more places because that provides us with a bigger pipe to the base stations. There are a lot of people involved inside Optus who work on this and we have a lot of work in the hands of our contractors as well in the market.”

Work is typically carried out during ‘maintenance windows’, according to Smith, with the telco notifying customers if network issues are expected to occur.

“We have an engaged process as to how we deal with that. It isn’t just turning off sites for our convenience to get the work done. There are very strict principles about how we manage our services through the upgrade process,” Smith says.

Optus has also signed an agreement with competitor Vodafone to share resources in a bid to push out 4G services quicker.

The agreement means both parties can access a certain number of each other’s sites – around 1000 in total. This allows Optus to install its equipment on Vodafone sites and vice versa.

“The deal here is we get access to a broader pool of sites [and] we get there a lot faster too because accessing their sites is a lot faster than building them, and also reduces a lot of the environmental impact. That’s 1000 new sites that we’re not needing to build to add to the number of sites in the environment, so it’s a more effective use of the resources in the industry,” Smith says.

A joint venture agreement between the company covering 3G services was initially signed in 2004, with the most recent agreement a cost effective way for both companies to propel themselves forward in the 4G market.

“This is around trying to reduce the capital costs [and] reduce the operating cost so we can effectively deliver better propositions to customers by having a more economic base for our mobile investment,” Smith says.

“Yes, they are a competitor, but those sort of top-line competitive aspects – marketing and pricing – are absolutely independent of this joint venture.”

Smith was reluctant to peg the agreement as a way for Australia's number two and three telcos to compete with Telstra when on the 4G front.

“Telstra – it’s really up to them as to the degree they want to roll out 4G and their speed to market. We see this as something that’s necessary to provide the customers with the services we are. So yes, we want to make sure we’re absolutely competitive in that market and we believe the joint venture is a good way for us to retain and maintain a competitive position that we have against Telstra,” he says.

The agreement will also involve the construction of 500 new sites, with Optus and Vodafone to share the costs of construction. These new sites, according to Smith, will primarily be located on the fringes of metro areas and cover growing housing estates.

The agreement will provide Optus with a 20 per cent increase in the number of mobile sites in its network by 2015 and accelerate improvements to 3G and 4G services by 12 to 18 months.

Spectrum

Like Telstra, Optus has not been shy in announcing its intention to acquire some of the 700MHz spectrum being auctioned in the Digital Dividend.

While Telstra and Vodafone have access to lower spectrum bands, such as 800MHz, Optus does not have access to this band. Instead, it has access to 900MHz, 1800MHz and 2100MHz.

Optus has been involved with trials on the 700MHz band in Bendigo, Victoria, and acquiring 700MHz could be crucial to Optus’ plans to roll out 4G; Paul O’Sullivan, Optus chief executive, has stated it would be “vital for delivering 4G LTE, especially in regional Australia, because of its ability to deliver LTE over longer distances”.

Smith also believes 4G is best deployed in low spectrum bands.

“The best way to architect [3G and 4G] is to have a good low band, which gives you the good depth of coverage, or the range, and 700MHz – or the Digital Dividend – is one that we’ve been advocating for some time,” he says.

The Digital Dividend auction is not scheduled to occur until 2013 and may not be available until 2015.

“At this point our focus is on acquiring 700MHz. We do think it’s the right thing in our position to do, but obviously there’s an auction in the process … so we’ll cross that bridge.,” he says.

Optus will continue to roll out 4G on the 1800MHz spectrum and introduce a TTD 2300MHz 4G service as well.

“That’ll add capability and capacity to the network, so we’ll continue to roll out 4G and then we’ll supplement that with 700MHz, assuming that we get it at the auction... We see it as a series of steps to ultimately provide a comprehensive 4G service,” Smith says.

Optus states its 4G technology can achieve speeds of 2-40Mbps, with latency around a third of 3G, Smith says. He expects speeds will also improve in the future.

The future for Optus’ 4G

Optus has plans to enter the Adelaide and Brisbane markets with 4G services early next year, Smith says.

In the meantime, the telco will continue to gradually roll out 4G services and expand its metro coverage.

“Next year’s icing on the cake for us as we bring this 4G TTD, which comes from the 2300MHz spectrum which we acquired from vividwireless, and we add that to our 4G portfolio while we also continue to expand our current [offering],” Smith says.

“Then, auction permitting, we’ll also bring 700MHz. Really, over the next few years, our customers can expect a fantastic improvement in expansion and the level of 4G coverage and capability we offer. We think the market will eat that up.”

The future of 4G in Australia

4G wars: Telstra betting big on 4G
4G wars: The road to 4G for Telstra
Can Vodafone make a 4G comeback?

Follow Stephanie McDonald on Twitter: @stephmcdonald0

Follow Computerworld Australia on Twitter: @ComputerworldAU

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