Telenor's - Ericsson

strategy broadband
Australia
Population: 22.48 million
Land area: 7.6 million sq km
TELSTRA ANNUAL REPORT 2010
▶ Annual revenues USD 21 billion
▶ Number of subscribers (in millions)
Basic access 8.66, fixed broadband 3.99,
mobile broadband 10.56
▶ Employees 31,157 (full-time staff in
Australia)
▶ PayTV Owns (50 percent) and operates
HFC network for Foxtel
▶ International operations New Zealand,
China (mainland and Hong Kong)
46 EBR #3 2010
the majority of Australia’s traffic, currently
approximately 45 petabytes per
month. This figure is doubling every two to
three years.
ADAPTING TO BROADBAND
Historically, Telstra was the incumbent ptt,
with its focus squarely on telephony. The
introduction of mobile phones and business
data services in the 1980s and cable tv and
2g mobile phones in the 1990s greatly
expanded its business range. Throughout
this period, and well into the 2000s,
Telstra’s transmission network followed a
traditional model mirroring the telephony
hierarchy of local, tandem/transit and main
telephony switches.
The introduction and success of first generation
broadband on adsl and data services
on mobile networks in the early 2000s
showed Telstra that fixed and mobile data/
ip traffic would soon overtake telephony traffic.
Also, the traditional model of adding capacity
link-by-link, as needed was shown to
be insufficiently flexible when planning and
budgeting for transmission services. The
deployment of new services was also frequently
constrained and delayed by the need
to expand the capacity and routes beforehand.
In 2005 a new hierarchical transmission
architecture was established and then progressively
put in place. This program of
“Ethernet enablement” matched the transition
to the use of Ethernet interfaces on new
ip-dslams and new 3g mobile base stations.
Transmission planning was simplified
through adding gigabyte capacity, rather than
e1 links on specific routes.
The establishment of the new architecture
was followed by a two-year period of accelerated
investment to realize the new model.
For 2008 to 2010, capital expenditure on
long-haul transmission equipment decreased
somewhat – yet the capacity of the network
has continued to grow to support a doubling
of traffic volumes – an effective growth rate
of about 30 percent a year to the end of 2009.
Today, Telstra’s total traffic volume is more
than 45 petabytes per month.
DECOUPLING CAPACITY AND COST
How has Telstra effectively decoupled capacity
and capital expenditure?
Between 1985 and 2000, Telstra installed
sufficient fiber capacity, meaning expensive
construction work for new fiber cables was
rarely required. Deploying scalable capacity
based on the new architecture, Telstra has
been able to leverage the original investment
in transmission equipment to continually increase
the capacity on its existing cable plant.
Added to this, the cost of capacity provided
by transmission equipment has been driven
down, so over the past 10 years, the cost per
gigabyte has dropped considerably.
Other carriers around the world lease
transmission capacity from third parties. For
them, the growth in broadband traffic leads
to increasing operational expenditure, but
Decoupling capacity growth and capital expenditure
Capex PB per month
50
2004 2005 2006 2007 2008 2009 2010
The curve shows total volume of traffic, predominantly IP/data, carried over Telstra's network. The bars show long haul capital expenditure
(Australian dollars) including all fiber design installation costs and SDH and DWDH equipment costs. Source: Telstra.
45
40
35
30
25
20
15
10
5
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